CubeSmart(CUBE) - 2024 Q1 - Quarterly Report

FORM 10-Q Common Shares Outstanding (As of April 24, 2024) | Category | Shares Outstanding as of April 24, 2024 | | :----------- | :-------------------------------------- | | Common Stock | 224,972,363 | EXPLANATORY NOTE - This report consolidates the quarterly reports of CubeSmart (the Parent Company, a REIT) and CubeSmart, L.P. (the Operating Partnership) to provide a comprehensive business view, reduce redundant disclosures, and enhance efficiency[23][24][43] - The Parent Company is the sole general partner of the Operating Partnership, holding a 99.4% interest as of March 31, 2024[19] - The Operating Partnership holds most of the company's assets and conducts its business, while the Parent Company primarily acts as the general partner, issuing public equity and guaranteeing the Operating Partnership's debt[42] Forward-Looking Statements - This report contains forward-looking statements based on assumptions and expectations that may not be realized, subject to various risks, uncertainties, and other factors that could cause actual results to differ materially from expectations[30] - Key risks include adverse changes in economic conditions, increased competition, failure to execute business plans, pandemic impacts, reduced capital availability and increased costs, rising interest rates, financing risks, REIT qualification maintenance risks, acquisition and development failures, increased taxes, non-performance by joint venture partners, asset valuation declines, and cybersecurity breaches[49][32] Part I. FINANCIAL INFORMATION Item 1. Financial Statements This section presents the unaudited consolidated financial statements for CubeSmart and its subsidiaries, including balance sheets, statements of operations, comprehensive income, equity, and cash flows, along with corresponding statements for CubeSmart, L.P. and its subsidiaries, accompanied by detailed notes explaining organizational structure, accounting policies, and financial specifics Consolidated Balance Sheets (CubeSmart and Subsidiaries) Consolidated Balance Sheet Key Data (in thousands USD) | Metric | March 31, 2024 | December 31, 2023 | | :----------------------- | :------------- | :---------------- | | Total Assets | 6,208,888 | 6,225,020 | | Total Liabilities | 3,346,849 | 3,344,212 | | Total Equity | 2,803,786 | 2,820,532 | | Storage Properties, Net | 5,938,734 | 5,951,236 | | Cash and Cash Equivalents| 5,587 | 6,526 | Consolidated Statements of Operations (CubeSmart and Subsidiaries) Consolidated Statements of Operations Key Data (For the Three Months Ended March 31, in thousands USD) | Metric | 2024 | 2023 | | :--------------------------------------- | :------ | :------ | | Total Revenue | 261,406 | 256,528 | | Operating Expenses | 143,379 | 136,130 | | Net Income | 94,858 | 97,942 | | Net Income Attributable to Company Common Shareholders | 94,527 | 97,566 | | Basic Earnings Per Share | 0.42 | 0.43 | | Diluted Earnings Per Share | 0.42 | 0.43 | Consolidated Statements of Comprehensive Income (Loss) (CubeSmart and Subsidiaries) Consolidated Statements of Comprehensive Income (Loss) Key Data (For the Three Months Ended March 31, in thousands USD) | Metric | 2024 | 2023 | | :----------------------- | :----- | :----- | | Net Income | 94,858 | 97,942 | | Other Comprehensive Income | 20 | 20 | | Comprehensive Income | 94,878 | 97,962 | Consolidated Statements of Equity (CubeSmart and Subsidiaries) Consolidated Statements of Equity Key Data (in thousands USD) | Metric | Balance as of December 31, 2023 | Balance as of March 31, 2024 | | :------------------------------- | :------------------------------ | :--------------------------- | | Total CubeSmart Shareholders' Equity | 2,798,828 | 2,782,108 | | Noncontrolling Interests (Subsidiaries) | 21,704 | 21,678 | | Total Equity | 2,820,532 | 2,803,786 | Consolidated Statements of Cash Flows (CubeSmart and Subsidiaries) Consolidated Statements of Cash Flows Key Data (For the Three Months Ended March 31, in thousands USD) | Activity | 2024 | 2023 | | :----------------------------------------------- | :-------- | :-------- | | Net Cash Provided by Operating Activities | 150,150 | 136,706 | | Net Cash Used in Investing Activities | (34,220) | (25,560) | | Net Cash Used in Financing Activities | (116,534) | (111,289) | | Cash and Cash Equivalents and Restricted Cash, End of Period | 7,613 | 8,782 | Consolidated Balance Sheets (CubeSmart, L.P. and Subsidiaries) Consolidated Balance Sheet Key Data (in thousands USD) | Metric | March 31, 2024 | December 31, 2023 | | :----------------------- | :------------- | :---------------- | | Total Assets | 6,208,888 | 6,225,020 | | Total Liabilities | 3,346,849 | 3,344,212 | | Total Capital | 2,803,786 | 2,820,532 | | Storage Properties, Net | 5,938,734 | 5,951,236 | | Cash and Cash Equivalents| 5,587 | 6,526 | Consolidated Statements of Operations (CubeSmart, L.P. and Subsidiaries) Consolidated Statements of Operations Key Data (For the Three Months Ended March 31, in thousands USD) | Metric | 2024 | 2023 | | :--------------------------------------- | :------ | :------ | | Total Revenue | 261,406 | 256,528 | | Operating Expenses | 143,379 | 136,130 | | Net Income | 94,858 | 97,942 | | Net Income Attributable to CubeSmart, L.P. | 95,068 | 98,180 | | Basic Earnings Per Unit | 0.42 | 0.43 | | Diluted Earnings Per Unit | 0.42 | 0.43 | Consolidated Statements of Comprehensive Income (Loss) (CubeSmart, L.P. and Subsidiaries) Consolidated Statements of Comprehensive Income (Loss) Key Data (For the Three Months Ended March 31, in thousands USD) | Metric | 2024 | 2023 | | :----------------------- | :----- | :----- | | Net Income | 94,858 | 97,942 | | Other Comprehensive Income | 20 | 20 | | Comprehensive Income | 94,878 | 97,962 | Consolidated Statements of Capital (CubeSmart, L.P. and Subsidiaries) Consolidated Statements of Capital Key Data (in thousands USD) | Metric | Balance as of December 31, 2023 | Balance as of March 31, 2024 | | :------------------------------- | :------------------------------ | :--------------------------- | | Total CubeSmart, L.P. Capital | 2,798,828 | 2,782,108 | | Noncontrolling Interests (Subsidiaries) | 21,704 | 21,678 | | Total Capital | 2,820,532 | 2,803,786 | Notes to Unaudited Consolidated Financial Statements 1. Organization and Nature of Operations - CubeSmart operates as a self-managed and self-administered real estate investment trust (REIT), conducting its business through CubeSmart, L.P. and its subsidiaries[8] - As of March 31, 2024, the company owned (or partially owned and consolidated) self-storage properties in the District of Columbia and 24 states, operating as one reportable business segment[8] - The company typically experiences seasonal fluctuations in property occupancy, with slightly higher occupancy rates during summer months due to increased moving activity[98] 2. Summary of Significant Accounting Policies - The unaudited consolidated financial statements are prepared in accordance with SEC rules and regulations for interim financial reporting, including all necessary adjustments for a fair presentation of financial position, results of operations, and cash flows[99] - The company records self-storage properties at cost less accumulated depreciation, with depreciation for buildings, improvements, and equipment recognized on a straight-line basis over estimated useful lives of 5 to 39 years[204] - Upon property acquisition, the purchase price is allocated to acquired tangible and intangible assets and assumed liabilities based on their estimated relative fair values[183] - Long-lived assets are reviewed for impairment when indicators such as declining occupancy and poor operating performance arise, and are evaluated based on their recoverability[184] - Investments in unconsolidated real estate ventures are accounted for using the equity method, with regular assessments for other-than-temporary impairment[208] - ASU No. 2023-07—Segment Reporting (Topic 280), issued in November 2023, is not expected to have a material impact on the company's consolidated financial statements[122] 3. Storage Properties Summary of Storage Property Carrying Values (in thousands USD) | Metric | March 31, 2024 | December 31, 2023 | | :----------------------------- | :------------- | :---------------- | | Land | 1,599,314 | 1,594,742 | | Buildings and Improvements | 5,542,740 | 5,517,544 | | Equipment | 141,954 | 144,372 | | Construction in Progress | 71,635 | 69,010 | | Right-of-Use Assets - Finance Leases | 41,945 | 41,945 | | Total Storage Properties | 7,397,588 | 7,367,613 | | Less: Accumulated Depreciation | (1,458,854) | (1,416,377) | | Storage Properties, Net | 5,938,734 | 5,951,236 | 4. Investment Activity - In the first quarter of 2024, the company acquired two properties in Connecticut for a total purchase price of $20.2 million, including $0.9 million in intangible assets (in-place leases)[5][125] - In 2023, the company acquired one property in New Jersey for $22 million, recognizing approximately $0.5 million in amortization expense[126] - In 2023, the company sold the California Yacht Club for $0.8 million, recognizing a $0.2 million loss; additionally, an Illinois property was involuntarily condemned for $8 million, resulting in a $4.8 million gain[127][302] - As of March 31, 2024, the company had invested in four consolidated joint ventures for self-storage properties, with accumulated development costs of $57.3 million and estimated total construction costs of $109.7 million[128] 5. Investment in Unconsolidated Real Estate Ventures Summary of Investments in Unconsolidated Real Estate Ventures (As of March 31, 2024) | Joint Venture Name | CubeSmart Ownership Percentage | Number of Properties (March 31, 2024) | Investment Carrying Value (in thousands USD, March 31, 2024) | | :--------------------------------- | :----------------------------- | :------------------------------------ | :----------------------------------------------------------- | | Fontana Self Storage, LLC | 50% | 1 | 13,461 | | Rancho Cucamonga Self Storage, LLC | 50% | 1 | 20,524 | | 191 V CUBE LLC (HVP V) | 20% | 6 | 12,628 | | 191 IV CUBE LLC (HVP IV) | 20% | 28 | 16,385 | | CUBE HHF Northeast Venture LLC (HHFNE) | 10% | 13 | 909 | | CUBE HHF Limited Partnership (HHF) | 50% | 28 | 32,320 | | Total | | 77 | 96,227 | - The company's share of earnings from unconsolidated real estate ventures decreased from $2.6 million in Q1 2023 to $0.8 million in Q1 2024, a $1.7 million (66.9%) reduction, primarily due to an excess distribution from HVPSE in Q1 2023[108][215] Summary of Unconsolidated Real Estate Ventures Operating Results (For the Three Months Ended March 31, in thousands USD) | Metric | 2024 | 2023 | | :----------------------- | :----- | :----- | | Total Revenue | 24,586 | 24,064 | | Net Income | 1,915 | 1,620 | | Company's Share of Net Income | 845 | 2,551 | 6. Other Assets Composition of Other Assets (in thousands USD) | Metric | March 31, 2024 | December 31, 2023 | | :----------------------------------------- | :------------- | :---------------- | | Intangible Assets, Net | 2,036 | 1,806 | | Accounts Receivable, Net | 7,907 | 8,944 | | Prepaid Real Estate Taxes | 5,738 | 8,171 | | Prepaid Insurance | 2,174 | 4,879 | | Due from Related Parties | 20,018 | 18,045 | | Assets Related to Deferred Compensation Arrangements | 62,142 | 60,038 | | Right-of-Use Assets - Operating Leases | 50,179 | 50,476 | | Ground Lease Receivables | 6,206 | 6,193 | | Other | 6,233 | 4,732 | | Total Other Assets, Net | 162,633 | 163,284 | 7. Unsecured Senior Notes Summary of Unsecured Senior Notes (in thousands USD) | Note Name | March 31, 2024 | December 31, 2023 | Effective Interest Rate | Maturity Date | | :----------------- | :------------- | :---------------- | :---------------------- | :------------ | | 4.000% Due 2025 | 300,000 | 300,000 | 3.99% | November 2025 | | 3.125% Due 2026 | 300,000 | 300,000 | 3.18% | September 2026| | 2.250% Due 2028 | 550,000 | 550,000 | 2.33% | December 2028 | | 4.375% Due 2029 | 350,000 | 350,000 | 4.46% | February 2029 | | 3.000% Due 2030 | 350,000 | 350,000 | 3.04% | February 2030 | | 2.000% Due 2031 | 450,000 | 450,000 | 2.10% | February 2031 | | 2.500% Due 2032 | 500,000 | 500,000 | 2.59% | February 2032 | | Principal Balance | 2,800,000 | 2,800,000 | | | | Less: Net Issuance Discount | (9,735) | (10,148) | | | | Less: Net Debt Issuance Costs | (12,740) | (13,362) | | | | Unsecured Senior Notes, Net | 2,777,525 | 2,776,490 | | | - As of March 31, 2024, the Operating Partnership complied with all senior note financial covenants, including a leverage ratio not exceeding 60%, an interest coverage ratio exceeding 1.5:1.0, and a secured debt leverage ratio not exceeding 40%[134][246] 8. Revolving Credit Facility - The company amended and restated its credit agreement on October 26, 2022, which includes an $850 million unsecured revolving credit facility maturing on February 15, 2027[154][264] - As of March 31, 2024, the borrowing rate under the revolving credit facility was 6.37%, with $831 million available for borrowing[135][247] - For the three months ended March 31, 2024, the Operating Partnership complied with all financial covenants under the Second Amended and Restated Credit Agreement[136][231][304] 9. Mortgage Loans and Notes Payable Summary of Mortgage Loans and Notes Payable (in thousands USD) | Mortgage Loans and Notes Payable | Carrying Value as of March 31, 2024 | Carrying Value as of December 31, 2023 | Effective Interest Rate | Maturity Date | | :------------------------------- | :---------------------------------- | :------------------------------------- | :---------------------- | :------------ | | Annapolis I, MD | 4,651 | 4,703 | 3.78% | May 2024 | | Brooklyn XV, NY | 14,657 | 14,746 | 2.15% | May 2024 | | Long Island City IV, NY | 11,862 | 11,946 | 2.15% | May 2024 | | Long Island City II, NY | 17,719 | 17,834 | 2.25% | July 2026 | | Long Island City III, NY | 17,723 | 17,839 | 2.25% | August 2026 | | Flushing II, NY | 54,300 | 54,300 | 2.15% | July 2029 | | Principal Balance | 120,912 | 121,368 | | | | Add: Unamortized Fair Value Adjustment | 7,103 | 7,689 | | | | Less: Net Debt Issuance Costs | (776) | (871) | | | | Mortgage Loans and Notes Payable, Net | 127,239 | 128,186 | | | - As of March 31, 2024, the company's mortgage loans were secured by self-storage properties with a net carrying value of approximately $354.6 million[115] 10. Accumulated Other Comprehensive Loss - Accumulated other comprehensive loss primarily represents unrealized losses on interest rate swaps[157] Summary of Changes in Accumulated Other Comprehensive Loss (For the Three Months Ended March 31, 2024, in thousands USD) | Metric | Amount | | :----------------------------------------------- | :----- | | Balance as of December 31, 2023 | (413) | | Reclassification of Realized Loss on Interest Rate Swaps | 20 | | Balance as of March 31, 2024 | (393) | | Less: Portion Attributable to Noncontrolling Interests | 2 | | Total Accumulated Other Comprehensive Loss Included in Equity | (391)| 11. Risk Management and Use of Financial Instruments - The company faces credit risk in cash accounts, but management considers the risk of loss low due to high credit ratings of major financial institutions[158] - The company uses derivative instruments, such as interest rate swap agreements, to manage interest rate risk, not for speculative purposes, aiming to minimize risk and/or borrowing costs[159] - As of March 31, 2024, and December 31, 2023, all of the company's derivative instruments were settled[160] - In Q1 2024, the company reclassified $20 thousand of unrealized losses from accumulated other comprehensive loss to interest expense, with an estimated $0.1 million expected to be reclassified over the next 12 months[305] 12. Fair Value Measurements - The company uses a fair value hierarchy (Level 1, Level 2, Level 3) to measure the fair value of financial assets and liabilities, prioritizing observable inputs[141][161][13] - As of March 31, 2024, and December 31, 2023, the fair values of cash and cash equivalents, restricted cash, accounts receivable, other financial instruments, accounts payable, accrued expenses, and other liabilities approximated their carrying values[163] Carrying Value and Estimated Fair Value of Debt (in thousands USD) | Metric | March 31, 2024 | December 31, 2023 | | :------------ | :------------- | :---------------- | | Carrying Value| 2,923,164 | 2,922,776 | | Fair Value | 2,607,864 | 2,631,221 | 13. Noncontrolling Interests - Noncontrolling interests represent third-party ownership in the company's consolidated joint ventures, primarily established for developing, owning, and operating new properties[144] Summary of Consolidated Joint Ventures (As of March 31, 2024, in thousands USD) | Consolidated Joint Venture | Number of Properties | Ownership Percentage | Total Assets | Total Liabilities | Related Party Loans | | :--------------------------------- | :------------------- | :------------------- | :----------- | :---------------- | :------------------ | | New Rochelle Investors, LLC | 1 | 70% | 24,855 | 1,253 | 599 | | 1074 Raritan Road, LLC | 1 | 90% | 14,141 | 7,931 | 6,642 | | 350 Main Street, LLC | 1 | 90% | 5,862 | 19 | — | | Astoria Investors, LLC | 1 | 70% | 43,338 | 28,937 | 27,397 | | CS Lock Up Anoka, LLC | 1 | 50% | 10,216 | 5,625 | 5,540 | | CS Valley Forge Village Storage, LLC | 1 | 70% | 19,149 | 14,873 | 14,792 | | CS Vienna, LLC | 1 | 80% | 30,200 | 35,325 | 34,875 | | SH3, LLC | 1 | 90% | 36,621 | 521 | — | | Total | 8 | | 184,382 | 94,484 | 89,845 | 14. Commitments and Contingencies - As of March 31, 2024, third parties held 1,288,205 OP units with a total redemption value of $58.3 million[146] - The company has entered into four construction agreements for new self-storage properties with developers, expecting to pay approximately $38.5 million in installments during 2024 and 2025[147] - The company is involved in claims arising in the ordinary course of business, for which management has adequately provided for potential liabilities, included in accounts payable, accrued expenses, and other liabilities[148] 15. Related Party Transactions - The company provides management services to certain joint ventures and other related parties, with management fee income of $1.2 million for both Q1 2024 and Q1 2023[169] - As of March 31, 2024, amounts due from related parties totaled $20 million, and mortgage loans receivable from consolidated joint ventures amounted to $89.8 million[149] - The company recognized $0.1 million in revenue for both Q1 2024 and Q1 2023 as the lessor for ground leases related to the HVP IV properties in Texas[14][171] 16. Earnings Per Share and Unit and Shareholders' Equity and Capital Earnings Per Share Calculation Components (CubeSmart Common Shareholders, in thousands USD, except per share amounts) | Metric | For the Three Months Ended March 31, 2024 | For the Three Months Ended March 31, 2023 | | :--------------------------------------- | :---------------------------------------- | :---------------------------------------- | | Net Income Attributable to Company Common Shareholders | 94,527 | 97,566 | | Weighted Average Basic Shares | 225,767 | 225,294 | | Weighted Average Diluted Shares | 226,575 | 226,183 | | Basic Earnings Per Share | 0.42 | 0.43 | | Diluted Earnings Per Share | 0.42 | 0.43 | Earnings Per Unit Calculation Components (CubeSmart, L.P., in thousands USD, except per unit amounts) | Metric | For the Three Months Ended March 31, 2024 | For the Three Months Ended March 31, 2023 | | :--------------------------------------- | :---------------------------------------- | :---------------------------------------- | | Net Income Attributable to CubeSmart, L.P. | 95,068 | 98,180 | | Weighted Average Basic Units | 227,057 | 226,717 | | Weighted Average Diluted Units | 227,865 | 227,606 | | Basic Earnings Per Unit | 0.42 | 0.43 | | Diluted Earnings Per Unit | 0.42 | 0.43 | Summary of OP Units Outstanding | OP Unit Holder | March 31, 2024 | March 31, 2023 | | :----------------------------- | :------------- | :------------- | | OP Units Held by Third Parties | 1,288,205 | 1,418,549 | | OP Units Held by General Partner | 224,965,172 | 224,671,525 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section discusses the company's operating results, financial condition, and cash flows for Q1 2024, focusing on revenue, expenses, investment activities, liquidity, and non-GAAP financial measures, while highlighting strategies in self-storage property operations, acquisitions, and development Overview - The company is an integrated self-storage real estate company with in-house capabilities for operating, designing, developing, leasing, managing, and acquiring self-storage properties[176] - As of March 31, 2024, the company owned 613 self-storage properties, totaling approximately 44.4 million square feet, and managed 860 properties for third parties, totaling 1,473 properties[176] - Company revenue primarily derives from customer storage space rentals and property management fees, with operating performance dependent on the ability to maintain and increase occupancy and rental rates[198] - Properties in New York, Florida, California, and Texas contributed 17%, 14%, 11%, and 9%, respectively, to total revenue in Q1 2024[180] Summary of Critical Accounting Policies and Estimates - This section outlines critical accounting policies and estimates deemed essential by management for preparing the unaudited consolidated financial statements, which require management judgment and assumptions, and involve a degree of uncertainty[181] Results of Operations - As of March 31, 2024, the company owned 598 same-store properties and 15 non-same-store properties. Same-store properties had an ending occupancy rate of 90.4%, compared to 91.7% in the prior year period[187][190] Operating Results Comparison (For the Three Months Ended March 31, in thousands USD) | Metric | 2024 | 2023 | Change | Change Rate | | :--------------- | :------ | :------ | :------ | :---------- | | Total Revenue | 261,406 | 256,528 | 4,878 | 1.9% | | Operating Expenses | 143,379 | 136,130 | 7,249 | 5.3% | | Net Operating Income | 184,369 | 185,401 | (1,032) | (0.6%) | | Net Income | 94,858 | 97,942 | (3,084) | (3.1%) | - Total revenue increased by 1.9%, primarily due to increased revenue from non-same-store properties acquired or opened in 2023 and 2024, higher other property-related income from increased customer storage protection plan participation, and increased property management fees[237] - Property operating expenses increased by 8.3%, primarily due to higher real estate taxes and property insurance for same-store properties[238] - Interest expense on loans decreased by 3.3%, primarily due to a lower average outstanding debt balance and a slight decrease in the average effective interest rate[239] - Earnings from real estate ventures decreased by 66.9%, primarily due to an excess distribution from HVPSE in Q1 2023[215] Liquidity and Capital Resources - Cash flow from operating activities is the company's primary source of liquidity, used to fund debt payments, distributions, and capital expenditures[242] Cash Flow Activities Comparison (For the Three Months Ended March 31, in thousands USD) | Activity | 2024 | 2023 | Change | | :---------------------------------------- | :-------- | :-------- | :------ | | Net Cash Provided by Operating Activities | 150,150 | 136,706 | 13,444 | | Net Cash Used in Investing Activities | (34,220) | (25,560) | (8,660) | | Net Cash Used in Financing Activities | (116,534) | (111,289) | (5,245) | - Net cash provided by operating activities increased by $13.4 million, primarily attributable to the timing and amount of payments for certain accounts payable and accrued expenses[216] - Net cash used in investing activities increased by $8.7 million, primarily due to $20.1 million in storage property acquisitions in Q1 2024, compared to no acquisitions in the prior year period[241] - Net cash used in financing activities increased by $5.2 million, primarily due to higher cash distributions to common shareholders and noncontrolling interests in the Operating Partnership[217] - As of March 31, 2024, the company had approximately $5.6 million in available cash and cash equivalents, and $831 million available under its revolving credit facility[226] - The company anticipates recurring capital expenditures of $15 million to $20 million, planned capital improvements and property upgrades of $13 million to $18 million, and new property development costs of $18 million to $28 million for the remainder of 2024[244][222] - Through its at-the-market equity program, the company may issue and sell up to 60 million shares of common stock, though no common stock was sold in Q1 2024[249][266] Non-GAAP Financial Measures - Net Operating Income (NOI) is a key metric used by management to assess property operating performance, helping to measure property economic productivity and eliminate the effects of capital structure and depreciation[251][252][267][268] - Funds From Operations (FFO) is a widely used performance measure for real estate companies, providing a more comparable assessment of operating performance by excluding non-operating items such as gains/losses on real estate sales, impairment charges, and depreciation and amortization[254][269][270] Reconciliation of FFO Attributable to Company Common Shareholders and Third-Party OP Unit Holders (in thousands USD) | Metric | For the Three Months Ended March 31, 2024 | For the Three Months Ended March 31, 2023 | | :----------------------------------------------- | :---------------------------------------- | :---------------------------------------- | | Net Income Attributable to Company Common Shareholders | 94,527 | 97,566 | | Add: Real Estate Depreciation and Amortization | 49,249 | 48,916 | | Add: Company's Share in Unconsolidated Real Estate Ventures | 2,092 | 2,134 | | Less: Net Gain on Sale of Real Estate | — | (1,713) | | Add: Noncontrolling Interests in Operating Partnership | 541 | 614 | | FFO Attributable to Company Common Shareholders and Third-Party OP Unit Holders | 146,409 | 147,517 | Item 3. Quantitative and Qualitative Disclosures About Market Risk This section discloses the company's market risks, particularly the impact of interest rate fluctuations on revenue, cash flows, and the fair value of financial instruments, detailing sensitivity analyses for fixed and variable-rate debt Market Risk - The company's future revenues, cash flows, and the fair value of financial instruments are dependent on market interest rates[274] - As of March 31, 2024, the company's consolidated debt included $2.92 billion in fixed-rate mortgage loans and unsecured senior notes, and $18.4 million in variable-rate unsecured credit facility borrowings[276] Effect of Changes in Interest Rates on our Outstanding Debt - If market interest rates increase by 100 basis points, the fair value of fixed-rate debt would decrease by approximately $115.5 million; a 100 basis point decrease would result in an increase of approximately $119.7 million[259] - If market interest rates for variable-rate debt increase/decrease by 100 basis points, annual interest expense would decrease/increase by approximately $0.2 million accordingly[285] Item 4. Controls and Procedures This section discloses the management's assessment of disclosure controls and procedures for both the Parent Company and Operating Partnership, confirming their effectiveness at a reasonable assurance level, and reports no material changes in internal control over financial reporting Controls and Procedures (Parent Company) - As of the end of the reporting period, the Parent Company's Chief Executive Officer and Chief Financial Officer assessed and concluded that its disclosure controls and procedures are effective at a reasonable assurance level[278][288] Controls and Procedures (Operating Partnership) - As of the end of the reporting period, the Operating Partnership's Chief Executive Officer and Chief Financial Officer assessed and concluded that its disclosure controls and procedures are effective at a reasonable assurance level[289] Changes in Internal Control Over Financial Reporting - No changes in internal control over financial reporting for either the Parent Company or the Operating Partnership occurred during the most recent fiscal quarter that materially affected, or are reasonably likely to materially affect, internal control over financial reporting[262][290] Part II. OTHER INFORMATION Item 1. Legal Proceedings This section discloses that the company currently has no pending legal proceedings, other than routine litigation and administrative actions arising in the ordinary course of business, which are not expected to have a material adverse effect on the company's financial condition, results of operations, or cash flows - The company currently has no pending legal proceedings, other than routine litigation and administrative actions arising in the ordinary course of business, which are not expected to have a material adverse effect on the company's financial condition, results of operations, or cash flows[280][291] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section provides information on Parent Company common stock repurchases, primarily involving shares withheld for employee tax obligations, and mentions a board-approved but unexecuted share repurchase program Repurchases of Parent Company Common Shares Parent Company Common Share Repurchase Information (For the Three Months Ended March 31, 2024) | Period | Total Shares Repurchased | Average Price Paid Per Share | Total Number of Shares Repurchased Under Publicly Announced Plans or Programs | Maximum Number of Shares That May Yet Be Repurchased Under the Plans or Programs | | :----------------- | :----------------------- | :--------------------------- | :---------------------------------------------------------------------------- | :------------------------------------------------------------------------------- | | January 1 - January 31 | 17,736 | $46.17 | Not Applicable | 3,000,000 | | February 1 - February 29 | 278 | $43.69 | Not Applicable | 3,000,000 | | March 1 - March 31 | 167 | $43.60 | Not Applicable | 3,000,000 | | Total | 18,181 | $46.11 | Not Applicable | 3,000,000 | - Repurchased shares represent common stock withheld by the company to cover employee tax obligations upon the vesting of restricted shares[293] - The Parent Company's Board of Trustees approved a repurchase program on September 27, 2007, authorizing the repurchase of up to 3 million shares of common stock, though no repurchases have been made under this plan to date[281] Item 5. Other Information This section states that no Rule 10b5-1 or non-Rule 10b5-1 trading arrangements were adopted or terminated by the company's trustees or officers during Q1 2024 Trading Arrangements - During the three months ended March 31, 2024, no Rule 10b5-1 trading arrangements or non-Rule 10b5-1 trading arrangements were adopted or terminated by any of the company's trustees or officers[294] Item 6. Exhibits This section lists the exhibits filed with the report, including CEO and CFO certifications (pursuant to Sarbanes-Oxley Act Sections 302 and 906) and financial information in Inline XBRL format - This section lists the exhibits filed with the report, including CEO and CFO certifications (pursuant to Sarbanes-Oxley Act Sections 302 and 906) and financial information in Inline XBRL format[296] SIGNATURES OF REGISTRANT - This report was signed by Christopher P. Marr, Chief Executive Officer, Timothy M. Martin, Chief Financial Officer, and Matthew D. DeNarie, Chief Accounting Officer of CubeSmart on April 26, 2024[2][299][300]