CubeSmart(CUBE) - 2025 Q2 - Quarterly Report

Report Cover Page & General Information This document is the quarterly report (Form 10-Q) for the period ending June 30, 2025 - This is a quarterly report (Form 10-Q) for the period ending June 30, 2025[2] - The registrants include CubeSmart (the Parent Company, a Maryland real estate investment trust) and CubeSmart, L.P. (the Operating Partnership, a Delaware limited partnership)[2] - Both CubeSmart and CubeSmart, L.P. are classified as large accelerated filers[3] CubeSmart Common Shares Outstanding | Category | Shares Outstanding as of July 30, 2025 | | :--- | :--- | | Common Shares, $0.01 par value per share | 228,035,275 | Explanatory Note This report combines the Form 10-Q filings for CubeSmart and its operating partnership, CubeSmart, L.P - This report combines the Form 10-Q quarterly reports for CubeSmart (Parent Company, REIT) and CubeSmart, L.P. (Operating Partnership) for the period ended June 30, 2025, as they operate as a single enterprise[6] - As of June 30, 2025, the Parent Company owned approximately 99.5% of the interest in the Operating Partnership and has full authority over its daily operations as its sole general partner[7] - The Parent Company's primary asset is its investment in the Operating Partnership, which holds substantially all of the company's assets and conducts its business operations[9] - The consolidated financial statements of the Parent Company and the Operating Partnership are nearly identical, with main differences in the equity (or capital) sections[10] Forward-Looking Statements The report contains forward-looking statements based on assumptions and expectations that are inherently subject to risks and uncertainties - Forward-looking statements in this report are based on assumptions and expectations that may not be realized and are subject to risks, uncertainties, and other factors[22] - Key risks include adverse economic conditions in the real estate and self-storage markets, increased competition, inflation, rising interest rates, reduced capital availability, financing risks, failure to maintain REIT status, and risks related to acquisitions, cybersecurity, and regulatory changes[23][25] - The company cautions readers against undue reliance on these statements and undertakes no obligation to update them beyond what is required by securities laws[24] Part I. FINANCIAL INFORMATION Item 1. Financial Statements This section presents the unaudited consolidated financial statements for CubeSmart and CubeSmart, L.P., as of June 30, 2025 CUBESMART AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS Consolidated Balance Sheet Key Data (in thousands of USD) | Metric | June 30, 2025 | December 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Total assets | $6,709,320 | $6,394,181 | +$315,139 | | Storage properties, net | $6,413,603 | $6,038,186 | +$375,417 | | Cash and cash equivalents | $8,741 | $71,560 | -$62,819 | | Total liabilities | $3,820,046 | $3,440,313 | +$379,733 | | Revolving credit facility | $366,300 | — | +$366,300 | | Total CubeSmart shareholders' equity | $2,813,678 | $2,871,856 | -$58,178 | CUBESMART AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS Consolidated Statements of Operations Key Data (in thousands of USD, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change | Change % | | :--- | :--- | :--- | :--- | :--- | | Total revenues | $282,303 | $266,209 | +$16,094 | +6.0% | | Total operating expenses | $170,413 | $148,754 | +$21,659 | +14.6% | | Net income attributable to the Company | $82,960 | $93,964 | -$11,004 | -11.7% | | Basic earnings per share | $0.36 | $0.42 | -$0.06 | -14.3% | | Diluted earnings per share | $0.36 | $0.41 | -$0.05 | -12.2% | | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change | Change % | | :--- | :--- | :--- | :--- | :--- | | Total revenues | $555,339 | $527,615 | +$27,724 | +5.3% | | Total operating expenses | $328,571 | $292,133 | +$36,438 | +12.5% | | Net income attributable to the Company | $172,157 | $188,491 | -$16,334 | -8.7% | | Basic earnings per share | $0.75 | $0.83 | -$0.08 | -9.6% | | Diluted earnings per share | $0.75 | $0.83 | -$0.08 | -9.6% | CUBESMART AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) Comprehensive Income Attributable to the Company (in thousands of USD) | Period | 2025 | 2024 | Change | Change % | | :--- | :--- | :--- | :--- | :--- | | Three months ended June 30 | $82,980 | $93,984 | -$11,004 | -11.7% | | Six months ended June 30 | $172,197 | $188,531 | -$16,334 | -8.7% | CUBESMART AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EQUITY Total CubeSmart Shareholders' Equity (in thousands of USD) | Date | Amount | | :--- | :--- | | June 30, 2025 | $2,813,678 | | December 31, 2024 | $2,871,856 | - For the six months ended June 30, 2025, dividends on common shares were $0.52 per share[34] CUBESMART AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Consolidated Statements of Cash Flows Key Data (Six months ended June 30, in thousands of USD) | Activity | 2025 | 2024 | Change | | :--- | :--- | :--- | :--- | | Net cash from operating activities | $303,800 | $321,012 | -$17,212 | | Net cash from investing activities | $(491,395) | $(54,563) | -$436,832 | | Net cash from financing activities | $124,264 | $(267,396) | +$391,660 | | Cash, cash equivalents, and restricted cash at end of period | $14,332 | $7,270 | +$7,062 | - The significant increase in cash used in investing activities was primarily due to the $451.1 million payment to acquire the remaining 80% interest in 191 IV CUBE LLC[36] - Cash from financing activities shifted from a net outflow to a net inflow, mainly driven by a $373.8 million increase in net proceeds from the revolving credit facility[36] CUBESMART, L.P. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS Consolidated Balance Sheet Key Data (in thousands of USD) | Metric | June 30, 2025 | December 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Total assets | $6,709,320 | $6,394,181 | +$315,139 | | Storage properties, net | $6,413,603 | $6,038,186 | +$375,417 | | Cash and cash equivalents | $8,741 | $71,560 | -$62,819 | | Total liabilities | $3,820,046 | $3,440,313 | +$379,733 | | Revolving credit facility | $366,300 | — | +$366,300 | | Total CubeSmart, L.P. capital | $2,813,678 | $2,871,856 | -$58,178 | CUBESMART, L.P. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS Consolidated Statements of Operations Key Data (in thousands of USD, except per unit data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change | Change % | | :--- | :--- | :--- | :--- | :--- | | Total revenues | $282,303 | $266,209 | +$16,094 | +6.0% | | Total operating expenses | $170,413 | $148,754 | +$21,659 | +14.6% | | Net income attributable to CubeSmart, L.P. | $83,361 | $94,488 | -$11,127 | -11.8% | | Basic earnings per unit | $0.36 | $0.42 | -$0.06 | -14.3% | | Diluted earnings per unit | $0.36 | $0.41 | -$0.05 | -12.2% | | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change | Change % | | :--- | :--- | :--- | :--- | :--- | | Total revenues | $555,339 | $527,615 | +$27,724 | +5.3% | | Total operating expenses | $328,571 | $292,133 | +$36,438 | +12.5% | | Net income attributable to CubeSmart, L.P. | $173,011 | $189,556 | -$16,545 | -8.7% | | Basic earnings per unit | $0.75 | $0.83 | -$0.08 | -9.6% | | Diluted earnings per unit | $0.75 | $0.83 | -$0.08 | -9.6% | CUBESMART, L.P. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) Comprehensive Income Attributable to CubeSmart, L.P. (in thousands of USD) | Period | 2025 | 2024 | Change | Change % | | :--- | :--- | :--- | :--- | :--- | | Three months ended June 30 | $83,381 | $94,508 | -$11,127 | -11.8% | | Six months ended June 30 | $173,051 | $189,596 | -$16,545 | -8.7% | CUBESMART, L.P. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CAPITAL Total CubeSmart, L.P. Capital (in thousands of USD) | Date | Amount | | :--- | :--- | | June 30, 2025 | $2,813,678 | | December 31, 2024 | $2,871,856 | - For the six months ended June 30, 2025, distributions on OP Units were $0.52 per unit[45] CUBESMART, L.P. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Consolidated Statements of Cash Flows Key Data (Six months ended June 30, in thousands of USD) | Activity | 2025 | 2024 | Change | | :--- | :--- | :--- | :--- | | Net cash from operating activities | $303,800 | $321,012 | -$17,212 | | Net cash from investing activities | $(491,395) | $(54,563) | -$436,832 | | Net cash from financing activities | $124,264 | $(267,396) | +$391,660 | | Cash, cash equivalents, and restricted cash at end of period | $14,332 | $7,270 | +$7,062 | - The significant increase in cash used in investing activities was primarily due to the $451.1 million payment to acquire the remaining 80% interest in 191 IV CUBE LLC[47] - Cash from financing activities shifted from a net outflow to a net inflow, mainly driven by a $373.8 million increase in net proceeds from the revolving credit facility[47] NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS 1. ORGANIZATION AND NATURE OF OPERATIONS - CubeSmart operates as a self-administered and self-managed real estate investment trust (REIT) through CubeSmart, L.P. and its subsidiaries[48] - As of June 30, 2025, the company owned (or partially owned and consolidated) self-storage properties in the District of Columbia and 25 states, which it operates as a single reportable segment[48] - The Parent Company owns approximately 99.5% of the partnership interests in the Operating Partnership and serves as its sole general partner in an UPREIT structure[49] - The company typically experiences slightly higher store occupancy during the summer months due to increased moving activity[49] 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - The consolidated financial statements are prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP) and SEC rules for interim financial reporting[50] - The Operating Partnership qualifies as a variable interest entity (VIE), and the Parent Company's assets and liabilities primarily represent those of the Operating Partnership[51][52] - All of the Parent Company's debt represents obligations of the Operating Partnership, and the Parent Company guarantees the Operating Partnership's unsecured debt obligations[53] 3. STORAGE PROPERTIES Book Value of Company's Real Estate Assets (in thousands of USD) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Land | $1,703,015 | $1,645,549 | | Buildings and improvements | $6,148,331 | $5,759,848 | | Equipment | $155,294 | $147,709 | | Construction in progress | $49,805 | $33,723 | | Finance lease right-of-use assets | $41,945 | $41,945 | | Storage properties | $8,098,390 | $7,628,774 | | Less: accumulated depreciation | $(1,684,787) | $(1,590,588) | | Storage properties, net | $6,413,603 | $6,038,186 | Summary of Company's Acquisition and Disposition Activities (January 1, 2024 to June 30, 2025) | Year | Asset/Portfolio | Transaction Date | Number of Stores | Transaction Price (in thousands of USD) | | :--- | :--- | :--- | :--- | :--- | | 2025 Acquisitions | HVP IV Assets | February 2025 | 28 | $452,785 | | 2024 Acquisitions | Connecticut Asset | January 2024 | 2 | $20,200 | | | Oregon Asset | November 2024 | 1 | $10,450 | | | Pennsylvania Asset | November 2024 | 1 | $11,500 | | | Hines Portfolio | December 2024 | 14 | $157,250 | 4. INVESTMENT ACTIVITY - On February 20, 2025, the company acquired the remaining 80% interest in HVP IV for $452.8 million, resulting in the consolidation of its 28 stores into the company's financial statements[57] - In December 2024, the company acquired an 85% interest in seven consolidated joint ventures (the Hines Portfolio), which own 14 stores, for approximately $157.3 million[58] - As of June 30, 2025, the company had incurred $39.0 million in development costs for two self-storage projects in New York, with an expected total cost of $45.7 million and completion in Q3 2025[60] Stores Opened from January 1, 2024 to June 30, 2025 | Store Location | Number of Stores | Opening Date | Ownership % | Total Construction Cost (in thousands of USD) | | :--- | :--- | :--- | :--- | :--- | | Astoria, NY | 1 | Q2 2024 | 70% | $45,900 | | Clark, NJ | 1 | Q2 2024 | 90% | $15,900 | 5. INVESTMENTS IN UNCONSOLIDATED REAL ESTATE VENTURES Summary of Investments in Unconsolidated Real Estate Ventures (in thousands of USD) | Unconsolidated Real Estate Venture | Ownership % | Stores at June 30, 2025 | Stores at Dec 31, 2024 | Investment Book Value at June 30, 2025 | Investment Book Value at Dec 31, 2024 | | :--- | :--- | :--- | :--- | :--- | :--- | | Fontana Self Storage, LLC | 50% | 1 | 1 | $13,016 | $13,200 | | Rancho Cucamonga Self Storage, LLC | 50% | 1 | 1 | $19,824 | $20,107 | | 191 V CUBE LLC | 20% | 6 | 6 | $10,490 | $11,353 | | 191 IV CUBE LLC | 20% | - | 28 | — | $14,591 | | CUBE HHF Northeast Venture LLC | 10% | 13 | 13 | $1,287 | $1,469 | | CUBE HHF Limited Partnership | 50% | 28 | 28 | $30,023 | $31,253 | | Total | | 49 | 77 | $74,640 | $91,973 | - HVP IV was consolidated on February 20, 2025, after the company acquired the remaining 80% interest and is no longer listed as an unconsolidated joint venture[64][65] Summary of Financial Position of Unconsolidated Ventures (in thousands of USD) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Storage properties, net | $374,458 | $684,067 | | Total assets | $388,442 | $701,193 | | Debt | $251,838 | $472,633 | | CubeSmart's equity | $44,091 | $60,993 | Summary of Operating Results of Unconsolidated Ventures (in thousands of USD) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Total revenues | $14,296 | $24,840 | $34,418 | $49,426 | | Net income | $843 | $205 | $714 | $2,120 | | Company's share of net income | $547 | $425 | $926 | $1,270 | 6. OTHER ASSETS Composition of Other Assets (in thousands of USD) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Intangible assets, net | $25,962 | $10,332 | | Accounts receivable, net | $9,907 | $10,372 | | Prepaid property taxes | $7,429 | $9,272 | | Prepaid insurance | $9,962 | $5,768 | | Due from related parties | $24,648 | $18,866 | | Assets related to deferred compensation arrangements | $65,108 | $63,761 | | Operating lease right-of-use assets | $48,920 | $49,435 | | Ground lease receivable | — | $6,249 | | Notes receivable | $5,000 | $5,000 | | Other | $7,711 | $4,573 | | Total other assets, net | $204,647 | $183,628 | - On October 8, 2024, the company provided a $5.0 million loan to the owner of a third-party managed store at an annual interest rate of 10.00%, maturing on May 7, 2026[71] 7. UNSECURED SENIOR NOTES Summary of Unsecured Senior Notes (in thousands of USD) | Unsecured Senior Notes | June 30, 2025 | December 31, 2024 | Effective Interest Rate | Issue Date | Maturity Date | | :--- | :--- | :--- | :--- | :--- | :--- | | $300M 4.000% Guaranteed Notes due 2025 | $300,000 | $300,000 | 3.99% | Various | November 2025 | | $300M 3.125% Guaranteed Notes due 2026 | $300,000 | $300,000 | 3.18% | August 2016 | September 2026 | | $550M 2.250% Guaranteed Notes due 2028 | $550,000 | $550,000 | 2.33% | November 2021 | December 2028 | | $350M 4.375% Guaranteed Notes due 2029 | $350,000 | $350,000 | 4.46% | January 2019 | February 2029 | | $350M 3.000% Guaranteed Notes due 2030 | $350,000 | $350,000 | 3.04% | October 2019 | February 2030 | | $450M 2.000% Guaranteed Notes due 2031 | $450,000 | $450,000 | 2.10% | October 2020 | February 2031 | | $500M 2.500% Guaranteed Notes due 2032 | $500,000 | $500,000 | 2.59% | November 2021 | February 2032 | | Total principal outstanding | $2,800,000 | $2,800,000 | | | | | Less: Discount on issuance of unsecured senior notes, net | $(7,668) | $(8,495) | | | | | Less: Loan procurement costs, net | $(9,631) | $(10,874) | | | | | Total unsecured senior notes, net | $2,782,701 | $2,780,631 | | | | - For the three and six months ended June 30, 2025, the Operating Partnership was in compliance with all financial covenants under the unsecured senior notes[74] 8. REVOLVING CREDIT FACILITY - The company amended its unsecured credit agreement on October 26, 2022, which includes an $850 million unsecured revolving credit facility maturing on February 15, 2027[75] - As of June 30, 2025, the borrowing rate under the revolving credit facility was 5.48%, with $483.1 million of available borrowing capacity[76] - For the three and six months ended June 30, 2025, the Operating Partnership was in compliance with all financial covenants under the credit agreement[77] 9. MORTGAGE LOANS AND NOTES PAYABLE Summary of Mortgage Loans and Notes Payable (in thousands of USD) | Mortgage Loans and Notes Payable | Book Value at June 30, 2025 | Book Value at Dec 31, 2024 | Effective Interest Rate | Maturity Date | | :--- | :--- | :--- | :--- | :--- | | Long Island City II, NY | $17,126 | $17,368 | 2.25% | July 2026 | | Long Island City III, NY | $17,127 | $17,371 | 2.25% | August 2026 | | Allen, TX | $7,328 | $7,432 | 6.29% | August 2026 | | Dallas-Fort Worth, TX | $108,000 | $108,000 | 6.23% | May 2029 | | Flushing II, NY | $54,300 | $54,300 | 2.15% | July 2029 | | Total principal outstanding | $203,881 | $204,471 | | | | Add: Unamortized fair value adjustment | $5,331 | $6,137 | | | | Less: Loan procurement costs, net | $(4,120) | $(4,693) | | | | Total mortgage loans and notes payable, net | $205,092 | $205,915 | | | - As of June 30, 2025, the company's mortgage loans were secured by self-storage properties with a net book value of approximately $399.7 million[79] Future Principal Repayment Requirements for Mortgage Loans and Notes Payable as of June 30, 2025 (in thousands of USD) | Year | Amount | | :--- | :--- | | 2025 | $595 | | 2026 | $40,986 | | 2027 | — | | 2028 | — | | 2029 | $162,300 | | 2030 and thereafter | — | | Total principal repayments | $203,881 | 10. ACCUMULATED OTHER COMPREHENSIVE LOSS - Accumulated other comprehensive loss represents the unrealized loss on interest rate swaps[80] Summary of Changes in Accumulated Other Comprehensive Loss (Six months ended June 30, 2025, in thousands of USD) | Metric | June 30, 2025 | | :--- | :--- | | Beginning balance at December 31, 2024 | $(332) | | Reclassification of realized loss on interest rate swaps | $40 | | Ending balance at June 30, 2025 | $(292) | | Less: Portion included in noncontrolling interests in the Operating Partnership | $2 | | Total accumulated other comprehensive loss included in equity | $(290) | 11. RISK MANAGEMENT AND USE OF FINANCIAL INSTRUMENTS - The company uses derivative instruments, such as interest rate swap agreements, solely to manage interest rate risk exposure, not for speculative purposes[83] - As of June 30, 2025, and December 31, 2024, all derivative instruments entered into by the company had been settled[84] - In January 2019, the company settled an interest rate swap agreement for $0.8 million, with the termination premium being reclassified to interest expense over the life of the 2029 notes[86] - For the three and six months ended June 30, 2025, the reclassification of unrealized losses on interest rate swaps increased interest expense by $20 thousand and $40 thousand, respectively[86] 12. FAIR VALUE MEASUREMENTS - The company uses a fair value hierarchy (Level 1, 2, and 3) to measure financial assets and liabilities, prioritizing observable inputs[87][88][89] Carrying Value and Estimated Fair Value of Company's Debt (in thousands of USD) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Carrying Value | $3,354,093 | $2,986,546 | | Fair Value | $3,170,176 | $2,728,503 | - The fair value of debt is estimated based on a discounted cash flow analysis using market rates for comparable debt and is classified as Level 2 in the fair value hierarchy[90][92] 13. NONCONTROLLING INTERESTS Summary of Company's Consolidated Joint Ventures (As of June 30, 2025, in thousands of USD) | Consolidated Joint Venture | Number of Stores | Ownership % | Total Assets | Total Liabilities | Related Party Loan | | :--- | :--- | :--- | :--- | :--- | :--- | | Hines Capital | 14 | 85% | $178,906 | $117,260 | — | | New Rochelle Investors, LLC | 1 | 70% | $38,191 | $15,322 | $13,096 | | 1074 Raritan Road, LLC | 1 | 90% | $15,526 | $10,832 | $10,601 | | 350 Main Street, LLC | 1 | 90% | $15,748 | $9,278 | $7,882 | | Astoria Investors, LLC | 1 | 70% | $44,832 | $30,740 | $29,955 | | CS Lock Up Anoka, LLC | 1 | 50% | $9,461 | $5,575 | $5,535 | | CS Valley Forge Village Storage, LLC | 1 | 70% | $18,175 | $14,882 | $14,792 | | CS Vienna, LLC | 1 | 80% | $28,899 | $34,873 | $34,193 | | SH3, LLC | 1 | 90% | $35,889 | $326 | — | | Total | 22 | | $385,627 | $239,088 | $116,054 | - As of June 30, 2025, and December 31, 2024, third parties held 1,103,240 and 1,194,705 Operating Partnership Units (OP Units), respectively[94] - The redemption value of the 1,103,240 OP Units held by third parties totaled $46.9 million as of June 30, 2025[94] 14. SEGMENT INFORMATION - The company operates in a single business segment: the ownership, operation, development, management, and acquisition of self-storage properties[95] - The company's Chief Operating Decision Maker (CODM) is the CEO, who manages the company on a consolidated basis and uses net income as the measure of segment profit or loss[97][98][100] Self-Storage Segment Revenues and Significant Segment-Level Expenses (Six months ended June 30, in thousands of USD) | Metric | 2025 | 2024 | Change | Change % | | :--- | :--- | :--- | :--- | :--- | | Total revenues | $555,339 | $527,615 | +$27,724 | +5.3% | | Property taxes | $60,266 | $54,048 | +$6,218 | +11.5% | | Personnel expenses | $43,784 | $44,668 | -$884 | -2.0% | | Advertising | $14,407 | $12,016 | +$2,391 | +19.9% | | Total property operating expenses | $171,962 | $160,134 | +$11,828 | +7.4% | | Depreciation and amortization | $125,644 | $101,752 | +$23,892 | +23.5% | | Interest expense on loans | $55,190 | $45,686 | +$9,504 | +20.8% | | Net income | $171,177 | $189,044 | -$17,867 | -9.5% | 15. COMMITMENTS AND CONTINGENCIES - The company has agreements with developers to construct two new self-storage properties, with an expected payment of approximately $10.0 million in 2025[103] - The company is involved in claims arising from the ordinary course of business, for which management believes adequate provisions have been made[104] 16. RELATED PARTY TRANSACTIONS Related Party Management Fee Revenue (in thousands of USD) | Period | 2025 | 2024 | Change | Change % | | :--- | :--- | :--- | :--- | :--- | | Three months ended June 30 | $600 | $1,200 | -$600 | -50.0% | | Six months ended June 30 | $1,500 | $2,400 | -$900 | -37.5% | Due from Related Parties (in thousands of USD) | Date | Amount | | :--- | :--- | | June 30, 2025 | $24,648 | | December 31, 2024 | $18,866 | - As of June 30, 2025, the company had outstanding mortgage receivables of $116.1 million from its consolidated joint ventures[106] - For the six months ended June 30, 2025, the company recognized $0.1 million in ground lease income[108] 17. EARNINGS PER SHARE AND UNIT AND SHAREHOLDERS' EQUITY AND CAPITAL Earnings Per Share Attributable to Company Common Shareholders (in thousands of USD, except per share amounts) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Basic EPS | $0.36 | $0.42 | | Diluted EPS | $0.36 | $0.41 | | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Basic EPS | $0.75 | $0.83 | | Diluted EPS | $0.75 | $0.83 | - For the three months ended June 30, 2025, dividends declared per common share were $0.52[109] Earnings Per Unit Attributable to CubeSmart, L.P. (in thousands of USD, except per unit amounts) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Basic EPU | $0.36 | $0.42 | | Diluted EPU | $0.36 | $0.41 | | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Basic EPU | $0.75 | $0.83 | | Diluted EPU | $0.75 | $0.83 | Summary of OP Units Outstanding | Category | As of June 30, 2025 | As of June 30, 2024 | | :--- | :--- | :--- | | OP Units outstanding held by third parties | 1,103,240 | 1,238,205 | | OP Units outstanding held by the General Partner | 228,033,843 | 225,196,862 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's analysis of the company's financial condition and results of operations Overview - The company is an integrated self-storage real estate company with capabilities in design, development, acquisition, operation, leasing, and management of self-storage properties[115] - As of June 30, 2025, the company owned (or partially owned and consolidated) 659 self-storage properties totaling approximately 48.1 million rentable square feet and managed 873 stores for third parties, for a total of 1,532 stores[115] - The company's operating performance depends on retaining existing customers, leasing available space to new customers, and maintaining or increasing pricing levels[116] - The company continues to focus on maximizing internal growth opportunities and selectively pursuing targeted acquisitions and developments of self-storage properties[119] - For the six months ended June 30, 2025, stores in New York, Florida, Texas, and California contributed approximately 17%, 14%, 11%, and 10% of total revenues, respectively[121] Summary of Critical Accounting Policies and Estimates - The consolidated financial statements include all accounts of the company and its majority-owned and/or controlled subsidiaries, with the portion not owned by the company presented as noncontrolling interests[123] - The company records self-storage properties at cost less accumulated depreciation, with the purchase price allocated to tangible and intangible assets based on estimated relative fair values[125][126] - The company reviews long-lived assets for impairment when events indicate that their carrying value may not be recoverable; no impairment losses were recognized for the periods ended June 30, 2025 and 2024[129] - The company accounts for its investments in unconsolidated real estate joint ventures using the equity method and assesses them for other-than-temporary impairment; no impairment losses were recognized for the periods ended June 30, 2025 and 2024[132] Results of Operations Acquisition and Development Activities Change in Number of Owned (or partially owned and consolidated) Stores (January 1, 2024 to June 30, 2025) | Date | Number of Stores | | :--- | :--- | | Balance at January 1, 2024 | 631 | | Stores acquired in 2025 | 28 | | Stores developed in 2024 | 2 | | Stores acquired in 2024 | 16 | | Balance at June 30, 2025 | 659 | Comparison of the three months ended June 30, 2025 to the three months ended June 30, 2024 Comparison of Results of Operations (Three months ended June 30, in thousands of USD) | Metric | 2025 | 2024 | Change | Change % | | :--- | :--- | :--- | :--- | :--- | | Total revenues | $282,303 | $266,209 | +$16,094 | +6.0% | | Property operating expenses | $89,028 | $83,097 | +$5,931 | +7.1% | | Depreciation and amortization | $66,488 | $51,035 | +$15,453 | +30.3% | | Interest expense on loans | $29,090 | $22,767 | +$6,323 | +27.8% | | Net income | $82,432 | $94,186 | -$11,754 | -12.5% | | Net income attributable to Company common shareholders | $82,960 | $93,964 | -$11,004 | -11.7% | - The increase in total revenues was primarily attributable to additional revenue from the non-same-store portfolio of properties acquired or opened in 2024 and 2025[142] - The increase in interest expense on loans was due to a higher average outstanding debt balance (from $2.96 billion to $3.43 billion) and a higher weighted-average effective interest rate (from 3.01% to 3.32%) during the 2025 period[145] Same-Store Portfolio Performance (Three months ended June 30) | Metric | 2025 | 2024 | Change | Change % | | :--- | :--- | :--- | :--- | :--- | | Rental income | $222,645 | $224,165 | $(1,520) | (0.7)% | | Other property related revenues | $12,043 | $11,634 | $409 | 3.5% | | Total revenues | $234,688 | $235,799 | $(1,111) | (0.5)% | | Property operating expenses | $69,366 | $68,569 | $797 | 1.2% | | Net operating income (NOI) | $165,322 | $167,230 | $(1,908) | (1.1)% | | Occupancy at period-end | 91.1% | 91.8% | -0.7% | | | Annualized realized rent per sq. ft. | $22.45 | $22.41 | +$0.04 | | | Number of stores | 606 | 606 | | | Comparison of the six months ended June 30, 2025 to the six months ended June 30, 2024 Comparison of Results of Operations (Six months ended June 30, in thousands of USD) | Metric | 2025 | 2024 | Change | Change % | | :--- | :--- | :--- | :--- | :--- | | Total revenues | $555,339 | $527,615 | +$27,724 | +5.3% | | Property operating expenses | $171,962 | $160,134 | +$11,828 | +7.4% | | Depreciation and amortization | $125,644 | $101,752 | +$23,892 | +23.5% | | Interest expense on loans | $55,190 | $45,686 | +$9,504 | +20.8% | | Net income | $171,177 | $189,044 | -$17,867 | -9.5% | | Net income attributable to Company common shareholders | $172,157 | $188,491 | -$16,334 | -8.7% | - The increase in total revenues was primarily attributable to additional revenue from the non-same-store portfolio of properties acquired or opened in 2024 and 2025[150] - The increase in interest expense on loans was due to a higher average outstanding debt balance (from $2.98 billion to $3.31 billion) and a higher weighted-average effective interest rate (from 3.02% to 3.25%) during the 2025 period[154] Same-Store Portfolio Performance (Six months ended June 30) | Metric | 2025 | 2024 | Change | Change % | | :--- | :--- | :--- | :--- | :--- | | Rental income | $443,557 | $446,904 | $(3,347) | (0.7)% | | Other property related revenues | $22,541 | $21,141 | $1,400 | 6.6% | | Total revenues | $466,098 | $468,045 | $(1,947) | (0.4)% | | Property operating expenses | $135,404 | $134,189 | $1,215 | 0.9% | | Net operating income (NOI) | $330,694 | $333,856 | $(3,162) | (0.9)% | | Occupancy at period-end | 91.1% | 91.8% | -0.7% | | | Annualized realized rent per sq. ft. | $22.50 | $22.51 | $(0.01) | | | Number of stores | 606 | 606 | | | Cash Flows Comparison of Cash Flows (Six months ended June 30, in thousands of USD) | Activity | 2025 | 2024 | Change | | :--- | :--- | :--- | :--- | | Net cash from operating activities | $303,800 | $321,012 | $(17,212) | | Net cash from investing activities | $(491,395) | $(54,563) | $(436,832) | | Net cash from financing activities | $124,264 | $(267,396) | $391,660 | - The decrease in cash flow from operating activities was primarily due to the timing and amount of payments for certain accounts payable and accrued expenses[155] - The increase in cash used in investing activities was mainly due to the $451.1 million payment to acquire the remaining 80% interest in 191 IV CUBE LLC[156] - The shift in cash flow from financing activities from a net outflow in 2024 to a net inflow in 2025 was primarily due to a $373.8 million increase in net proceeds from the revolving credit facility[157] Liquidity and Capital Resources Liquidity Overview - The company's primary source of liquidity is cash flow from operating activities, which is used to fund debt service, distributions, and capital expenditures[158] - As a REIT, the company is required to distribute at least 90% of its REIT taxable income annually, creating significant short-term and long-term liquidity needs[159] - For the remainder of fiscal 2025, expected recurring capital expenditures are $5.5 million to $10.5 million, planned capital improvements are $5.0 million to $10.0 million, and new store development costs are $9.0 million to $14.0 million[160][161] - Scheduled principal repayments on outstanding debt for the remainder of 2025 are approximately $300.6 million[162] - As of June 30, 2025, the company had approximately $8.7 million in available cash and cash equivalents and $483.1 million available for borrowing under its revolving credit facility[166] Unsecured Senior Notes Summary of Unsecured Senior Notes (in thousands of USD) | Unsecured Senior Notes | June 30, 2025 | December 31, 2024 | Effective Interest Rate | Issue Date | Maturity Date | | :--- | :--- | :--- | :--- | :--- | :--- | | $300M 4.000% Guaranteed Notes due 2025 | $300,000 | $300,000 | 3.99% | Various | November 2025 | | $300M 3.125% Guaranteed Notes due 2026 | $300,000 | $300,000 | 3.18% | August 2016 | September 2026 | | $550M 2.250% Guaranteed Notes due 2028 | $550,000 | $550,000 | 2.33% | November 2021 | December 2028 | | $350M 4.375% Guaranteed Notes due 2029 | $350,000 | $350,000 | 4.46% | January 2019 | February 2029 | | $350M 3.000% Guaranteed Notes due 2030 | $350,000 | $350,000 | 3.04% | October 2019 | February 2030 | | $450M 2.000% Guaranteed Notes due 2031 | $450,000 | $450,000 | 2.10% | October 2020 | February 2031 | | $500M 2.500% Guaranteed Notes due 2032 | $500,000 | $500,000 | 2.59% | November 2021 | February 2032 | | Total principal outstanding | $2,800,000 | $2,800,000 | | | | | Less: Discount on issuance of unsecured senior notes, net | $(7,668) | $(8,495) | | | | | Less: Loan procurement costs, net | $(9,631) | $(10,874) | | | | | Total unsecured senior notes, net | $2,782,701 | $2,780,631 | | | | - For the three and six months ended June 30, 2025, the Operating Partnership was in compliance with all financial covenants under the unsecured senior notes[169] Revolving Credit Facility - The company amended and restated its unsecured credit agreement, which includes an $850 million unsecured revolving credit facility maturing on February 15, 2027[170] - As of June 30, 2025, the borrowing rate under the revolving credit facility was 5.48%, with $483.1 million of available borrowing capacity[171] - For the three and six months ended June 30, 2025, the Operating Partnership was in compliance with all financial covenants under the credit agreement[172] Mortgage Loans and Notes Payable Summary of Mortgage Loans and Notes Payable (in thousands of USD) | Mortgage Loans and Notes Payable | Book Value at June 30, 2025 | Book Value at Dec 31, 2024 | Effective Interest Rate | Maturity Date | | :--- | :--- | :--- | :--- | :--- | | Long Island City II, NY | $17,126 | $17,368 | 2.25% | July 2026 | | Long Island City III, NY | $17,127 | $17,371 | 2.25% | August 2026 | | Allen, TX | $7,328 | $7,432 | 6.29% | August 2026 | | Dallas-Fort Worth, TX | $108,000 | $108,000 | 6.23% | May 2029 | | Flushing II, NY | $54,300 | $54,300 | 2.15% | July 2029 | | Total principal outstanding | $203,881 | $204,471 | | | | Add: Unamortized fair value adjustment | $5,331 | $6,137 | | | | Less: Loan procurement costs, net | $(4,120) | $(4,693) | | | | Total mortgage loans and notes payable, net | $205,092 | $205,915 | | | At-the-Market Equity Program - The company launched a new at-the-market equity program on March 3, 2025, allowing for the sale of up to 13,510,817 CubeSmart common shares[174] - As of June 30, 2025, no common shares had been sold under the new program[175] - Net proceeds from the program will be used for working capital and general corporate purposes[175] Non-GAAP Financial Measures NOI - Net Operating Income (NOI) is defined as total continuing revenues less continuing property operating expenses and is a key metric for measuring store-level operating performance[176][177] - NOI should not be considered a substitute for operating income or net income and has limitations, including difficulty in comparing results across companies[177][178] FFO - Funds from Operations (FFO) is a widely used performance measure for real estate companies, defined as net income excluding gains or losses from property sales, plus real estate depreciation and amortization[180] - Management uses FFO as a key performance indicator to evaluate store-level operations, as it excludes certain expenses not relevant to operating performance[181] - FFO should not be considered an alternative to net income and does not represent cash generated from operating activities or the company's ability to make cash distributions[182] FFO Attributable to Company Common Shareholders and Third-Party OP Unitholders (in thousands of USD) | Period | 2025 | 2024 | Change | Change % | | :--- | :--- | :--- | :--- | :--- | | Three months ended June 30 | $148,912 | $145,970 | +$2,942 | +2.0% | | Six months ended June 30 | $297,061 | $292,379 | +$4,682 | +1.6% | Off-Balance Sheet Arrangements - The company has no off-balance sheet arrangements or relationships with unconsolidated entities other than its co-investment partnerships that have not been discussed in the report[185] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section discloses the company's market risks, particularly interest rate risk, and its strategies for managing these risks Market Risk - The company's investment policy for cash and cash equivalents is to preserve principal and liquidity while maximizing returns on available funds[188] - The company's interest rate risk objective is to limit the impact of interest rate fluctuations on earnings and cash flows and to lower overall borrowing costs[189] Effect of Changes in Interest Rates on our Outstanding Debt - As of June 30, 2025, the company's consolidated debt included $3.0 billion of fixed-rate debt and $366.3 million of variable-rate borrowings[190] - A 100 basis point increase in market interest rates on variable-rate debt would increase annual interest expense by approximately $3.7 million[191] - A 100 basis point decrease in market interest rates on variable-rate debt would decrease annual interest expense by approximately $3.7 million[191] - A 100 basis point increase in market interest rates would decrease the fair value of fixed-rate debt by approximately $96.7 million[192] - A 100 basis point decrease in market interest rates would increase the fair value of fixed-rate debt by approximately $101.0 million[192] Item 4. Controls and Procedures This section confirms the effectiveness of disclosure controls and procedures for both CubeSmart and CubeSmart, L.P Controls and Procedures (Parent Company) - As of the end of the reporting period, the Parent Company's management evaluated the effectiveness of its disclosure controls and procedures[193] - The evaluation concluded that the Parent Company's disclosure controls and procedures were effective at a reasonable assurance level[194] - There were no material changes to the Parent Company's internal control over financial reporting during the most recent fiscal quarter[196] Controls and Procedures (Operating Partnership) - As of the end of the reporting period, the Operating Partnership's management evaluated the effectiveness of its disclosure controls and procedures[197] - The evaluation concluded that the Operating Partnership's disclosure controls and procedures were effective at a reasonable assurance level[198] - There were no material changes to the Operating Partnership's internal control over financial reporting during the most recent fiscal quarter[199] Part II. OTHER INFORMATION Item 1. Legal Proceedings This section states that the company has no ongoing legal proceedings expected to have a material adverse effect on its financial condition - The company has no ongoing legal proceedings that are expected to have a material adverse effect on its financial condition, results of operations, or cash flows[200] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section discloses the repurchase of common shares and the issuance of unregistered equity securities Repurchases of Parent Company Common Shares Repurchases of Parent Company Common Shares (Three months ended June 30, 2025) | Period | Total Number of Shares Repurchased | Average Price Paid per Share | | :--- | :--- | :--- | | April 1 - April 30 | 4,351 | $42.03 | | May 1 - May 31 | — | — | | June 1 - June 30 | — | — | | Total | 4,351 | $42.03 | - The repurchased shares represent common shares withheld by the Parent Company to satisfy employee tax obligations upon the vesting of restricted shares[202] - The Board of Directors approved a repurchase program for up to 3.0 million common shares in June 2007, but no repurchases have been made under this program to date[202] Unregistered Sales of Equity Securities - During the three months ended June 30, 2025, the Parent Company issued 38,965 common shares to redeem an equivalent number of OP Units held by limited partners, exempt from registration under Section 4(a)(2) of the Securities Act of 1933[203] Item 5. Other Information This section covers trading arrangements for directors and executives, as well as recent changes to tax law Trading Arrangements - During the three months ended June 30, 2025, no director or executive officer of the company adopted or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangement[204] Tax Law Changes - On July 4, 2025, the "One Big Beautiful Bill Act" (OBBBA) was signed into law, making significant changes to U.S. federal income tax law[205] - OBBBA permanently extends the 20% deduction for "qualified REIT dividends" for individuals and other non-corporate taxpayers[205] - For taxable years beginning after December 31, 2025, OBBBA increases the REIT asset test percentage limit for taxable REIT subsidiaries (TRSs) from 20% to 25%[205] - For taxable years beginning after December 31, 2024, OBBBA restores the exclusion of depreciation, depletion, and amortization from adjusted taxable income when calculating the net interest expense deduction[205][206] Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including incentive plans, officer certifications, and financial information in Inline XBRL format - Exhibits include the amended and restated CubeSmart 2007 Equity Incentive Plan, various certifications by the CEO and CFO of CubeSmart and CubeSmart, L.P., and financial information in Inline XBRL format[209] Signatures The report was duly signed by the company's executive officers on August 1, 2025 - The reports for both CubeSmart and CubeSmart, L.P. were signed on August 1, 2025, by Christopher P. Marr (CEO), Timothy M. Martin (CFO), and Matthew D. DeNarie (CAO)[214][217]