Business Context and Reporting Period
CubeSmart (CubeSmart, L.P.) filed a Current Report on Form 8-K on November 9, 2011, regarding events occurring on November 3, 2011. The Company is a Maryland real estate investment trust that operates through a Delaware limited partnership. The filing details the partial completion of the "Storage Deluxe Acquisition," a portfolio purchase of 22 self-storage facilities announced in October 2011.
Key Financial Metrics and Transaction Details
The filing focuses on the financial structure of the Storage Deluxe Acquisition rather than standard operating metrics like revenue or profit margins for the period.
- Total Portfolio Value: Approximately $560 million for 22 facilities (approx. 1.6 million rentable square feet).
- Transaction Structure: Approximately $472 million in cash and the assumption of approximately $88 million in existing fixed-rate debt.
- Closing on November 3, 2011: Acquisition of 16 unencumbered properties completed.
- Price Paid (Nov 3): Approximately $357.3 million.
- Funding Sources (Nov 3):
- Approximately $269.9 million from net proceeds of recent public offerings of common and preferred shares.
- Approximately $93 million from borrowings under the revolving portion of the existing unsecured credit facility.
- Approximately $36 million released from escrow (part of the original $45 million earnest money deposit).
Material Changes and Transaction Status
The primary material change is the partial closing of the Storage Deluxe Acquisition. While 16 properties were acquired on November 3, 2011, the remaining 6 properties have not yet closed.
- Remaining Properties: Anticipated purchase price of approximately $202.7 million, including the assumption of $88 million in secured fixed-rate debt.
- Expected Closing Date: Management expects to close on the remaining properties during the first quarter of 2012, contingent upon the completion of the loan assumption process.
- Delays: Closing on two of the remaining properties may be further extended to secure third-party consents.
Guidance, Risks, and Unusual Items
The filing contains specific risks regarding the completion of the transaction and disclosures regarding future financial reporting.
- Completion Risk: The Company explicitly states it cannot assure that the acquisition of the remaining properties will be completed as anticipated or at all.
- Financial Statements: Audited and unaudited financial statements for the acquired properties are not included in this filing. They are required to be filed by January 19, 2012.
- Pro Forma Information: Pro forma financial information giving effect to the acquisition will be included in an amendment to this Form 8-K by January 19, 2012.
Key Facts for Investor Verification
- Verify the successful closing of the remaining 6 properties in Q1 2012 as anticipated.
- Review the financial statements of the acquired businesses when filed by January 19, 2012.
- Monitor the utilization of the revolving credit facility ($93 million drawn) and its impact on liquidity.
- Confirm the final assumption of the $88 million secured fixed-rate debt associated with the remaining properties.