Table of Contents

 

 

 

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549


FORM 10-Q


 

(Mark one)

 

 

R

Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

 

 

 

 

For the quarterly period ended March 31, 2014.

 

 

 

 

 

or

 

 

 

 

£

Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

 

For the transition period from                                       to                                       .

 

 

Commission file number:
001-32324 (CubeSmart)
000-54662 (CubeSmart, L.P.)

 


CUBESMART

CUBESMART, L.P.

(Exact Name of Registrant as Specified in its Charter)


 

Maryland (CubeSmart)
Delaware (CubeSmart, L.P.)

 

20-1024732
34-1837021

(State or Other Jurisdiction of

 

(I.R.S. Employer

Incorporation or Organization)

 

Identification No.)

 

 

 

5 Old Lancaster Road

 

 

Malvern, Pennsylvania

 

19355

(Address of Principal Executive Offices)

 

(Zip Code)

 

(610) 535-5000

(Registrant’s Telephone Number, Including Area Code)


 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

 

CubeSmart

Yes R No £

CubeSmart, L.P.

Yes R No £

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

 

CubeSmart

Yes R No £

CubeSmart, L.P.

Yes R No £

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

CubeSmart:

 

 

 

Large accelerated filer R

Accelerated filer £

Non-accelerated filer £

Smaller reporting company £

 

 

 

 

CubeSmart, L.P.:

 

 

 

Large accelerated filer £

Accelerated filer £

Non-accelerated filer R

Smaller reporting company £

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

 

CubeSmart

Yes £ No R

CubeSmart, L.P.

Yes £ No R

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:

 

Class

 

Outstanding at April 29, 2014

Common shares, $0.01 par value per share, of CubeSmart

 

144,308,200

 

 

 



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EXPLANATORY NOTE

 

This report combines the quarterly reports on Form 10-Q for the period ended March 31, 2014 of CubeSmart (the “Parent Company” or “CubeSmart”) and CubeSmart, L.P. (the “Operating Partnership”). The Parent Company is a Maryland real estate investment trust, or REIT, that owns its assets and conducts its operations through the Operating Partnership, a Delaware limited partnership, and subsidiaries of the Operating Partnership.  The Parent Company, the Operating Partnership and their consolidated subsidiaries are collectively referred to in this report as the “Company.” In addition, terms such as “we”, “us”, or “our” used in this report may refer to the Company, the Parent Company, or the Operating Partnership.

 

The Parent Company is the sole general partner of the Operating Partnership and, as of March 31, 2014, owned a 98.4% interest in the Operating Partnership. The remaining 1.6% interest consists of common units of limited partnership interest issued by the Operating Partnership to third parties in exchange for contributions of facilities to the Operating Partnership. As the sole general partner of the Operating Partnership, the Parent Company has full and complete authority over the Operating Partnership’s day-to-day operations and management.

 

Management operates the Parent Company and the Operating Partnership as one enterprise. The management teams of the Parent Company and the Operating Partnership are identical, and their constituents are officers of both the Parent Company and of the Operating Partnership.

 

There are few differences between the Parent Company and the Operating Partnership, which are reflected in the note disclosures in this report. The Company believes it is important to understand the differences between the Parent Company and the Operating Partnership in the context of how these entities operate as a consolidated enterprise. The Parent Company is a REIT, whose only material asset is its ownership of the partnership interests of the Operating Partnership.  As a result, the Parent Company does not conduct business itself, other than acting as the sole general partner of the Operating Partnership, issuing public equity from time to time and guaranteeing the debt obligations of the Operating Partnership. The Operating Partnership holds substantially all the assets of the Company and, directly or indirectly, holds the ownership interests in the Company’s real estate ventures. The Operating Partnership conducts the operations of the Company’s business and is structured as a partnership with no publicly traded equity. Except for net proceeds from equity issuances by the Parent Company, which are contributed to the Operating Partnership in exchange for partnership units, the Operating Partnership generates the capital required by the Company’s business through the Operating Partnership’s operations, by the Operating Partnership’s direct or indirect incurrence of indebtedness or through the issuance of partnership units of the Operating Partnership or equity interests in subsidiaries of the Operating Partnership.

 

The substantive difference between the Parent Company’s and the Operating Partnership’s filings is the fact that the Parent Company is a REIT with public equity, while the Operating Partnership is a partnership with no publicly traded equity. In the financial statements, this difference is primarily reflected in the equity (or capital for Operating Partnership) section of the consolidated balance sheets and in the consolidated statements of equity (or capital). Apart from the different equity treatment, the consolidated financial statements of the Parent Company and the Operating Partnership are nearly identical.

 

The Company believes that combining the quarterly reports on Form 10-Q of the Parent Company and the Operating Partnership into a single report will:

 

·       facilitate a better understanding by the investors of the Parent Company and the Operating Partnership by enabling them to view the business as a whole in the same manner as management views and operates the business;

·       remove duplicative disclosures and provide a more straightforward presentation in light of the fact that a substantial portion of the disclosure applies to both the Parent Company and the Operating Partnership; and

·       create time and cost efficiencies through the preparation of one combined report instead of two separate reports.

 

In order to highlight the differences between the Parent Company and the Operating Partnership, the separate sections in this report for the Parent Company and the Operating Partnership specifically refer to the Parent Company and the Operating Partnership. In the sections that combine disclosures of the Parent Company and the Operating Partnership, this report refers to such disclosures as those of the Company. Although the Operating Partnership is generally the entity that directly or indirectly enters into contracts and real estate ventures and holds assets and debt, reference to the Company is appropriate because the business is one enterprise and the Parent Company operates the business through the Operating Partnership.

 

As general partner with control of the Operating Partnership, the Parent Company consolidates the Operating Partnership for financial reporting purposes, and the Parent Company does not have significant assets other than its investment in the Operating Partnership. Therefore, the assets and liabilities of the Parent Company and the Operating Partnership are the same on their respective financial statements. The separate discussions of the Parent Company and the Operating Partnership in this report should be read in conjunction with each other to understand the results of the Company’s operations on a consolidated basis and how management operates the Company.

 

This report also includes separate Item 4 - Controls and Procedures sections, signature pages and Exhibit 31 and 32 certifications for each of  the Parent Company and the Operating Partnership in order to establish that the Chief Executive Officer and the Chief Financial Officer of the Parent Company and the Chief Executive Officer and the Chief Financial Officer of the Operating Partnership have made the requisite certifications and that the Parent Company and the Operating Partnership are compliant with Rule 13a-15 or Rule 15d-15 of the Securities Exchange Act of 1934 and 18 U.S.C. §1350.

 

1



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TABLE OF CONTENTS

 

Part I. FINANCIAL INFORMATION

 

 

Item 1.

Financial Statements

 

4

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

29

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

 

41

Item 4.

Controls and Procedures

 

42

 

 

 

 

Part II. OTHER INFORMATION

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

 

43

Item 6.

Exhibits

 

44

 

Filing Format

 

This combined Form 10-Q is being filed separately by CubeSmart and CubeSmart, L.P.

 

2



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Forward-Looking Statements

 

This Quarterly Report on Form 10-Q, or “this Report”, together with other statements and information publicly disseminated by the Parent Company and the Operating Partnership, contain certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. Forward-looking statements include statements concerning the Company’s plans, objectives, goals, strategies, future events, future revenues or performance, capital expenditures, financing needs, plans or intentions relating to acquisitions and other information that is not historical information.  In some cases, forward-looking statements can be identified by terminology such as “believes,” “expects,” “estimates,” “may,” “will,” “should,” “anticipates,” or “intends” or the negative of such terms or other comparable terminology, or by discussions of strategy.  Such statements are based on assumptions and expectations that may not be realized and are inherently subject to risks, uncertainties and other factors, many of which cannot be predicted with accuracy and some of which might not even be anticipated.  Although we believe the expectations reflected in these forward-looking statements are based on reasonable assumptions, future events and actual results, performance, transactions or achievements, financial and otherwise, may differ materially from the results, performance, transactions or achievements expressed or implied by the forward-looking statements.  As a result, you should not rely on or construe any forward-looking statements in this Report, or which management may make orally or in writing from time to time, as predictions of future events or as guarantees of future performance.  We caution you not to place undue reliance on forward-looking statements, which speak only as of the date of this Report or as of the dates otherwise indicated in the statements.  All of our forward-looking statements, including those in this Report, are qualified in their entirety by this statement.

 

There are a number of risks and uncertainties that could cause our actual results to differ materially from the forward-looking statements contained in or contemplated by this Report.  Any forward-looking statements should be considered in light of the risks and uncertainties referred to in Item 1A. “Risk Factors” in the Parent Company’s and the Operating Partnership’s combined Annual Report on Form 10-K for the year ended December 31, 2013 and in our other filings with the Securities and Exchange Commission (“SEC”).  These risks include, but are not limited to, the following:

 

·         national and local economic, business, real estate and other market conditions;

 

·         the competitive environment in which we operate, including our ability to maintain or raise occupancy and rental rates;

 

·         the execution of our business plan;

 

·         the availability of external sources of capital;

 

·         financing risks, including the risk of over-leverage and the corresponding risk of default on our mortgage and other debt and potential inability to refinance existing indebtedness;

 

·         increases in interest rates and operating costs;

 

·         counterparty non-performance related to the use of derivative financial instruments;

 

·         our ability to maintain our Parent Company’s qualification as a real estate investment trust (“REIT”) for federal income tax purposes;

 

·         acquisition and development risks;

 

·         increases in taxes, fees, and assessments from state and local jurisdictions;

 

·         changes in real estate and zoning laws or regulations;

 

·         risks related to natural disasters;

 

·         potential environmental and other liabilities;

 

·         other factors affecting the real estate industry generally or the self-storage industry in particular; and

 

·         other risks identified in the Parent Company’s and the Operating Partnership’s Annual Report on Form 10-K, as amended, and, from time to time, in other reports that we file with the SEC or in other documents that we publicly disseminate.

 

Given these uncertainties and the other risks identified elsewhere in this Report, we caution readers not to place undue reliance on forward-looking statements.  We undertake no obligation to publicly update or revise these forward-looking statements, whether as a result of new information, future events or otherwise except as may be required by securities laws.

 

3



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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

 

CUBESMART AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

(unaudited)

 

 

 

March 31,

 

December 31,

 

 

 

2014

 

2013

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

Storage facilities

 

  $

2,660,819

 

  $

2,553,706

 

Less: Accumulated depreciation

 

(419,460)

 

(398,536)

 

Storage facilities, net (including VIE assets of $41,624 and $34,559, respectively)

 

2,241,359

 

2,155,170

 

Cash and cash equivalents

 

3,235

 

3,176

 

Restricted cash

 

3,964

 

4,025

 

Loan procurement costs, net of amortization

 

12,086

 

12,687

 

Investment in real estate ventures, at equity

 

154,467

 

156,310

 

Other assets, net

 

27,420

 

27,256

 

Total assets

 

  $

2,442,531

 

  $

2,358,624

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

Unsecured senior notes

 

  $

500,000

 

  $

500,000

 

Revolving credit facility

 

70,600

 

38,600

 

Unsecured term loans

 

400,000

 

400,000

 

Mortgage loans and notes payable

 

226,025

 

200,218

 

Accounts payable, accrued expenses and other liabilities

 

49,627

 

57,599

 

Distributions payable

 

20,321

 

19,955

 

Deferred revenue

 

13,567

 

12,394

 

Security deposits

 

387

 

376

 

Total liabilities

 

1,280,527

 

1,229,142

 

 

 

 

 

 

 

Noncontrolling interests in the Operating Partnership

 

38,807

 

36,275

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

Equity

 

 

 

 

 

7.75% Series A Preferred shares $.01 par value, 3,220,000 shares authorized, 3,100,000 shares issued and outstanding at March 31, 2014 and December 31, 2013, respectively

 

31

 

31

 

Common shares $.01 par value, 200,000,000 shares authorized, 142,206,897 and 139,328,366 shares issued and outstanding at March 31, 2014 and December 31, 2013, respectively

 

1,422

 

1,393

 

Additional paid in capital

 

1,589,994

 

1,542,703

 

Accumulated other comprehensive loss

 

(10,360)

 

(11,014)

 

Accumulated deficit

 

(459,335)

 

(440,837)

 

Total CubeSmart shareholders’ equity

 

1,121,752

 

1,092,276

 

Noncontrolling interest in subsidiaries

 

1,445

 

931

 

Total equity

 

1,123,197

 

1,093,207

 

Total liabilities and equity

 

  $

2,442,531

 

  $

2,358,624

 

 

See accompanying notes to the unaudited consolidated financial statements.

 

4



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CUBESMART AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(unaudited)

 

 

 

Three Months Ended March 31,

 

 

 

2014

 

2013

 

 

 

 

 

 

 

REVENUES

 

 

 

 

 

Rental income

 

  $

75,714

 

  $

66,252

 

Other property related income

 

10,147

 

7,258

 

Property management fee income

 

1,406

 

1,145

 

Total revenues

 

87,267

 

74,655

 

OPERATING EXPENSES

 

 

 

 

 

Property operating expenses

 

32,290

 

29,161

 

Depreciation and amortization

 

28,115

 

28,982

 

General and administrative

 

6,569

 

7,613

 

Total operating expenses

 

66,974

 

65,756

 

OPERATING INCOME

 

20,293

 

8,899

 

OTHER INCOME (EXPENSE)

 

 

 

 

 

Interest:

 

 

 

 

 

Interest expense on loans

 

(11,871)

 

(10,272)

 

Loan procurement amortization expense

 

(541)

 

(476)

 

Acquisition related costs

 

(1,679)

 

(115)

 

Equity in losses of real estate venture

 

(1,369)

 

-

 

Other

 

(593)

 

(73)

 

Total other expense

 

(16,053)

 

(10,936)

 

 

 

 

 

 

 

INCOME (LOSS) FROM CONTINUING OPERATIONS

 

4,240

 

(2,037)

 

 

 

 

 

 

 

DISCONTINUED OPERATIONS

 

 

 

 

 

Income from discontinued operations

 

336

 

1,381

 

Gain on disposition of discontinued operations

 

-

 

228

 

Total discontinued operations

 

336

 

1,609

 

NET INCOME (LOSS)

 

4,576

 

(428)

 

NET LOSS (INCOME) ATTRIBUTABLE TO NONCONTROLLING INTERESTS

 

 

 

 

 

Noncontrolling interests in the Operating Partnership

 

(49)

 

35

 

Noncontrolling interest in subsidiaries

 

3

 

1

 

NET INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY

 

4,530

 

(392)

 

Distribution to Preferred Shares

 

(1,502)

 

(1,502)

 

NET INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY’S COMMON SHAREHOLDERS

 

  $

3,028

 

  $

(1,894)

 

 

 

 

 

 

 

Basic earnings (loss) per share from continuing operations attributable to common shareholders

 

  $

0.02

 

  $

(0.03)

 

Basic earnings per share from discontinued operations attributable to common shareholders

 

  $

0.00

 

  $

0.02

 

Basic earnings (loss) per share attributable to common shareholders

 

  $

0.02

 

  $

(0.01)

 

 

 

 

 

 

 

Diluted earnings (loss) per share from continuing operations attributable to common shareholders

 

  $

0.02

 

  $

(0.03)

 

Diluted earnings per share from discontinued operations attributable to common shareholders

 

  $

0.00

 

  $

0.02

 

Diluted earnings (loss) per share attributable to common shareholders

 

  $

0.02

 

  $

(0.01)

 

 

 

 

 

 

 

Weighted-average basic shares outstanding

 

140,219

 

132,951

 

Weighted-average diluted shares outstanding

 

142,774

 

132,951

 

 

 

 

 

 

 

AMOUNTS ATTRIBUTABLE TO THE COMPANY’S COMMON SHAREHOLDERS:

 

 

 

 

 

Income (loss) from continuing operations

 

  $

2,697

 

  $

(3,476)

 

Total discontinued operations

 

331

 

1,582

 

Net income (loss)

 

  $

3,028

 

  $

(1,894)

 

 

See accompanying notes to the unaudited consolidated financial statements.

 

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CUBESMART AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands)

(unaudited)

 

 

 

Three Months Ended March 31,

 

 

 

2014

 

2013

 

 

 

 

 

 

 

NET INCOME (LOSS)

 

  $

4,576

 

  $

(428)

 

Other comprehensive (loss) gain:

 

 

 

 

 

Unrealized losses on interest rate swap

 

(984)

 

(309)

 

Reclassification of realized losses on interest rate swaps

 

1,576

 

1,531

 

Unrealized gain (loss) on foreign currency translation

 

74

 

(256)

 

OTHER COMPREHENSIVE INCOME

 

666

 

966

 

COMPREHENSIVE INCOME

 

5,242

 

538

 

Comprehensive (income) loss attributable to noncontrolling interests in the Operating Partnership

 

(59)

 

17

 

Comprehensive loss attributable to noncontrolling interests in subsidiaries

 

1

 

10

 

COMPREHENSIVE INCOME ATTRIBUTABLE TO THE COMPANY

 

  $

5,184

 

  $

565

 

 

See accompanying notes to the unaudited consolidated financial statements.

 

6



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CUBESMART AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY

(in thousands)

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noncontrolling

 

 

 

 

 

 

 

 

 

 

Additional

 

Accumulated Other

 

 

 

Total

 

Noncontrolling

 

 

 

Interests in the

 

 

Common Shares

 

Preferred Shares

 

Paid in

 

Comprehensive

 

Accumulated

 

Shareholders’

 

Interest in

 

Total

 

Operating

 

 

Number

 

Amount

 

Number

 

Amount

 

Capital

 

(Loss) Income

 

Deficit

 

Equity

 

Subsidiaries

 

Equity

 

Partnership

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2013

 

139,328

 

  $

1,393

 

3,100

 

  $

31

 

  $

1,542,703

 

  $

(11,014)

 

  $

(440,837)

 

  $

1,092,276

 

  $

931

 

  $

1,093,207

 

  $

36,275

Contributions from noncontrolling

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

interests in subsidiaries

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  $

515

 

515

 

 

Issuance of common shares

 

2,705

 

28

 

 

 

 

 

46,134

 

 

 

 

 

46,162

 

 

 

46,162

 

 

Issuance of restricted shares

 

114

 

1

 

 

 

 

 

 

 

 

 

 

 

1

 

 

 

1

 

 

Conversion from units to shares

 

14

 

 

 

 

 

 

 

234

 

 

 

 

 

234

 

 

 

234

 

(234)

Exercise of stock options

 

46

 

 

 

 

 

 

 

560

 

 

 

 

 

560

 

 

 

560

 

 

Amortization of restricted shares

 

 

 

 

 

 

 

 

 

149

 

 

 

 

 

149

 

 

 

149

 

 

Share compensation expense

 

 

 

 

 

 

 

 

 

214

 

 

 

 

 

214

 

 

 

214

 

 

Adjustment for noncontrolling

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

interest in the Operating Partnership

 

 

 

 

 

 

 

 

 

 

 

 

 

(3,001)

 

(3,001)

 

 

 

(3,001)

 

3,001

Net income (loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

4,530

 

4,530

 

(3)

 

4,527

 

49

Other comprehensive gain:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gain on interest rate swap

 

 

 

 

 

 

 

 

 

 

 

583

 

 

 

583

 

 

 

583

 

9

Unrealized gain on foreign currency translation

 

 

 

 

 

 

 

 

 

 

 

71

 

 

 

71

 

2

 

73

 

1

Preferred share distributions

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,502)

 

(1,502)

 

 

 

(1,502)

 

 

Common share distributions

 

 

 

 

 

 

 

 

 

 

 

 

 

(18,525)

 

(18,525)

 

 

 

(18,525)

 

(294)

Balance at March 31, 2014

 

142,207

 

  $

1,422

 

3,100

 

  $

31

 

  $

1,589,994

 

  $

(10,360)

 

  $

(459,335)

 

  $

1,121,752

 

  $

1,445

 

  $

1,123,197

 

  $

38,807

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noncontrolling

 

 

 

 

 

 

 

 

 

 

Additional

 

Accumulated Other

 

 

 

Total

 

Noncontrolling

 

 

 

Interests in the

 

 

Common Shares

 

Preferred Shares

 

Paid in

 

Comprehensive

 

Accumulated

 

Shareholders’

 

Interest in

 

Total

 

Operating

 

 

Number

 

Amount

 

Number

 

Amount

 

Capital

 

(Loss) Income

 

Deficit

 

Equity

 

Subsidiaries

 

Equity

 

Partnership

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2012

 

131,795

 

  $

1,318

 

3,100

 

  $

31

 

  $

1,418,463

 

  $

(19,796)

 

  $

(410,225)

 

  $

989,791

 

  $

118

 

  $

989,909

 

  $

47,990

Issuance of common shares

 

100

 

1

 

 

 

 

 

1,511

 

 

 

 

 

1,512

 

 

 

1,512

 

 

Issuance of restricted shares

 

211

 

2

 

 

 

 

 

 

 

 

 

 

 

2

 

 

 

2

 

 

Conversion from units to shares

 

1,013

 

10

 

 

 

 

 

14,591

 

 

 

 

 

14,601

 

 

 

14,601

 

(14,601)

Exercise of stock options

 

89

 

1

 

 

 

 

 

784

 

 

 

 

 

785

 

 

 

785

 

 

Amortization of restricted shares

 

 

 

 

 

 

 

 

 

808

 

 

 

 

 

808

 

 

 

808

 

 

Share compensation expense

 

 

 

 

 

 

 

 

 

221

 

 

 

 

 

221

 

 

 

221

 

 

Adjustment for noncontrolling

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

interest in the Operating Partnership

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,915)

 

(2,915)

 

 

 

(2,915)

 

2,915

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

(392)

 

(392)

 

(1)

 

(393)

 

(35)

Other comprehensive gain (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gain on interest rate swap

 

 

 

 

 

 

 

 

 

 

 

1,200

 

 

 

1,200

 

 

 

1,200

 

22

Unrealized loss on foreign currency translation

 

 

 

 

 

 

 

 

 

 

 

(243)

 

 

 

(243)

 

(9)

 

(252)

 

(4)

Preferred share distributions

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,502)

 

(1,502)

 

 

 

(1,502)

 

 

Common share distributions

 

 

 

 

 

 

 

 

 

 

 

 

 

(14,702)

 

(14,702)

 

 

 

(14,702)

 

(251)

Balance at March 31, 2013

 

133,208

 

  $

1,332

 

3,100

 

  $

31

 

  $

1,436,378

 

  $

(18,839)

 

  $

(429,736)

 

  $

989,166

 

  $

108

 

  $

989,274

 

  $

36,036

 

See accompanying notes to the unaudited consolidated financial statements.

 

7



Table of Contents

 

CUBESMART AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

 

 

 

Three Months Ended March 31,

 

 

 

2014

 

2013

 

 

 

 

 

 

 

Operating Activities

 

 

 

 

 

Net income (loss)

 

  $

4,576

 

  $

(428)

 

Adjustments to reconcile net income (loss) to cash provided by operating activities:

 

 

 

 

 

Depreciation and amortization

 

28,656

 

30,365

 

Gain on disposition of discontinued operations

 

-

 

(228)

 

Equity compensation expense

 

363

 

1,029

 

Accretion of fair market value adjustment of debt

 

(351)

 

(247)

 

Equity in losses of real estate venture

 

1,369

 

-

 

Changes in other operating accounts:

 

 

 

 

 

Other assets

 

2,147

 

892

 

Restricted cash

 

(26)

 

657

 

Accounts payable and accrued expenses

 

(6,800)

 

(6,400)

 

Other liabilities

 

647

 

821

 

 Net cash provided by operating activities

 

  $

30,581

 

  $

26,461

 

 

 

 

 

 

 

Investing Activities

 

 

 

 

 

Acquisitions of storage facilities

 

  $

(76,619)

 

  $

(6,857)

 

Additions and improvements to storage facilities

 

(5,112)

 

(4,229)

 

Development costs

 

(7,488)

 

(2,655)

 

Cash contributed to real estate venture

 

(1,050)

 

-

 

Cash distributed from real estate venture

 

1,524

 

-

 

Proceeds from sales of properties, net

 

-

 

10,993

 

Proceeds from notes receivable

 

-

 

5,192

 

Change in restricted cash

 

306

 

(71)

 

 Net cash (used in) provided by investing activities

 

  $

(88,439)

 

  $

2,373

 

 

 

 

 

 

 

Financing Activities

 

 

 

 

 

Proceeds from:

 

 

 

 

 

Revolving credit facility

 

  $

197,500

 

  $

60,600

 

Principal payments on:

 

 

 

 

 

Revolving credit facility

 

(165,500)

 

(75,600)

 

Mortgage loans and notes payable

 

(1,309)

 

(1,584)

 

Loan procurement costs

 

(57)

 

-

 

Proceeds from issuance of common shares

 

46,163

 

1,514

 

Exercise of stock options

 

560

 

785

 

Contributions from noncontrolling interests in subsidiaries

 

515

 

-

 

Distributions paid to common shareholders

 

(18,157)

 

(14,555)

 

Distributions paid to preferred shareholders

 

(1,502)

 

(1,502)

 

Distributions paid to noncontrolling interests in Operating Partnership

 

(296)

 

(362)

 

 Net cash provided by (used in) financing activities

 

  $

57,917

 

  $

(30,704)

 

 

 

 

 

 

 

Change in cash and cash equivalents

 

59

 

(1,870)

 

 

 

 

 

 

 

Cash and cash equivalents at beginning of period

 

3,176

 

4,495

 

Cash and cash equivalents at end of period

 

  $

3,235

 

  $

2,625

 

 

 

 

 

 

 

Supplemental Cash Flow and Noncash Information

 

 

 

 

 

Cash paid for interest, net of interest capitalized

 

  $

12,819

 

  $

14,359

 

Supplemental disclosure of noncash activities:

 

 

 

 

 

Derivative valuation adjustment

 

  $

592

 

  $

1,222

 

Foreign currency translation adjustment

 

  $

74

 

  $

(256)

 

Mortgage loan assumption - acquisition of storage facilities

 

  $

27,467

 

  $

-

 

 

See accompanying notes to the unaudited consolidated financial statements.

 

8



Table of Contents

 

CUBESMART, L.P. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands)

(unaudited)

 

 

 

March 31,

 

December 31,

 

 

2014

 

2013

 

 

 

 

 

ASSETS

 

 

 

 

Storage facilities

 

  $

2,660,819

 

  $

2,553,706

Less: Accumulated depreciation

 

(419,460)

 

(398,536)

Storage facilities, net (including VIE asssets of $41,624 and $34,559, respectively)

 

2,241,359

 

2,155,170

Cash and cash equivalents

 

3,235

 

3,176

Restricted cash

 

3,964

 

4,025

Loan procurement costs, net of amortization

 

12,086

 

12,687

Investment in real estate ventures, at equity

 

154,467

 

156,310

Other assets, net

 

27,420

 

27,256

Total assets

 

  $

2,442,531

 

  $

2,358,624

 

 

 

 

 

LIABILITIES AND CAPITAL

 

 

 

 

Unsecured senior notes

 

  $

500,000

 

  $

500,000

Revolving credit facility

 

70,600

 

38,600

Unsecured term loan

 

400,000

 

400,000

Mortgage loans and notes payable

 

226,025

 

200,218

Accounts payable, accrued expenses and other liabilities

 

49,627

 

57,599

Distributions payable

 

20,321

 

19,955

Deferred revenue

 

13,567

 

12,394

Security deposits

 

387

 

376

Total liabilities

 

1,280,527

 

1,229,142

 

 

 

 

 

Limited Partnership interest of third parties

 

38,807

 

36,275

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

Capital

 

 

 

 

Operating Partner

 

1,132,112

 

1,103,290

Accumulated other comprehensive loss

 

(10,360)

 

(11,014)

Total CubeSmart, L.P. capital

 

1,121,752

 

1,092,276

Noncontrolling interests in subsidiaries

 

1,445

 

931

Total capital

 

1,123,197

 

1,093,207

Total liabilities and capital

 

  $

2,442,531

 

  $

2,358,624

 

See accompanying notes to the unaudited consolidated financial statements.

 

9



Table of Contents

 

CUBESMART, L.P. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per common unit data)

(unaudited)

 

 

 

Three Months Ended March 31,

 

 

2014

 

2013

 

 

 

 

 

REVENUES

 

 

 

 

Rental income

 

  $

75,714

 

  $

66,252

Other property related income

 

10,147

 

7,258

Property management fee income

 

1,406

 

1,145

Total revenues

 

87,267

 

74,655

OPERATING EXPENSES

 

 

 

 

Property operating expenses

 

32,290

 

29,161

Depreciation and amortization

 

28,115

 

28,982

General and administrative

 

6,569

 

7,613

Total operating expenses

 

66,974

 

65,756

OPERATING INCOME

 

20,293

 

8,899

OTHER INCOME (EXPENSE)

 

 

 

 

Interest:

 

 

 

 

Interest expense on loans

 

(11,871)

 

(10,272)

Loan procurement amortization expense

 

(541)

 

(476)

Acquisition related costs

 

(1,679)

 

(115)

Equity in losses of real estate venture

 

(1,369)

 

-

Other

 

(593)

 

(73)

Total other expense

 

(16,053)

 

(10,936)

 

 

 

 

 

INCOME (LOSS) FROM CONTINUING OPERATIONS

 

4,240

 

(2,037)

 

 

 

 

 

DISCONTINUED OPERATIONS

 

 

 

 

Income from discontinued operations

 

336

 

1,381

Gain on disposition of discontinued operations

 

-

 

228

Total discontinued operations

 

336

 

1,609

NET INCOME (LOSS)

 

4,576

 

(428)

NET LOSS (INCOME) ATTRIBUTABLE TO

 

 

 

 

NONCONTROLLING INTERESTS

 

 

 

 

Noncontrolling interest in subsidiaries

 

3

 

1

NET INCOME (LOSS) ATTRIBUTABLE TO CUBESMART L.P.

 

4,579

 

(427)

Operating Partnership interest of third parties

 

(49)

 

35

NET INCOME (LOSS) ATTRIBUTABLE TO OPERATING PARTNER

 

4,530

 

(392)

Distribution to Preferred Units

 

(1,502)

 

(1,502)

NET INCOME (LOSS) ATTRIBUTABLE TO COMMON UNITHOLDERS

 

  $

3,028

 

  $

(1,894)

 

 

 

 

 

Basic earnings (loss) per share from continuing operations attributable to common unitholders

 

  $

0.02

 

  $

(0.03)

Basic earnings per share from discontinued operations attributable to common unitholders

 

  $

0.00

 

  $

0.02

Basic earnings (loss) per share attributable to common unitholders

 

  $

0.02

 

  $

(0.01)

 

 

 

 

 

Diluted earnings (loss) per share from continuing operations attributable to common unitholders

 

  $

0.02

 

  $

(0.03)

Diluted earnings per share from discontinued operations attributable to common unitholders

 

  $

0.00

 

  $

0.02

Diluted earnings (loss) per share attributable to common unitholders

 

  $

0.02

 

  $

(0.01)

 

 

 

 

 

Weighted-average basic units outstanding

 

140,219

 

132,951

Weighted-average diluted units outstanding

 

142,774

 

132,951

 

 

 

 

 

AMOUNTS ATTRIBUTABLE TO COMMON UNITHOLDERS

 

 

 

 

Income (loss) from continuing operations

 

  $

2,697

 

  $

(3,476)

Total discontinued operations

 

331

 

1,582

Net income (loss)

 

  $

3,028

 

  $

(1,894)

 

See accompanying notes to the unaudited consolidated financial statements.

 

10



Table of Contents

 

CUBESMART, L.P. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands)

(unaudited)

 

 

 

Three Months Ended March 31,

 

 

2014

 

2013

 

 

 

 

 

NET INCOME (LOSS)

 

  $

4,576

 

  $

(428)

Other comprehensive (loss) gain:

 

 

 

 

Unrealized losses on interest rate swap

 

(984)

 

(309)

Reclassification of realized losses on interest rate swaps

 

1,576

 

1,531

Unrealized gain (loss) on foreign currency translation

 

74

 

(256)

OTHER COMPREHENSIVE INCOME

 

666

 

966

COMPREHENSIVE INCOME

 

5,242

 

538

Comprehensive (income) loss attributable to Operating Partnership interest of third parties

 

(59)

 

17

Comprehensive loss attributable to noncontrolling interests in subsidiaries

 

1

 

10

COMPREHENSIVE INCOME ATTRIBUTABLE TO OPERATING PARTNER

 

  $

5,184

 

  $

565

 

See accompanying notes to the unaudited consolidated financial statements.

 

11



Table of Contents

 

CUBESMART, L.P. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CAPITAL

(in thousands)

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

 

 

Operating

 

 

Number of OP Units

Outstanding

 

Operating

 

Accumulated Other

Comprehensive

 

CubeSmart

L.P.

 

Noncontrolling

Interests in

 

Total

 

Partnership

Interest

 

 

Common

 

Preferred

 

Partner

 

(Loss) Income

 

Capital

 

Subsidiaries

 

Capital

 

of Third Parties

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2013

 

139,328

 

3,100

 

$

1,103,290

 

$

(11,014)

 

$

1,092,276

 

$

931

 

$

1,093,207

 

$

36,275

Contributions from noncontrolling interests in subsidiaries

 

 

 

 

 

 

 

 

 

 

 

$

515

 

515

 

 

Issuance of common OP units

 

2,705

 

 

 

46,162

 

 

 

46,162

 

 

 

46,162

 

 

Issuance of restricted OP units

 

114

 

 

 

1

 

 

 

1

 

 

 

1

 

 

Conversion from units to shares

 

14

 

 

 

234

 

 

 

234

 

 

 

234

 

(234)

Exercise of OP unit options

 

46

 

 

 

560

 

 

 

560

 

 

 

560

 

 

Amortization of restricted OP units

 

 

 

 

 

149

 

 

 

149

 

 

 

149

 

 

OP unit compensation expense

 

 

 

 

 

214

 

 

 

214

 

 

 

214

 

 

Adjustment for Operating Partnership interest of third parties

 

 

 

 

 

(3,001)

 

 

 

(3,001)

 

 

 

(3,001)

 

3,001

Net income (loss)

 

 

 

 

 

4,530

 

 

 

4,530

 

(3)

 

4,527

 

49

Other comprehensive gain:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gains on interest rate swaps

 

 

 

 

 

 

 

583

 

583

 

 

 

583

 

9

Unrealized gain on foreign currency translation

 

 

 

 

 

 

 

71

 

71

 

2

 

73

 

1

Preferred OP unit distributions

 

 

 

 

 

(1,502)

 

 

 

(1,502)

 

 

 

(1,502)

 

 

Common OP unit distributions

 

 

 

 

 

(18,525)

 

 

 

(18,525)

 

 

 

(18,525)

 

(294)

Balance at March 31, 2014

 

142,207

 

3,100

 

$

1,132,112

 

$

(10,360)

 

$

1,121,752

 

$

1,445

 

$

1,123,197

 

$

38,807

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

 

 

Operating

 

 

Number of OP Units

Outstanding

 

Operating

 

Accumulated Other

Comprehensive

 

CubeSmart

L.P.

 

Noncontrolling

Interests in

 

Total

 

Partnership

Interest

 

 

Common

 

Preferred

 

Partner

 

(Loss) Income

 

Capital

 

Subsidiaries

 

Capital

 

of Third Parties

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2012

 

131,795

 

3,100

 

$

1,009,587

 

$

(19,796)

 

$

989,791

 

$

118

 

$

989,909

 

$

47,990

Issuance of common OP units

 

100

 

 

 

1,512

 

 

 

1,512

 

 

 

1,512

 

 

Issuance of restricted OP units

 

211

 

 

 

2

 

 

 

2

 

 

 

2

 

 

Conversion from units to shares

 

1,013

 

 

 

14,601

 

 

 

14,601

 

 

 

14,601

 

(14,601)

Exercise of OP unit options

 

89

 

 

 

785

 

 

 

785

 

 

 

785

 

 

Amortization of restricted OP units

 

 

 

 

 

808

 

 

 

808

 

 

 

808

 

 

OP unit compensation expense

 

 

 

 

 

221

 

 

 

221

 

 

 

221

 

 

Adjustment for Operating Partnership interest of third parties

 

 

 

 

 

(2,915)

 

 

 

(2,915)

 

 

 

(2,915)

 

2,915

Net loss

 

 

 

 

 

(392)

 

 

 

(392)

 

(1)

 

(393)

 

(35)

Other comprehensive gain (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gain on interest rate swap

 

 

 

 

 

 

 

1,200

 

1,200

 

 

 

1,200

 

22

Unrealized loss on foreign currency translation

 

 

 

 

 

 

 

(243)

 

(243)

 

(9)

 

(252)

 

(4)

Preferred OP unit distributions

 

 

 

 

 

(1,502)

 

 

 

(1,502)

 

 

 

(1,502)

 

 

Common OP unit distributions

 

 

 

 

 

(14,702)

 

 

 

(14,702)

 

 

 

(14,702)

 

(251)

Balance at March 31, 2013

 

133,208

 

3,100

 

$

1,008,005

 

$

(18,839)

 

$

989,166

 

$

108

 

$

989,274

 

$

36,036

 

See accompanying notes to the unaudited consolidated financial statements.

 

12



Table of Contents

 

CUBESMART, L.P. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

 

 

 

Three Months Ended March 31,

 

 

2014

 

2013

 

 

 

 

 

Operating Activities

 

 

 

 

Net income (loss)

 

  $

4,576

 

  $

(428)

Adjustments to reconcile net income (loss) to cash provided by operating activities:

 

 

 

 

Depreciation and amortization

 

28,656

 

30,365

Gain on disposition of discontinued operations

 

-

 

(228)

Equity compensation expense

 

363

 

1,029

Accretion of fair market value adjustment of debt

 

(351)

 

(247)

Equity in losses of real estate venture

 

1,369

 

-

Changes in other operating accounts:

 

 

 

 

Other assets

 

2,147

 

892

Restricted cash

 

(26)

 

657

Accounts payable and accrued expenses

 

(6,800)

 

(6,400)

Other liabilities

 

647

 

821

 Net cash provided by operating activities

 

  $

30,581

 

  $

26,461

 

 

 

 

 

Investing Activities

 

 

 

 

Acquisitions of storage facilities

 

  $

(76,619)

 

  $

(6,857)

Additions and improvements to storage facilities

 

(5,112)

 

(4,229)

Development costs

 

(7,488)

 

(2,655)

Cash contributed to real estate venture

 

(1,050)

 

 

Cash distributed from real estate venture

 

1,524

 

-

Proceeds from sales of properties, net

 

-

 

10,993

Proceeds from notes receivable

 

-

 

5,192

Change in restricted cash

 

306

 

(71)

 Net cash (used in) provided by investing activities

 

  $

(88,439)

 

  $

2,373

 

 

 

 

 

Financing Activities

 

 

 

 

Proceeds from:

 

 

 

 

Revolving credit facility

 

  $

197,500

 

  $

60,600

Principal payments on:

 

 

 

 

Revolving credit facility

 

(165,500)

 

(75,600)

Mortgage loans and notes payable

 

(1,309)

 

(1,584)

Loan procurement costs

 

(57)

 

-

Proceeds from issuance of common OP units

 

46,163

 

1,514

Exercise of OP unit options

 

560

 

785

Contributions from noncontrolling interests in subsidiaries

 

515

 

-

Distributions paid to common unitholders

 

(18,453)

 

(14,917)

Distributions paid to preferred unitholders

 

(1,502)

 

(1,502)

Distributions paid to noncontrolling interests in subsidiaries

 

-

 

-

 Net cash provided by (used in) financing activities

 

  $

57,917

 

  $

(30,704)

 

 

 

 

 

Change in cash and cash equivalents

 

59

 

(1,870)

 

 

 

 

 

Cash and cash equivalents at beginning of period

 

3,176

 

4,495

Cash and cash equivalents at end of period

 

  $

3,235

 

  $

2,625

 

 

 

 

 

Supplemental Cash Flow and Noncash Information

 

 

 

 

Cash paid for interest, net of interest capitalized

 

  $

12,819

 

  $

14,359

Supplemental disclosure of noncash activities:

 

 

 

 

Derivative valuation adjustment

 

  $

592

 

  $

1,222

Foreign currency translation adjustment

 

  $

74

 

  $

(256)

Mortgage loan assumption - acquisition of storage facilities

 

  $

27,467

 

  $

-

 

See accompanying notes to the unaudited consolidated financial statements.

 

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CUBESMART AND CUBESMART, L.P.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

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 March 31, 2014, the Company owned self-storage facilities located in 20 states throughout the United States and the District of Columbia which are presented under one reportable segment: the Company owns, operates, develops, manages and acquires self-storage facilities.

 

As of March 31, 2014, the Parent Company owned approximately 98.4% 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 facilities 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 for cash equal to the fair value of an equivalent number of common shares of the Parent Company.  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.  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.”

 

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, 2013, 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, 2013.  The results of operations for the three months ended March 31, 2014 and 2013 are not necessarily indicative of the results of operations to be expected for any future period or the full year.

 

Recent Accounting Pronouncements

 

In April 2014, the Financial Accounting Standards Board (“FASB”) issued an update to the accounting standard for the reporting of discontinued operations.  The update redefines discontinued operations, changing the criteria for determining which disposals can be presented as discontinued operations and modifies related disclosure requirements.  This amendment becomes effective for annual periods beginning on or after December 15, 2014, and interim periods beginning on or after December 15, 2015; however, early adoption is permitted.  The adoption of this guidance in 2014 did not have a material impact on the Company’s consolidated financial position or results of operations because the Company did not dispose of any assets during the three months ended March 31, 2014.

 

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3.  STORAGE FACILITIES

 

The book value of the Company’s real estate assets is summarized as follows:

 

 

 

 

March 31,

 

 

December 31,

 

 

 

2014

 

 

2013

 

 

 

(in thousands)

Land

 

  $

480,296

 

  $

465,680

Buildings and improvements

 

1,980,005

 

1,888,823

Equipment

 

167,665

 

158,000

Construction in progress

 

32,853

 

41,203

Storage facilities

 

2,660,819

 

2,553,706

Less: Accumulated depreciation

 

(419,460)

 

(398,536)

Storage facilities, net

 

  $

2,241,359

 

  $

2,155,170

 

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The following table summarizes the Company’s acquisition and disposition activity from the period beginning on January 1, 2013 through March 31, 2014:

 

Facility/Portfolio

 

Location

 

Transaction Date

 

Number of
Facilities

 

Purchase / Sales
Price (in
thousands)

 

 

 

 

 

 

 

 

 

2014 Acquisitions:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Manchester Asset

 

Manchester, CT

 

January 2014

 

1

 

  $

4,950

 

 

 

 

 

 

 

 

 

 

Coconut Creek Asset

 

Coconut Creek, FL

 

January 2014

 

1

 

14,000

Florida Assets

 

Palm Coast, FL

 

January 2014

 

2

 

14,450

Fremont Asset

 

Fremont, CA

 

January 2014

 

1

 

8,300

Temple Hills Asset

 

Temple Hills, MD

 

February 2014

 

1

 

15,800

Timonium Asset

 

Timonium, MD

 

February 2014

 

1

 

15,500

Phoenix Asset

 

Phoenix, AZ

 

March 2014

 

1

 

14,750

Philadelphia Asset

 

Philadelphia, PA

 

March 2014

 

1

 

7,350

Frisco Asset

 

Frisco, TX

 

March 2014

 

1

 

8,225

 

 

 

 

 

 

10

 

  $

103,325

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2013 Acquisitions:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gilbert Asset

 

Gilbert, AZ

 

March 2013

 

1

 

  $

6,900

 

 

 

 

 

 

 

 

 

 

Evanston Asset

 

Evanston, IL

 

May 2013

 

1

 

8,300

Delray Beach Asset

 

Delray Beach, FL

 

May 2013

 

1

 

7,150

Miramar Asset

 

Miramar, FL

 

June 2013

 

1

 

9,000

Stoneham Asset

 

Stoneham, MA

 

June 2013

 

1

 

10,600

Maryland/New Jersey Assets

Multiple locations in MD and NJ

 

June 2013

 

5

 

52,400

Staten Island Asset

 

Staten Island, NY

 

July 2013

 

1

 

13,000

Lewisville Asset

 

Lewisville, TX

 

August 2013

 

1

 

10,975

Chandler Asset

 

Chandler, AZ

 

September 2013

 

1

 

10,500

Tempe Asset

 

Tempe, AZ

 

September 2013

 

1

 

4,300

Clinton Asset

 

Clinton, MD

 

November 2013

 

1

 

15,375

Katy Asset

 

Katy, TX

 

November 2013

 

1

 

9,700

Richmond Asset

 

Richmond, TX

 

December 2013