| INVESTMENT IN UNCONSOLIDATED REAL ESTATE VENTURES |
5. INVESTMENTS IN UNCONSOLIDATED REAL ESTATE VENTURES The Company’s investments in unconsolidated real estate ventures are summarized as follows (dollars in thousands): | | | | | | | | | | | | | | | CubeSmart | | Number of Stores as of | | Carrying Value of Investment as of | | | Ownership | | June 30, | | December 31, | | June 30, | | December 31, | Unconsolidated Real Estate Ventures | | Interest | | 2025 | | 2024 | | 2025 | | 2024 | Fontana Self Storage, LLC ("Fontana") (1) | | 50% | | 1 | | 1 | | $ | 13,016 | | $ | 13,200 | Rancho Cucamonga Self Storage, LLC ("RCSS") (1) | | 50% | | 1 | | 1 | | | 19,824 | | | 20,107 | 191 V CUBE LLC ("HVP V") | | 20% | | 6 | | 6 | | | 10,490 | | | 11,353 | 191 IV CUBE LLC ("HVP IV") (2) | | 20% | | - | | 28 | | | — | | | 14,591 | CUBE HHF Northeast Venture LLC ("HHFNE") | | 10% | | 13 | | 13 | | | 1,287 | | | 1,469 | CUBE HHF Limited Partnership ("HHF") | | 50% | | 28 | | 28 | | | 30,023 | | | 31,253 | | | | | 49 | | 77 | | $ | 74,640 | | $ | 91,973 |
| (1) | On December 9, 2021, the Company completed the acquisition of LAACO, which included a 50% interest in Fontana and RCSS, each of which owns one self-storage property in California. As of the date of acquisition, the Company recognized differences between the Company’s equity investment in Fontana and RCSS and the underlying equity reflected at the venture level. These differences are being amortized over the expected useful life of the self-storage properties owned by the ventures. As of June 30, 2025, the remaining unamortized difference was $12.3 million for Fontana and $18.3 million for RCSS. |
| (2) | On February 20, 2025, the Company purchased the remaining 80% interest in HVP IV for $452.8 million and consolidated the venture’s assets and liabilities. The $452.8 million purchase price included $44.4 million to repay the Company’s portion of the venture’s existing indebtedness, which was repaid in full at the time of the transaction (see note 4). |
The Company determined that Fontana, RCSS, HVP V, HVP IV, HHFNE and HHF (collectively, the “Ventures”) are not VIEs in accordance with the accounting standard for the consolidation of VIEs. As a result, the Company used the voting interest model under the accounting standard for consolidation in order to determine whether to consolidate the Ventures. Based upon each member’s substantive participating rights over the activities of each entity as stipulated in the operating agreements, the Ventures are not consolidated by the Company and are accounted for under the equity method of accounting (except for HVP IV, which was consolidated as of the Company’s purchase of the remaining 80% interest on February 20, 2025). The Company’s investments in the Ventures are included in Investment in real estate ventures, at equity on the Company’s consolidated balance sheets and the Company’s earnings from its investments in the Ventures are presented in Equity in earnings of real estate ventures within the Company’s consolidated statements of operations. The amounts reflected in the following table are based on the historical financial information of the Ventures. The following is a summary of the financial position of the Ventures as of June 30, 2025 and December 31, 2024. | | | | | | | | | June 30, | | December 31, | | | 2025 | | 2024 | | Assets | | (in thousands) | Storage properties, net | | $ | 374,458 | | $ | 684,067 | Other assets | | | 13,984 | | | 17,126 | Total assets | | $ | 388,442 | | $ | 701,193 | | | | | | | | Liabilities and equity | | | | | | | Debt | | $ | 251,838 | | $ | 472,633 | Other liabilities | | | 7,327 | | | 17,462 | Equity | | | | | | | CubeSmart | | | 44,091 | | | 60,993 | Joint venture partners | | | 85,186 | | | 150,105 | Total liabilities and equity | | $ | 388,442 | | $ | 701,193 |
The following is a summary of results of operations of the Ventures for the three and six months ended June 30, 2025 and 2024. | | | | | | | | | | | | | | | Three Months Ended June 30, | | Six Months Ended June 30, | | | 2025 (1) | | 2024 | | 2025 (1) | | 2024 | | | | (in thousands) | Total revenues | | $ | 14,296 | | $ | 24,840 | | $ | 34,418 | | $ | 49,426 | Operating expenses | | | (6,256) | | | (10,540) | | | (15,173) | | | (20,915) | Other expenses | | | (128) | | | (111) | | | (238) | | | (217) | Interest expense, net | | | (3,013) | | | (6,576) | | | (7,941) | | | (11,234) | Depreciation and amortization | | | (4,056) | | | (7,408) | | | (10,352) | | | (14,940) | Net income | | $ | 843 | | $ | 205 | | $ | 714 | | $ | 2,120 | Company’s share of net income | | $ | 547 | | $ | 425 | | $ | 926 | | $ | 1,270 |
| (1) | HVP IV’s results of operations are included through February 20, 2025 (date of consolidation). |
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