CubeSmart
Annual Report 2019

Plain-text annual report

2019 Annual Report  (NYSE: CUBE) CubeSmart (NYSE: CUBE), headquartered in Malvern, Pennsylvania, is one of the largest owners and operators of self-storage properties in the United States. CubeSmart is organized as a Maryland real estate investment trust. Our stores are designed to offer affordable, easily accessible and, in most locations, climate-controlled storage space for our residential and commercial customers. As of December 31, 2019, we owned 523 stores located in 24 states and the District of Columbia containing an aggregate of approximately 36.6 million rentable square feet. In addition, as of December 31, 2019, we managed 649 stores for third-party owners in 38 states and the District of Columbia containing an aggregate of approximately 43.0 million rentable square feet, bringing the total number of stores we operated to 1,172. In 2019, we continued to deliver on our core strategic objectives of:  Producing attractive organic growth in an increasingly competitive environment through a sophisticated operating platform;  Growing our portfolio of high-quality, well-positioned storage assets concentrated in targeted investment markets with appealing demographic trends and long-term growth prospects; and  Maintaining a conservative, unsecured balance sheet that provides an attractive long-term cost of capital and the flexibility to support our external growth objectives. Our focus on these core strategic objectives resulted in another year of solid growth when considering the short-term dilution generated by our value creation pipeline of recently developed assets and competition from new supply in many of our core markets. Attractive Organic Growth In a competitive operating environment that was characterized by high occupancies and increased levels of new supply, the Company’s strong operating performance in 2019 reflects the quality of our operating platform and the commitment of our teammates. At CubeSmart, we strategically invest in people, training and technology to better meet our customers’ needs and exceed their expectations by delivering a superior storage experience. In recognition of these efforts, CubeSmart received numerous external awards for outstanding customer service including the 2019 People’s Choice Stevie Award for Best Customer Service. Our more than 3,000 dedicated teammates serve with passion and exceed expectations by delivering our customer-centric service model every day. We remain committed to building upon our proprietary operating platform, which sets us apart in an industry characterized by broad fragmentation, generic service offerings and relatively unsophisticated technology solutions. In 2019, we continued to refine our digital marketing platform by expanding media channels and utilizing data and technologies to more efficiently attract potential customers searching for a solution to their storage needs. Additionally, we continued to enhance our revenue management processes by analyzing existing customer data and leveraging sophisticated forecasting and optimization models to set pricing and promotion strategies that attract customers to CubeSmart and maximize the revenue potential from every rental opportunity. A Portfolio of High-Quality, Well-Positioned Storage Assets CubeSmart’s portfolio is concentrated in targeted investment markets with strong demographics, including an industry-leading market share in New York City. Our external growth strategy is focused on acquiring existing cash-flowing properties, acquiring recently developed properties that are still in the early stages of lease-up and entering into selective development or acquisition opportunities with joint venture partners. In 2019, we continued to grow our portfolio by acquiring 29 properties for a total investment of $246.6 million. Included in those 29 properties are 18 properties that we were able to acquire for $128.3 million as part of our successful exit from one of our unconsolidated joint ventures. As part of that transaction, the joint venture sold 50 non-core properties for $293.5 million which subsequently allowed us to unlock a promoted return and acquire our partner’s 90% interest in the remaining 18 properties at an attractive valuation. Our development pipeline continues to produce high-quality stores as we opened three new stores in Queens, NY, Bayonne, NJ and Waltham, MA for a total investment of $90.6 million. Additionally, in 2019 we contributed $10.2 million to one of our other unconsolidated joint ventures, which acquired eight recently developed properties. During 2019, we also disposed of one non-strategic property for $4.1 million. Going forward, we expect to selectively invest in additional store acquisitions, new development properties and joint ventures that generate attractive risk- adjusted returns for the Company. Our third-party management platform has been, and continues to be, an important part of our portfolio growth and strategy. We continue to see significant and growing interest from private owners and developers who recognize the benefit of CubeSmart’s brand, sophisticated operating platform, real-time reporting and administrative support. During the past year, we added 199 new stores to the platform, ending the year with 649 third-party stores under management. Importantly, our third-party management platform increases CubeSmart’s scale and market penetration, adds a profitable revenue stream and serves as an attractive pipeline for future acquisition opportunities. This platform, combined with our deep industry relationships and disciplined investment process, provides us with a significant competitive advantage as we pursue our external growth objectives. A Conservative, Unsecured Balance Sheet We have long communicated our objective of maintaining an unsecured balance sheet that affords significant financing and portfolio management flexibility, while supporting an attractive long-term cost of capital. During 2019, both Moody’s and Standard & Poor’s reaffirmed the Company’s credit ratings of Baa2 and BBB, respectively. The Company finished 2019 with debt to total gross assets of 39.0% and a secured debt balance that represented just 1.9% of our total gross asset value. CubeSmart’s financial position remains strong and we have proven access to the full array of capital resources. In June, we amended and restated our revolving line of credit, expanding its capacity to $750 million, extending the maturity out to 2024 and improving pricing. To support our external growth initiatives in 2019, the Company completed two public offerings of unsecured notes, in January and October, raising aggregate gross proceeds of $700 million. Additionally, we prudently utilized our “at-the-market” equity program to sell common shares, raising $196.3 million in net proceeds. Looking forward, we expect to continue to fund growth in a manner that maintains credit metrics consistent with our investment grade ratings. Corporate Responsibility CubeSmart is dedicated to growing strategically and consciously in a sustainable manner that is beneficial to all of our stakeholders. We proactively pursue environmental and energy-efficient initiatives that positively impact the well-being of our customers, teammates and communities, while also improving our profitability. During 2019, we continued to install solar energy systems at select properties, invest in energy-efficient upgrades of HVAC and lighting equipment to reduce energy consumption and minimize the use of toner and paper through our innovative paperless transaction processes. We believe that implementation of sustainable business practices benefits our teammates, stakeholders and the communities in which we operate. Our Board of Trustees recognizes the importance of integrity and is dedicated to maintaining sound corporate governance and shareholder engagement practices, as demonstrated by scoring in the top twenty percent of peer companies for corporate governance by ISS. We are committed to the long-term benefit of our shareholders through the highest ethical standards and upholding our corporate responsibilities. The CubeSmart Code of Business Conduct and Ethics shapes our management, operation and governance of the Company, supporting and promoting diversity, inclusion and fairness. Going forward, CubeSmart will continue to maintain our sound corporate governance practices, reduce the environmental impact of our operations, and improve engagement with our teammates, investors and our communities. Value Creation At CubeSmart, we are committed to enhancing our high-quality portfolio, sophisticated operating platform and award-winning customer service while maintaining a conservative, unsecured balance sheet. During 2019, we continued to execute on our strategy by expanding our portfolio in targeted core markets and raising attractive capital to finance our continued growth while continuing to grow and improve our operating platform. Despite elevated levels of new supply, demand for self-storage remains steady and we believe our sophisticated platform and high-quality portfolio are well positioned to continue to meet any competitive challenges. We thank you for your interest and support as we remain focused on creating long-term value for all of our stakeholders. UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-K  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2019 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) Commission file number 000-54462 (CubeSmart, L.P.) CUBESMART CUBESMART, L.P. (Exact Name of Registrant as Specified in Its Charter) Maryland (CubeSmart) Delaware (CubeSmart, L.P.) (State or Other Jurisdiction of Incorporation or Organization) 5 Old Lancaster Road Malvern, Pennsylvania (Address of Principal Executive Offices) 20-1024732 (CubeSmart) 34-1837021 (CubeSmart, L.P.) (IRS Employer Identification No.) 19355 (Zip Code) Registrant’s telephone number, including area code (610) 535-5000 Securities registered pursuant to Section 12(b) of the Act: Title of Each Class Common Shares, $0.01 par value per share, of CubeSmart Trading Symbol(s) CUBE Name of Each Exchange on Which Registered New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: Units of General Partnership Interest of CubeSmart, L.P. Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. CubeSmart CubeSmart, L.P. Yes  No  Yes  No  Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. CubeSmart CubeSmart, L.P. Yes  No  Yes  No  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 CubeSmart, L.P. Yes  No  Yes  No  Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). CubeSmart CubeSmart, L.P. Yes  No  Yes  No  Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act: CubeSmart: Large accelerated filer  CubeSmart, L.P.: Large accelerated filer  Accelerated filer  Non-accelerated filer  Smaller reporting company  Emerging growth company  Accelerated filer  Non-accelerated filer  Smaller reporting company  Emerging growth company  If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. CubeSmart CubeSmart, L.P.   Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). CubeSmart CubeSmart, L.P. Yes  No  Yes  No  As of June 28, 2019, the last business day of CubeSmart’s most recently completed second fiscal quarter, the aggregate market value of common shares held by non-affiliates of CubeSmart was $6,407,986,013. As of February 19, 2020, the number of common shares of CubeSmart outstanding was 193,582,271. As of June 28, 2019, the last business day of CubeSmart, L.P.’s most recently completed second fiscal quarter, the aggregate market value of the 1,865,570 units of limited partnership (the “OP Units”) held by non-affiliates of CubeSmart, L.P. was $62,384,661 based upon the last reported sale price of $33.44 per share on the New York Stock Exchange on June 28, 2019 of the common shares of CubeSmart, the sole general partner of CubeSmart, L.P. (For this computation, the market value of all OP Units beneficially owned by CubeSmart has been excluded.) Documents incorporated by reference: Portions of the Proxy Statement for the 2020 Annual Meeting of Shareholders of CubeSmart to be filed subsequently with the SEC are incorporated by reference into Part III of this report. EXPLANATORY NOTE This report combines the annual reports on Form 10-K for the year ended December 31, 2019 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 and/or the Operating Partnership. The Parent Company is the sole general partner of the Operating Partnership and, as of December 31, 2019, owned a 99.0% interest in the Operating Partnership. The remaining 1.0% interest consists of common units of limited partnership interest issued by the Operating Partnership to third parties in exchange for contributions of properties 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 a 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 of 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 the 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 annual reports on Form 10-K 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 2 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 9A - Controls and Procedures sections, signature pages and Exhibits 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, as amended (the “Exchange Act”) and 18 U.S.C. §1350. 3 TABLE OF CONTENTS PART I Item 1. Business Item 1A. Risk Factors Item 1B. Unresolved Staff Comments Item 2. Properties Item 3. Legal Proceedings Item 4. Mining Safety Disclosures PART II Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters, and Issuer Purchases of Equity Securities Item 6. Selected Financial Data Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations Item 7A. Quantitative and Qualitative Disclosures About Market Risk Item 8. Financial Statements and Supplementary Data Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure Item 9A. Controls and Procedures Item 9B. Other Information PART III Item 10. Trustees, Executive Officers, and Corporate Governance Item 11. Executive Compensation Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters Item 13. Certain Relationships and Related Transactions, and Trustee Independence Item 14. Principal Accountant Fees and Services PART IV Item 15. Exhibits and Financial Statement Schedules Item 16. Form 10-K Summary 5 6 12 26 26 28 28 28 28 30 35 46 47 47 47 48 48 48 48 48 49 49 49 49 55 4 PART I Forward-Looking Statements This Annual Report on Form 10-K, 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 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 or persons acting on their behalf 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 such forward-looking 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 this Report and in our other filings with the Securities and Exchange Commission (“SEC”). These risks include, but are not limited to, the following:              adverse changes in the national and local economic, business, real estate and other market conditions; the effect of competition from existing and new self-storage properties and operators on our ability to maintain or raise occupancy and rental rates; the failure to execute our business plan; reduced availability and increased costs 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 or future indebtedness; increases in interest rates and operating costs; counterparty non-performance related to the use of derivative financial instruments; risks related to our ability to maintain the Parent Company’s qualification as a REIT for federal income tax purposes; the failure of acquisitions and developments to close on expected terms, or at all, or to perform as expected; increases in taxes, fees and assessments from state and local jurisdictions; the failure of our joint venture partners to fulfill their obligations to us or their pursuit of actions that are inconsistent with our objectives; reductions in asset valuations and related impairment charges; cyber security breaches or a failure of our networks, systems or technology, which could adversely impact our business, customer and employee relationships;  changes in real estate, zoning, use and occupancy laws or regulations; 5       risks related to natural disasters or acts of violence, pandemics, active shooters, terrorism or war that affect the markets in which we operate; potential environmental and other liabilities; uninsured or uninsurable losses and the ability to obtain insurance coverage against risks and losses; our ability to attract and retain talent in the current labor market; other factors affecting the real estate industry generally or the self-storage industry in particular; and other risks identified in this Report 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. Because of the factors referred to above, the future events discussed in or incorporated by reference in this Report may not occur and actual results, performance or achievement could differ materially from that anticipated or implied in the forward-looking statements. ITEM 1. BUSINESS Overview We are a self-administered and self-managed real estate company focused primarily on the ownership, operation, management, acquisition and development of self-storage properties in the United States. As of December 31, 2019, we owned 523 self-storage properties located in 24 states and in the District of Columbia containing an aggregate of approximately 36.6 million rentable square feet. As of December 31, 2019, approximately 89.5% of the rentable square footage at our owned stores was leased to approximately 306,000 customers, and no single customer represented a significant concentration of our revenues. As of December 31, 2019, we owned stores in the District of Columbia and the following 24 states: Arizona, California, Colorado, Connecticut, Florida, Georgia, Illinois, Indiana, Maryland, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, North Carolina, Ohio, Pennsylvania, Rhode Island, South Carolina, Tennessee, Texas, Utah and Virginia. In addition, as of December 31, 2019, we managed 649 stores for third parties (including 91 stores containing an aggregate of approximately 6.3 million net rentable square feet as part of four separate unconsolidated real estate ventures) bringing the total number of stores we owned and/or managed to 1,172. As of December 31, 2019, we managed stores for third parties in the District of Columbia and the following 38 states: Alabama, Arizona, California, Colorado, Connecticut, Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, Tennessee, Texas, Utah, Vermont, Virginia, Washington and Wisconsin. Our self-storage properties are designed to offer affordable and easily-accessible storage space for our residential and commercial customers. Our customers rent storage cubes for their exclusive use, typically on a month-to-month basis. Additionally, some of our stores offer outside storage areas for vehicles and boats. Our stores are designed to accommodate both residential and commercial customers, with features such as wide aisles and load-bearing capabilities for large truck access. All of our stores have a storage associate available to assist our customers during business hours, and 302, or approximately 57.7%, of our owned stores have a manager who resides in an apartment at the store. Our customers can access their storage cubes during business hours, and some of our stores provide customers with 24-hour access through computer-controlled access systems. Our goal is to provide customers with the highest standard of physical attributes and service in the industry. To that end, 442, or approximately 84.5%, of our owned stores include climate-controlled cubes. The Parent Company was formed in July 2004 as a Maryland REIT. The Parent Company owns its assets and conducts its business through the Operating Partnership, and its subsidiaries. The Parent Company controls the Operating Partnership as its sole general partner and, as of December 31, 2019, owned a 99.0% interest in the Operating Partnership. The Operating Partnership was formed in July 2004 as a Delaware limited partnership and has been engaged in virtually all aspects of the self-storage business, including the development, acquisition, management, ownership and operation of self-storage properties. 6 Acquisition and Disposition Activity As of December 31, 2019 and 2018, we owned 523 and 493 stores, respectively, that contained an aggregate of 36.6 million and 34.6 million rentable square feet with occupancy levels of 89.5% and 89.0%, respectively. A complete listing of, and additional information about, our stores is included in Item 2 of this Report. The following is a summary of our 2019, 2018 and 2017 acquisition and disposition activity: Asset/Portfolio 2019 Acquisitions: Maryland Asset Florida Assets Arizona Asset HVP III Assets Georgia Asset South Carolina Asset Texas Asset Florida Assets California Asset 2019 Disposition: Texas Asset 2018 Acquisitions: Texas Asset Texas Asset Metro DC Asset Nevada Asset North Carolina Asset California Asset Texas Asset California Asset New York Asset Illinois Asset 2018 Dispositions: Arizona Assets 2017 Acquisitions: Illinois Asset Maryland Asset California Asset Texas Asset Florida Asset Illinois Asset Florida Asset Market Transaction Date Stores Number of Purchase / Sale Price (in thousands) Baltimore / DC Florida Markets - Other Phoenix Various (see note 4) Atlanta Charleston Texas Markets - Major Florida Markets - Other Los Angeles March 2019 April 2019 May 2019 June 2019 August 2019 August 2019 October 2019 November 2019 December 2019 1 2 1 18 1 1 1 3 1 29 $ $ 22,000 19,000 1,550 128,250 (1) 14,600 3,300 7,300 32,100 18,500 246,600 Texas Markets - Major October 2019 1 1 $ $ 4,146 4,146 Texas Markets - Major Texas Markets - Major Baltimore / DC Las Vegas Charlotte Los Angeles Texas Markets - Major San Diego New York / Northern NJ Chicago January 2018 May 2018 July 2018 September 2018 September 2018 October 2018 October 2018 November 2018 November 2018 December 2018 Phoenix November 2018 Chicago Baltimore / DC Sacramento Texas Markets - Major Florida Markets - Other Chicago Florida Markets - Other April 2017 May 2017 May 2017 October 2017 October 2017 November 2017 December 2017 1 1 1 1 1 1 1 1 1 1 10 2 2 1 1 1 1 1 1 1 7 $ $ 12,200 19,000 34,200 14,350 11,000 53,250 23,150 19,118 37,000 4,250 227,518 $ $ 17,502 17,502 $ $ 11,200 18,200 3,650 4,050 14,500 11,300 17,750 80,650 7 (1) Amount represents the purchase price for 90% of the ownership interest in 191 III CUBE LLC ("HVP III"), which at the time of the acquisition owned 18 storage properties (see note 4). The comparability of our results of operations is affected by the timing of acquisition and disposition activities during the periods reported. As of December 31, 2019, 2018 and 2017, we owned 523, 493 and 484 self-storage properties and related assets, respectively. The following table summarizes the change in number of owned stores from January 1, 2017 through December 31, 2019: Balance - January 1 Stores acquired Stores developed Balance - March 31 Stores acquired Stores developed Stores combined (1) Balance - June 30 Stores acquired Stores developed Balance - September 30 Stores acquired Stores developed Stores combined (1) Stores sold Balance - December 31 2019 2018 2017 493 1 — 494 21 2 (1) 516 2 1 519 5 — — (1) 523 484 1 — 485 1 — — 486 3 1 490 5 — — (2) 493 475 — 1 476 3 — (1) 478 — 2 480 4 1 (1) — 484 (1) On May 16, 2017, October 2, 2017 and May 24, 2019, we acquired stores located in Sacramento, CA, Keller, TX and Tempe, AZ for approximately $3.7 million, $4.1 million and $1.6 million, respectively. In each case, the store acquired is located directly adjacent to an existing wholly-owned store. Given their proximity to each other, each acquired store has been combined with the existing adjacent store in our store count, as well as for operational and reporting purposes. Financing and Investing Activities The following summarizes certain financing and investing activities during the year ended December 31, 2019:  Store Acquisitions. During 2019, we acquired 11 self-storage properties located in Arizona (1), California (1), Florida (5), Georgia (1), Maryland (1), South Carolina (1) and Texas (1), for an aggregate purchase price of approximately $118.3 million. Additionally, on June 6, 2019, we acquired our partner’s 90% ownership interest in 191 III CUBE LLC (“HVP III”), an unconsolidated real estate venture in which we previously owned a 10% noncontrolling interest, for $128.3 million. As of the date of acquisition, HVP III owned 18 stores located in Georgia (1), Massachusetts (7), North Carolina (1), South Carolina (7) and Tennessee (2). As of December 31, 2019, we had two stores under contract for an aggregate purchase price of $57.5 million.  Development Activity. During 2019, we completed construction and opened for operation three joint venture properties located in Massachusetts (1), New Jersey (1) and New York (1). As of December 31, 2019, we had five joint venture development properties under construction located in Massachusetts (1), New York (2), Pennsylvania (1) and Virginia (1) which are expected to be completed by the second quarter of 2021. As of December 31, 2019, we had invested $58.6 million of an expected $131.9 million, related to these five projects.  Consolidated Development Joint Venture Buy-outs. During 2019, we acquired the noncontrolling members’ interest in six previously consolidated development joint ventures for an aggregate purchase price of $94.6 million. The stores are located in Massachusetts (1), New Jersey (1) and New York (4) and are wholly-owned by the Company as of December 31, 2019.  Store Disposition. On October 7, 2019, we sold a store in Texas for a sales price of approximately $4.1 million. We recorded a $1.5 million gain in connection with the sale.  Unconsolidated Real Estate Venture Activity. During 2019, 191 IV CUBE LLC, an unconsolidated real estate venture in which we own a 20% interest, acquired eight stores for an aggregate purchase price of $122.5 million, of which we contributed $10.2 million. 8 The acquired stores are located in Florida (1), Minnesota (1), Pennsylvania (1) and Texas (5). Additionally, on June 5, 2019, HVP III sold 50 stores located in Florida (3), Georgia (4), Michigan (17), North Carolina (3), South Carolina (15) and Tennessee (8), to an unaffiliated third party buyer for an aggregate sales price of $293.5 million. The venture recorded gains which aggregated to approximately $106.7 million in connection with the sale.  Debt Offerings. On January 30, 2019, we issued $350.0 million in aggregate principal amount of unsecured senior notes due February 15, 2029, which bear interest at a rate of 4.375% per annum. Net proceeds from the offering were used to repay all of the outstanding indebtedness under the $200.0 million unsecured term loan portion of our credit facility that was scheduled to mature in January 2019. The remaining proceeds from the offering were used to repay a portion of the outstanding indebtedness under the revolving portion of our credit facility. Additionally, on October 11, 2019, we issued $350.0 million in aggregate principal amount of unsecured senior notes due February 15, 2030 which bear interest at a rate of 3.000% per annum. Net proceeds from the offering were used to repay all of the outstanding indebtedness under the revolving portion of our credit facility and for working capital and other corporate purposes.  Credit Facility Amendment. On June 19, 2019, we amended and restated, in its entirety, our credit facility which, subsequent to the amendment and restatement, is comprised of a $750.0 million unsecured revolving facility (the “Revolver”) maturing on June 19, 2024. At our current Baa2/BBB level, amounts drawn under the Revolver are priced at 1.10% over LIBOR, inclusive of a facility fee of 0.15%.  Term Loan Repayments. During 2019, we repaid all $200.0 million of outstanding indebtedness under the unsecured term loan portion of our credit facility that was scheduled to mature in January 2019 and all $100.0 million of outstanding indebtedness under the unsecured term loan portion of our term loan facility that was scheduled to mature in January 2020.  Mortgage Loan Repayment. During 2019, we repaid one mortgage loan for $9.0 million.  At-The-Market Equity Program Activity. During 2019, under our at-the-market equity program, we sold a total of 5.9 million common shares at an average sales price of $33.64 per share, resulting in net proceeds of $196.3 million for the year, after deducting offering costs. As of December 31, 2019, 4.6 million common shares remained available for sale under the program. We used the proceeds from the 2019 sales to fund the acquisition and development of self-storage properties and for general corporate purposes. Business Strategy Our business strategy consists of several elements:  Maximize cash flow from our stores — Our operating strategy focuses on maximizing sustainable rents at our stores while achieving and sustaining occupancy targets. We utilize our operating systems and experienced personnel to manage the balance between rental rates, discounts and physical occupancy with an objective of maximizing our rental revenue.  Acquire stores within targeted markets — During 2020, we intend to pursue selective acquisitions in markets that we believe have high barriers to entry, strong demographic fundamentals and demand for storage in excess of storage capacity. We believe the self-storage industry will continue to afford us opportunities for growth through acquisitions due to the highly fragmented composition of the industry. In the past, we have formed joint ventures with unaffiliated third parties, and in the future we may form additional joint ventures, to facilitate the funding of future developments or acquisitions.  Dispose of stores — During 2020, we intend to continue to evaluate opportunities to dispose of assets that have unattractive risk- adjusted returns. We intend to use proceeds from these transactions to fund acquisitions within targeted markets.  Grow our third-party management business — We intend to pursue additional third-party management opportunities. We intend to leverage our current platform to take advantage of consolidation in the industry. We plan to utilize our relationships with third-party owners to help source future acquisitions and other investment opportunities. Investment and Market Selection Process We maintain a disciplined and focused process in the acquisition and development of self-storage properties. Our investment committee is comprised of four senior officers who oversee our investment process. Our investment process involves six stages — identification, initial due diligence, economic assessment, investment committee approval (and when required, the approval of 9 our Board of Trustees (the “Board”), final due diligence and documentation. Through our investment committee, we intend to focus on the following criteria:  Targeted markets — Our targeted markets include areas where we currently maintain management that can be extended to additional stores, or where we believe that we can acquire a significant number of stores efficiently and within a short period of time. We evaluate both the broader market and the immediate area, typically three miles around the store, for its ability to support above-average demographic growth. We seek to increase our presence primarily in areas that we expect will experience growth, including, but not exclusively limited to, the Northeastern and Mid-Atlantic areas of the United States and areas within Arizona, California, Florida, Georgia, Illinois and Texas, and to enter additional markets should suitable opportunities arise.  Quality of store — We focus on self-storage properties that have good visibility, ease of access and are located near retail centers, which typically provide high traffic corridors and are generally located near residential communities and commercial customers.  Growth potential — We target acquisitions that offer growth potential through increased operating efficiencies and, in some cases, through additional leasing efforts, renovations or expansions. In addition to acquiring single stores, we seek to invest in portfolio acquisitions, including those offering significant potential for increased operating efficiency and the ability to spread our fixed costs across a large base of stores. Segment We have one reportable segment: we own, operate, develop, manage and acquire self-storage properties. Concentration Our self-storage properties are located in major metropolitan areas as well as suburban areas and have numerous customers per store. No single customer represented a significant concentration of our 2019 revenues. Our stores in Florida, New York, Texas and California provided approximately 16%, 16%, 10% and 8%, respectively, of our total revenues for the year ended December 31, 2019. Our stores in Florida, New York, Texas and California provided approximately 17%, 16%, 10% and 8%, respectively, of our total revenues for each of the years ended December 31, 2018 and 2017. Seasonality We typically experience seasonal fluctuations in occupancy levels at our stores, with the levels generally slightly higher during the summer months due to increased moving activity. Financing Strategy We maintain a capital structure that we believe is reasonable and prudent and that will enable us to have ample cash flow to cover debt service and make distributions to our shareholders. As of December 31, 2019, our debt to total market capitalization ratio (determined by dividing the carrying value of our total indebtedness by the sum of (a) the market value of the Parent Company’s outstanding common shares and units of the Operating Partnership held by third parties and (b) the carrying value of our total indebtedness) was approximately 23.9% compared to approximately 24.4% as of December 31, 2018. Our ratio of debt to the undepreciated cost of our total assets as of December 31, 2019 was approximately 39.0% compared to approximately 37.9% as of December 31, 2018. We expect to finance additional investments in self-storage properties through the most attractive sources of capital available at the time of the transaction, in a manner consistent with maintaining a strong financial position and future financial flexibility, subject to limitations on incurrence of indebtedness in our unsecured credit facilities and the indenture that governs our unsecured notes. These capital sources may include existing cash, borrowings under the revolving portion of our credit facility, additional secured or unsecured financings, sales of common or preferred shares of the Parent Company in public offerings or private placements, additional issuances of debt securities, issuances of common or preferred units in our Operating Partnership in exchange for contributed properties and formations of joint ventures. We also may sell stores that have unattractive risk-adjusted returns and use the sales proceeds to fund other acquisitions. Competition Self-storage properties compete based on a number of factors, including location, rental rates, security, suitability of the store’s design to prospective customers’ needs and the manner in which the store is operated and marketed. In particular, the number of competing self- storage properties in a market could have a material effect on our occupancy levels, rental rates and on the overall operating performance of our stores. We believe that the primary competition for potential customers of any of our self-storage properties comes from other self- 10 storage providers within a three-mile radius of that store. We believe our stores are well-positioned within their respective markets, and we emphasize customer service, convenience, security, professionalism and cleanliness. Our key competitors include local and regional operators as well as the other public self-storage REITs, including Public Storage, Extra Space Storage Inc. and Life Storage, Inc. These companies, some of which operate significantly more stores than we do and have greater resources than we have, and other entities may be able to accept more risk than we determine is prudent for us, including risks with respect to the geographic proximity of investments and the payment of higher acquisition prices. This competition may reduce the number of suitable acquisition opportunities available to us, increase the price required to acquire stores and reduce the demand for self-storage space at our stores. Nevertheless, we believe that our experience in operating, managing, acquiring, developing and obtaining financing for self- storage properties should enable us to compete effectively. Government Regulation We are subject to various laws, ordinances and regulations, including regulations relating to lien sale rights and procedures and various federal, state and local regulations that apply generally to the ownership of real property and the operation of self-storage properties. Under the Americans with Disabilities Act of 1990 and applicable state accessibility act laws (collectively, the “ADA”), all places of public accommodation are required to meet federal requirements related to physical access and use by disabled persons. A number of other federal, state and local laws may also impose access and other similar requirements at our stores. A failure to comply with the ADA or similar state or local requirements could result in the governmental imposition of fines or the award of damages to private litigants affected by the noncompliance. Although we believe that our stores comply in all material respects with these requirements (or would be eligible for applicable exemptions from material requirements because of adaptive assistance provided), a determination that one or more of our stores or websites is not in compliance with the ADA or similar state or local requirements would result in the incurrence of additional costs associated with bringing them into compliance. Under various federal, state and local laws, ordinances and regulations, an owner or operator of real property may become liable for the costs of removal or remediation of hazardous substances released on or in its property. These laws often impose liability without regard to whether the owner or operator knew of, or was responsible for, the release of such hazardous substances. The presence of hazardous substances, or the failure to properly remediate such substances, when released, may adversely affect the property owner’s ability to sell the real estate or to borrow using the real estate as collateral, and may cause the property owner to incur substantial remediation costs. In addition to claims for cleanup costs, the presence of hazardous substances on a property could result in a claim by a private party for personal injury or a claim by an adjacent property owner or user for property damage. We may also become liable for the costs of removal or remediation of hazardous substances stored at our properties by a customer even though storage of hazardous substances would be without our knowledge or approval and in violation of the customer’s storage lease agreement with us. Our practice is to conduct or obtain environmental assessments in connection with the acquisition or development of properties. Whenever the environmental assessment for one of our stores indicates that a store is impacted by soil or groundwater contamination from prior owners/operators or other sources, we work with our environmental consultants and, where appropriate, state governmental agencies, to ensure that the store is either cleaned up, that no cleanup is necessary because the low level of contamination poses no significant risk to public health or the environment, or that the responsibility for cleanup rests with a third party. In certain cases, we have purchased environmental liability insurance coverage to indemnify us against claims for contamination or other adverse environmental conditions that may affect a property. We are not aware of any environmental cleanup liability that we believe will have a material adverse effect on us. We cannot provide assurance, however, that these environmental assessments and investigations have revealed or will reveal all potential environmental liabilities, that no prior owner created any material environmental condition not known to us or the independent consultant or that future events or changes in environmental laws will not result in the imposition of environmental liability on us. We have not received notice from any governmental authority of any material noncompliance, claim or liability in connection with any of our stores, nor have we been notified of a claim for personal injury or property damage by a private party in connection with any of our stores relating to environmental conditions. We are not aware of any environmental condition with respect to any of our stores that could reasonably be expected to have a material adverse effect on our financial condition or results of operations, and we do not expect that the cost of compliance with environmental regulations will have a material adverse effect on our financial condition or results of operations. We cannot provide assurance, however, that this will continue to be the case. 11 Insurance We carry comprehensive liability, fire, casualty, extended coverage and rental loss insurance covering all of the properties in our portfolio. We also carry environmental insurance coverage on certain stores in our portfolio. We believe the policy specifications and insured limits are appropriate and adequate given the relative risk of loss, the cost of the coverage and industry practice. We do not carry insurance for losses such as loss from riots, war or acts of God, and, in some cases, flood and environmental hazards, because such coverage is either not available or not available at commercially reasonable rates. Some of our policies, such as those covering losses due to terrorism, hurricanes, floods and earthquakes, are insured subject to limitations involving large deductibles or co-payments and policy limits that may not be sufficient to cover losses. Additionally, we use a combination of insurance products to provide risk mitigation for potential liabilities associated with automobiles, workers’ compensation, employment practices, general contractors, directors and officers, employee health-care benefits and personal injuries that might be sustained at our stores. Offices Our principal executive offices are located at 5 Old Lancaster Road, Malvern, PA 19355. Our telephone number is (610) 535-5000. Employees As of December 31, 2019, we employed 3,011 employees, of whom 390 were corporate executive and administrative personnel and 2,621 were property-level personnel. We believe that our relations with our employees are good. Our employees are not unionized. Available Information We file registration statements, proxy statements, our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports, with the SEC. You may obtain copies of these documents by accessing the SEC’s website at www.sec.gov. Our internet website address is www.cubesmart.com. You also can obtain on our website, free of charge, copies of our annual report on Form 10-K, our quarterly reports on Form 10-Q, our current reports on Form 8-K and any amendments to those reports, after we electronically file such reports or amendments with, or furnish them to, the SEC. Our internet website and the information contained therein or connected thereto are not intended to be incorporated by reference into this Report. Also available on our website, free of charge, are copies of our Code of Business Conduct and Ethics, our Corporate Governance Guidelines and the charters for each of the committees of our Board — the Audit Committee, the Corporate Governance and Nominating Committee and the Compensation Committee. Copies of each of these documents are also available in print free of charge, upon request by any shareholder. You can obtain copies of these documents by contacting Investor Relations by mail at 5 Old Lancaster Road, Malvern, PA 19355. ITEM 1A. RISK FACTORS Overview An investment in our securities involves various risks. Investors should carefully consider the risks set forth below together with other information contained in this Report. These risks are not the only ones that we may face. Additional risks not presently known to us, or that we currently consider immaterial, may also impair our business, financial condition, operating results and ability to make distributions to our shareholders. Risks Related to our Business and Operations Adverse macroeconomic and business conditions may significantly and negatively affect our rental rates, occupancy levels and therefore our results of operations. We are susceptible to the effects of adverse macro-economic events that can result in higher unemployment, shrinking demand for products, large-scale business failures and tight credit markets. Our results of operations are sensitive to changes in overall economic conditions that impact consumer spending, including discretionary spending, as well as to increased bad debts due to recessionary pressures. Adverse economic conditions affecting disposable consumer income, such as employment levels, business conditions, interest rates, tax rates and fuel and energy costs, could reduce consumer spending or cause consumers to shift their spending to other products and services. A general reduction in the level of discretionary spending or shifts in consumer discretionary spending could adversely affect our growth and profitability. 12 It is difficult to determine the breadth and duration of economic and financial market disruptions and the many ways in which they may affect our customers and our business in general. Nonetheless, financial and macroeconomic disruptions could have a significant adverse effect on our sales, profitability and results of operations. Many states and local jurisdictions are facing severe budgetary problems which may have an adverse impact on our business and financial results. Many states and jurisdictions are facing severe budgetary problems. Action that may be taken in response to these problems, such as increases in property taxes on commercial properties, changes to sales taxes or other governmental efforts, including mandating medical insurance, paid time off and severance payments for employees, could adversely impact our business and results of operations. Our financial performance is dependent upon economic and other conditions of the markets in which our stores are located. We are susceptible to adverse developments in the markets in which we operate, such as business layoffs or downsizing, industry slowdowns, relocations of businesses, changing demographics and other factors. Our stores in Florida, New York, Texas and California accounted for approximately 16%, 16%, 10% and 8%, respectively, of our total 2019 revenues. As a result of this geographic concentration of our stores, we are particularly susceptible to adverse market conditions in these areas. Any adverse economic or real estate developments in these markets, or in any of the other markets in which we operate, or any decrease in demand for self-storage space resulting from the local business climate, could adversely affect our rental revenues, which could impair our ability to satisfy our debt service obligations and pay distributions to our shareholders. We face risks associated with property acquisitions. We intend to continue to acquire individual and portfolios of self-storage properties. The purchase agreements that we enter into in connection with acquisitions typically contain closing conditions that need to be satisfied before the acquisitions can be consummated. The satisfaction of many of these conditions is outside of our control, and we therefore cannot assure that any of our pending or future acquisitions will be consummated. These conditions include, among other things, satisfactory examination of the title to the properties, the ability to obtain title insurance and customary closing conditions. Moreover, in the event we are unable to complete pending or future acquisitions, we may have incurred significant legal, accounting and other transaction costs in connection with such acquisitions without realizing the expected benefits. Those acquisitions that we do consummate would increase our size and may potentially alter our capital structure. Although we believe that future acquisitions that we complete will enhance our financial performance, the success of acquisitions is subject to the risks that:   acquisitions may fail to perform as expected; the actual costs of repositioning or redeveloping acquired properties may be higher than our estimates;  we may be unable to obtain acquisition financing on favorable terms;   acquisitions may be located in new markets where we may have limited knowledge and understanding of the local economy, an absence of business relationships in the area or an unfamiliarity with local governmental and permitting procedures; and there is only limited recourse, or no recourse, to the former owners of newly acquired properties for unknown or undisclosed liabilities such as the clean-up of undisclosed environmental contamination; claims by customers, vendors or other persons arising on account of actions or omissions of the former owners of the properties; and claims by local governments, adjoining property owners, property owner associations and easement holders for fees, assessments or taxes on other property-related changes. As a result, if a liability were asserted against us based upon ownership of an acquired property, we might be required to pay significant sums to settle it, which could adversely affect our financial results and cash flow. In addition, we often do not obtain third-party appraisals of acquired properties and instead rely on value determinations by our senior management. 13 We will incur costs and will face integration challenges when we acquire additional stores. As we acquire or develop additional self-storage properties and bring additional self-storage properties onto our third party management platform, we will be subject to risks associated with integrating and managing new stores, including customer retention and mortgage default risks. In the case of a large portfolio purchase, we could experience strains in our existing information management capacity. In addition, acquisitions or developments may cause disruptions in our operations and divert management’s attention away from day-to-day operations. Furthermore, our income may decline because we will be required to depreciate/amortize in future periods costs for acquired real property and intangible assets. Our failure to successfully integrate any future acquisitions into our portfolio could have an adverse effect on our operating costs and our ability to make distributions to our shareholders. The acquisition of new stores that lack operating history with us will make it more difficult to predict revenue potential. We intend to continue to acquire additional stores. These acquisitions could fail to perform in accordance with expectations. If we fail to accurately estimate occupancy levels, rental rates, operating costs or costs of improvements to bring an acquired store up to the standards established for our intended market position, the performance of the store may be below expectations. Acquired stores may have characteristics or deficiencies affecting their valuation or revenue potential that we have not yet discovered. We cannot assure that the performance of stores acquired by us will increase or be maintained under our management. Our development activities may be more costly or difficult to complete than we anticipate. We intend to continue to develop self-storage properties where market conditions warrant such investment. Once made, these investments may not produce results in accordance with our expectations. Risks associated with development and construction activities include:     the unavailability of favorable financing sources in the debt and equity markets; construction cost overruns, including on account of rising interest rates, diminished availability of materials and labor, and increases in the costs of materials and labor; construction delays and failure to achieve target occupancy levels and rental rates, resulting in a lower than projected return on our investment; and complications (including building moratoriums and anti-growth legislation) in obtaining necessary zoning, occupancy and other governmental permits. We depend on external sources of capital that are outside of our control; the unavailability of capital from external sources could adversely affect our ability to acquire or develop stores, satisfy our debt obligations and/or make distributions to shareholders. We depend on external sources of capital to fund acquisitions and development, to satisfy our debt obligations and to make distributions to our shareholders required to maintain our status as a REIT, and these sources of capital may not be available on favorable terms, if at all. Our access to external sources of capital depends on a number of factors, including the market’s perception of our growth potential, our current and potential future earnings and our ability to continue to qualify as a REIT for federal income tax purposes. If we are unable to obtain external sources of capital, we may not be able to acquire or develop properties when strategic opportunities exist, satisfy our debt obligations, make distributions to shareholders that would permit us to qualify as a REIT or avoid paying tax on our REIT taxable income. We may incur impairment charges. We evaluate on a quarterly basis our real estate portfolio for indicators of impairment. Impairment charges reflect management’s judgment of the probability and severity of the decline in the value of real estate assets we own. These charges and provisions may be required in the future as a result of factors beyond our control, including, among other things, changes in the economic environment and market conditions affecting the value of real property assets or natural or man-made disasters. If we are required to take impairment charges, our results of operations will be adversely impacted. 14 Rising operating expenses could reduce our cash flow and funds available for future distributions. Our stores and any other stores we acquire or develop in the future are, and will be, subject to operating risks common to real estate in general, any or all of which may negatively affect us. Our stores are subject to increases in operating expenses such as real estate and other taxes, personnel costs including the cost of providing specific medical coverage and governmental mandated benefits to our employees, utilities, insurance, administrative expenses and costs for repairs and maintenance. If operating expenses increase without a corresponding increase in revenues, our profitability could diminish and limit our ability to make distributions to our shareholders. We cannot assure our ability to pay dividends in the future. Historically, we have paid quarterly distributions to our shareholders, and we intend to continue to pay quarterly dividends and to make distributions to our shareholders in amounts such that all or substantially all of our taxable income in each year, subject to certain adjustments, is distributed. This, along with other factors, should enable us to continue to qualify for the tax benefits accorded to a REIT under the Internal Revenue Code. We have not established a minimum dividends payment level, and all future distributions will be made at the discretion of our Board. Our ability to pay dividends will depend upon, among other factors:    the operational and financial performance of our stores; capital expenditures with respect to existing and newly acquired stores; general and administrative costs associated with our operation as a publicly-held REIT;  maintenance of our REIT status;    the amount of, and the interest rates on, our debt; the absence of significant expenditures relating to environmental and other regulatory matters; and other risk factors described in this Report. Certain of these matters are beyond our control and any significant difference between our expectations and actual results could have a material adverse effect on our cash flow and our ability to make distributions to shareholders. If we are unable to promptly re-let our cubes or if the rates upon such re-letting are significantly lower than expected, our business and results of operations would be adversely affected. We derive revenues principally from rents received from customers who rent cubes at our self-storage properties under month-to-month leases. Any delay in re-letting cubes as vacancies arise would reduce our revenues and harm our operating results. In addition, lower than expected rental rates upon re-letting could adversely affect our revenues and impede our growth. Store ownership through joint ventures may limit our ability to act exclusively in our interest. We co-invest with, and we may continue to co-invest with, third parties through joint ventures. In any such joint venture, we may not be in a position to exercise sole decision-making authority regarding the stores owned through joint ventures. Investments in joint ventures may, under certain circumstances, involve risks not present when a third party is not involved, including the possibility that joint venture partners might become bankrupt or fail to fund their share of required capital contributions. Joint venture partners may have business interests or goals that are inconsistent with our business interests or goals and may be in a position to take actions contrary to our policies or objectives. Such investments also have the potential risk of impasse on strategic decisions, such as a sale, in cases where neither we nor the joint venture partner would have full control over the joint venture. In other circumstances, joint venture partners may have the ability without our agreement to make certain major decisions, including decisions about sales, capital expenditures, and/or financing. Any disputes that may arise between us and our joint venture partners could result in litigation or arbitration that could increase our expenses and distract our officers and/or Trustees from focusing their time and effort on our business. In addition, we might in certain circumstances be liable for the actions of our joint venture partners, and the activities of a joint venture could adversely affect our ability to qualify as a REIT, even though we do not control the joint venture. 15 We face significant competition for customers and acquisition and development opportunities. Actions by our competitors may decrease or prevent increases of the occupancy and rental rates of our stores. We compete with numerous developers, owners and operators of self-storage properties, including other REITs, as well as on-demand storage providers, some of which own or may in the future own stores similar to ours in the same submarkets in which our stores are located and some of which may have greater capital resources. In addition, due to the relatively low cost of each individual self-storage property, other developers, owners and operators have the capability to build additional stores that may compete with our stores. If our competitors build new stores that compete with our stores or offer space at rental rates below the rental rates we currently charge our customers, we may lose potential customers, and we may be pressured to reduce our rental rates below those we currently charge in order to retain customers when our customers’ leases expire. As a result, our financial condition, cash flow, cash available for distribution, market price of our shares and ability to satisfy our debt service obligations could be materially adversely affected. In addition, increased competition for customers may require us to make capital improvements to our stores that we would not have otherwise made. Any unbudgeted capital improvements we undertake may reduce cash available for distributions to our shareholders. We also face significant competition for acquisitions and development opportunities. Some of our competitors have greater financial resources than we do and a greater ability to borrow funds to acquire stores. These competitors may also be willing to accept more risk than we can prudently manage, including risks with respect to the geographic proximity of investments and the payment of higher acquisition prices. This competition for investments may reduce the number of suitable investment opportunities available to us, may increase acquisition costs and may reduce demand for self-storage space in certain areas where our stores are located and, as a result, adversely affect our operating results. We may become subject to litigation or threatened litigation which may divert management’s time and attention, require us to pay damages and expenses or restrict the operation of our business. We may become subject to disputes with commercial parties with whom we maintain relationships or other parties with whom we do business. Any such dispute could result in litigation between us and the other parties. Whether or not any dispute actually proceeds to litigation, we may be required to devote significant management time and attention to its successful resolution (through litigation, settlement or otherwise), which would detract from our management’s ability to focus on our business. Any such resolution could involve the payment of damages or expenses by us, which may be significant. In addition, any such resolution could involve our agreement with terms that restrict the operation of our business. There are other commercial parties, at both a local and national level, that may assert that our use of our brand names and other intellectual property conflict with their rights to use brand names, internet domains and other intellectual property that they consider to be similar to ours. Any such commercial dispute and related resolution would involve all of the risks described above, including, in particular, our agreement to restrict the use of our brand name or other intellectual property. We also could be sued for personal injuries and/or property damage occurring on our properties. We maintain liability insurance with limits that we believe are adequate to provide for the defense and/or payment of any damages arising from such lawsuits. There can be no assurance that such coverage will cover all costs and expenses from such suits. Legislative actions and changes may cause our general and administrative costs and compliance costs to increase. In order to comply with laws adopted by federal, state or local government or regulatory bodies, we may be required to increase our expenditures and hire additional personnel and additional outside legal, accounting and advisory services, all of which may cause our general and administrative and compliance costs to increase. Significant workforce-related legislative changes could increase our expenses and adversely affect our operations. Examples of possible workforce-related legislative changes include changes to an employer's obligation to recognize collective bargaining units, the process by which collective bargaining agreements are negotiated or imposed, minimum wage requirements and health care and medical and family leave mandates. In addition, changes in the regulatory environment affecting health care reimbursements, and increased compliance costs related to enforcement of federal and state wage and hour statutes and common law related to overtime, among others, could cause our expenses to increase without an ability to pass through any increased expenses through higher prices. Potential losses may not be covered by insurance. We carry comprehensive liability, fire, casualty, extended coverage and rental loss insurance covering all of the properties in our portfolio. We also carry environmental insurance coverage on certain stores in our portfolio. We believe the policy specifications and 16 insured limits are appropriate and adequate given the relative risk of loss, the cost of the coverage and industry practice. We do not carry insurance for losses such as loss from riots, war or acts of God, and, in some cases, flood and environmental hazards, because such coverage is either not available or is not available at commercially reasonable rates. Some of our policies, such as those covering losses due to terrorism, hurricanes, floods and earthquakes, are insured subject to limitations involving large deductibles or co-payments and policy limits that may not be sufficient to cover losses. If we experience a loss at a store that is uninsured or that exceeds policy limits, we could lose the capital invested in that store as well as the anticipated future cash flows from that store. Inflation, changes in building codes and ordinances, environmental considerations and other factors also might make it impractical or undesirable to use insurance proceeds to replace a store after it has been damaged or destroyed. In addition, if the damaged stores are subject to recourse indebtedness, we would continue to be liable for the indebtedness, even if these stores were irreparably damaged. Additionally, we use a combination of insurance products, some of which include deductibles and self-insured retention amounts, to provide risk mitigation for potential liabilities associated with automobiles, workers' compensation, employment practices, general contractors, directors and officers, employee health-care benefits and personal injuries that might be sustained at our stores. Liabilities associated with the risks that are retained by us are estimated, in part, by considering historical claims experience and actuarial assumptions. Our results of operations could be materially impacted by claims and other expenses related to such insurance plans if future occurrences and claims differ from these assumptions and historical trends. Our insurance coverage may not comply with certain loan requirements. Certain of our stores serve as collateral for our mortgage-backed debt, some of which we assumed in connection with our acquisition of stores and requires us to maintain insurance, deductibles, retentions and other policy terms at levels that are not commercially reasonable in the current insurance environment. We may be unable to obtain required insurance coverage if the cost and/or availability make it impractical or impossible to comply with debt covenants. If we cannot comply with a lender’s requirements, the lender could declare a default, which could affect our ability to obtain future financing and have a material adverse effect on our results of operations and cash flows and our ability to obtain future financing. In addition, we may be required to self-insure against certain losses or our insurance costs may increase. Potential liability for environmental contamination could result in substantial costs. We are subject to federal, state and local environmental regulations that apply generally to the ownership of real property and the operation of self-storage properties. If we fail to comply with those laws, we could be subject to significant fines or other governmental sanctions. Under various federal, state and local laws, ordinances and regulations, an owner or operator of real estate may be required to investigate and clean up hazardous or toxic substances or petroleum product releases at a property and may be held liable to a governmental entity or to third parties for property damage and for investigation and clean-up costs incurred by such parties in connection with contamination. Such liability may be imposed whether or not the owner or operator knew of, or was responsible for, the presence of these hazardous or toxic substances. The cost of investigation, remediation or removal of such substances may be substantial, and the presence of such substances, or the failure to properly remediate such substances, may adversely affect our ability to sell or rent such property or to borrow using such property as collateral. In addition, in connection with the ownership, operation and management of properties, we are potentially liable for property damage or injuries to persons and property. Our practice is to conduct or obtain environmental assessments in connection with the acquisition or development of additional stores. We carry environmental insurance coverage on certain stores in our portfolio. We obtain or examine environmental assessments from qualified and reputable environmental consulting firms (and intend to conduct such assessments prior to the acquisition or development of additional stores). The environmental assessments received to date have not revealed, nor do we have actual knowledge of, any environmental liability that we believe will have a material adverse effect on us. However, we cannot assure that our environmental assessments have identified or will identify all material environmental conditions, that any prior owner of any property did not create a material environmental condition not actually known to us, or that a material environmental condition does not otherwise exist with respect to any of our properties. Americans with Disabilities Act and applicable state accessibility act compliance may require unanticipated expenditures. Under the ADA, all places of public accommodation are required to meet federal requirements related to access and use by disabled persons. A number of other federal, state and local laws may also impose access and other similar requirements at our properties or websites. A failure to comply with the ADA or similar state or local requirements could result in the governmental imposition of fines or the award of damages to private litigants affected by the noncompliance. Although we believe that our properties and websites comply in 17 all material respects with these requirements (or would be eligible for applicable exemptions from material requirements because of adaptive assistance provided), a determination that one or more of our properties or websites is not in compliance with the ADA or similar state or local requirements would result in the incurrence of additional costs associated with bringing the properties or websites into compliance. If we are required to make substantial modifications to comply with the ADA or similar state or local requirements, we may be required to incur significant unanticipated expenditures, which could have an adverse effect on our operating costs and our ability to make distributions to our shareholders. Privacy concerns could result in regulatory changes that may harm our business. Personal privacy has become a significant issue in the jurisdictions in which we operate. Many jurisdictions in which we operate, including California and New York, have imposed restrictions and requirements on the use of personal information by those collecting such information. The regulatory framework for privacy issues is rapidly evolving and future enactment of more restrictive laws, rules or regulations and/or future enforcement actions or investigations could have a materially adverse impact on us through increased costs or restrictions on our business. Failure to comply with such laws and regulations could result in consent orders or regulatory penalties and significant legal liability, including fines, which could damage our reputation and have an adverse effect on our results of operations or financial condition. We face system security risks as we depend upon automated processes and the internet, which could damage our reputation, cause us to incur substantial additional costs and become subject to litigation if our systems or processes are penetrated. We are increasingly dependent upon automated information technology processes and internet commerce, and many of our new customers come from the telephone or over the internet. Moreover, the nature of our business involves the receipt and retention of personal information about our customers. We also rely extensively on third-party vendors to retain data, process transactions and provide other systems and services. These systems, and our systems, are subject to damage or interruption from power outages, computer and telecommunications failures, computer viruses, malware and other destructive or disruptive security breaches and catastrophic events, such as a natural disaster or a terrorist event or cyber-attack. In addition, experienced computer programmers and hackers may be able to penetrate our security systems and misappropriate our confidential information, create system disruptions or cause shutdowns. Such data security breaches as well as system disruptions and shutdowns could result in additional costs to repair or replace such networks or information systems and possible legal liability, including government enforcement actions and private litigation. In addition, our customers could lose confidence in our ability to protect their personal information, which could cause them to discontinue leasing at our stores. If we are unable to attract and retain team members or contract with third parties having the specialized skills or technologies needed to support our systems, implement improvements to our customer-facing technology in a timely manner, allow accurate visibility to product availability when customers are ready to rent, quickly and efficiently fulfill our customers rental and payment methods they demand or provide a convenient and consistent experience for our customers regardless of the ultimate sales channel, our ability to compete and our results of operations could be adversely affected. Terrorist attacks , active shooter incidents and other acts of violence or war may adversely impact our performance and may affect the markets on which our securities are traded. Terrorist attacks at or against our stores, the United States or our interests, may negatively impact our operations and the value of our securities. Attacks, armed conflicts or active-shooter situations could negatively impact the demand for self-storage and increase the cost of insurance coverage for our stores, which could reduce our profitability and cash flow. Furthermore, any terrorist attacks, armed conflicts or active-shooter situations could result in increased volatility in or damage to the United States and worldwide financial markets and economy. Risks Related to the Real Estate Industry Our performance and the value of our self-storage properties are subject to risks associated with our properties and with the real estate industry. Our rental revenues, operating costs and the value of our real estate assets, and consequently the value of our securities, are subject to the risk that if our stores do not generate revenues sufficient to meet our operating expenses, including debt service and capital expenditures, our cash flow and ability to pay distributions to our shareholders will be adversely affected. Events or conditions beyond our control that may adversely affect our operations or the value of our properties include but are not limited to: 18          downturns in the national, regional and local economic climate; local or regional oversupply, increased competition or reduction in demand for self-storage space; vacancies or changes in market rents for self-storage space; inability to collect rent from customers; increased operating costs, including maintenance, personnel, insurance premiums, customer acquisition costs and real estate taxes; changes in interest rates and availability of financing; hurricanes, earthquakes and other natural disasters, civil disturbances, terrorist acts or acts of war that may result in uninsured or underinsured losses; significant expenditures associated with acquisitions and development projects, such as debt service payments, real estate taxes, insurance and maintenance costs which are generally not reduced when circumstances cause a reduction in revenues from a property; costs of complying with changes in laws and governmental regulations, including those governing usage, zoning, the environment and taxes; and  the relative illiquidity of real estate investments. In addition, prolonged periods of economic slowdown or recession, rising interest rates, declining demand for self-storage or the public perception that any of these events may occur, could result in a general decline in rental revenues, which could impair our ability to satisfy our debt service obligations and to make distributions to our shareholders. Rental revenues are significantly influenced by demand for self-storage space generally, and a decrease in such demand would likely have a greater adverse effect on our rental revenues than if we owned a more diversified real estate portfolio. Because our real estate portfolio consists primarily of self-storage properties, we are subject to risks inherent in investments in a single industry. A decrease in the demand for self-storage space would have a greater adverse effect on our rental revenues than if we owned a more diversified real estate portfolio. Demand for self-storage space could be adversely affected by weakness in the national, regional and local economies, changes in supply of, or demand for, similar or competing self-storage properties in an area and the excess amount of self-storage space in a particular market. To the extent that any of these conditions occur, they are likely to affect market rents for self- storage space, which could cause a decrease in our rental revenue. Any such decrease could impair our ability to satisfy debt service obligations and make distributions to our shareholders. Because real estate is illiquid, we may not be able to sell properties when appropriate. Real estate property investments generally cannot be sold quickly. Also, the tax laws applicable to REITs require that we hold our properties for investment, rather than for sale in the ordinary course of business, which may cause us to forgo or defer sales of properties that otherwise would be in our best interest. Therefore, we may not be able to dispose of properties promptly, or on favorable terms, in response to economic or other market conditions, which may adversely affect our financial position. Risks Related to our Qualification and Operation as a REIT Failure to qualify as a REIT would subject us to U.S. federal income tax which would reduce the cash available for distribution to our shareholders. We operate our business to qualify to be taxed as a REIT for federal income tax purposes. We have not requested and do not plan to request a ruling from the IRS that we qualify as a REIT, and the statements in this Report are not binding on the IRS or any court. As a REIT, we generally will not be subject to federal income tax on the income that we distribute currently to our shareholders. Many of the REIT requirements, however, are highly technical and complex. The determination that we are a REIT requires an analysis of various factual matters and circumstances that may not be totally within our control. For example, to qualify as a REIT, at least 95% of our gross 19 income must come from specific passive sources, such as rent, that are itemized in the REIT tax laws. In addition, to qualify as a REIT, we cannot own specified amounts of debt and equity securities of some issuers. We also are required to distribute to our shareholders with respect to each year at least 90% of our REIT taxable income, excluding net capital gains. The fact that we hold substantially all of our assets through the Operating Partnership and its subsidiaries and joint ventures further complicates the application of the REIT requirements for us. Even a technical or inadvertent mistake could jeopardize our REIT status, and, given the highly complex nature of the rules governing REITs and the ongoing importance of factual determinations, we cannot provide any assurance that we will continue to qualify as a REIT. Changes to rules governing REITs were made by legislation commonly known as the Tax Cuts and Jobs Act (the “TCJA”) and the Protecting Americans From Tax Hikes Act of 2015, signed into law on December 22, 2017 and December 18, 2015, respectively, and Congress and the IRS might make further changes to the tax laws and regulations, and the courts might issue new rulings that make it more difficult, or impossible, for us to remain qualified as a REIT. If we fail to qualify as a REIT for federal income tax purposes and are able to avail ourselves of one or more of the statutory savings provisions in order to maintain our REIT status, we would nevertheless be required to pay penalty taxes of $50,000 or more for each such failure. If we fail to qualify as a REIT for federal income tax purposes, and are unable to avail ourselves of certain savings provisions set forth in the Internal Revenue Code, we would be subject to federal income tax at regular corporate rates on all of our income. As a taxable corporation, we would not be allowed to take a deduction for distributions to shareholders in computing our taxable income or pass through long-term capital gains to individual shareholders at favorable rates. For tax years beginning before January 1, 2018, we also could be subject to the federal alternative minimum tax and possibly increased state and local taxes. We would not be able to elect to be taxed as a REIT for four years following the year we first failed to qualify unless the IRS were to grant us relief under certain statutory provisions. If we failed to qualify as a REIT, we would have to pay significant income taxes, which would reduce our net earnings available for investment or distribution to our shareholders. This likely would have a significant adverse effect on our earnings and likely would adversely affect the value of our securities. In addition, we would no longer be required to pay any distributions to shareholders. Furthermore, we owned a subsidiary REIT (“PSI”) that was liquidated on December 31, 2018. Prior to liquidation, PSI was independently subject to, and was required to comply with, the same REIT requirements that we must satisfy in order to qualify as a REIT, together with all other rules applicable to REITs. If PSI failed to qualify as a REIT during our period of ownership, and certain statutory relief provisions do not apply, as a result of a protective election made jointly by PSI and CubeSmart, PSI will be taxed as a taxable REIT subsidiary. See the section entitled “Taxation of CubeSmart−Requirements for Qualification−Taxable REIT Subsidiaries” in Exhibit 99.1 for more information regarding taxable REIT subsidiaries. Failure of the Operating Partnership (or a subsidiary partnership or joint venture) to be treated as a partnership would have serious adverse consequences to our shareholders. If the IRS were to successfully challenge the tax status of the Operating Partnership or any of its subsidiary partnerships or joint ventures for federal income tax purposes, the Operating Partnership or the affected subsidiary partnership or joint venture would be taxable as a corporation. In such event, we would cease to qualify as a REIT and the imposition of a corporate tax on the Operating Partnership, a subsidiary partnership or joint venture would reduce the amount of cash available for distribution from the Operating Partnership to us and ultimately to our shareholders. To maintain our REIT status, we may be forced to borrow funds on a short-term basis during unfavorable market conditions. As a REIT, we are subject to certain distribution requirements, including the requirement to distribute 90% of our REIT taxable income, excluding net capital gains, which may result in our having to make distributions at a disadvantageous time or to borrow funds at unfavorable rates. Compliance with this requirement may hinder our ability to operate solely on the basis of maximizing profits. We will pay some taxes even if we qualify as a REIT, which will reduce the cash available for distribution to our shareholders. Even if we qualify as a REIT for federal income tax purposes, we will be required to pay certain federal, state and local taxes on our income and property. For example, we will be subject to income tax to the extent we distribute less than 100% of our REIT taxable income, including capital gains. Additionally, we will be subject to a 4% nondeductible excise tax on the amount, if any, by which dividends paid by us in any calendar year are less than the sum of 85% of our ordinary income, 95% of our capital gain net income and 100% of our undistributed income from prior years. Moreover, if we have net income from “prohibited transactions,” that income will be subject to a 100% penalty tax. In general, prohibited transactions are sales or other dispositions of property held primarily for sale to customers in the ordinary course of business. The determination as to whether a particular sale is a prohibited transaction depends on the facts and circumstances related to that sale. We cannot guarantee that sales of our properties would not be prohibited transactions unless we comply with certain statutory safe-harbor provisions. 20 In addition, any net taxable income earned directly by our taxable REIT subsidiaries, or through entities that are disregarded for federal income tax purposes as entities separate from our taxable REIT subsidiaries, will be subject to federal and possibly state corporate income tax. We have elected to treat some of our subsidiaries as taxable REIT subsidiaries, and we may elect to treat other subsidiaries as taxable REIT subsidiaries in the future. In this regard, several provisions of the laws applicable to REITs and their subsidiaries ensure that a taxable REIT subsidiary will be subject to an appropriate level of federal income taxation. For example, a taxable REIT subsidiary is limited in its ability to deduct certain interest payments made to an affiliated REIT. In addition, the REIT has to pay a 100% penalty tax on some payments that it receives or on some deductions taken by a taxable REIT subsidiary if the economic arrangements between the REIT, the REIT’s customers, and the taxable REIT subsidiary are not comparable to similar arrangements between unrelated parties. Finally, some state and local jurisdictions may tax some of our income even though as a REIT we are not subject to federal income tax on that income because not all states and localities follow the federal income tax treatment of REITs. To the extent that we and our affiliates are required to pay federal, state and local taxes, we will have less cash available for distributions to our shareholders. We face possible federal, state and local tax audits. Because we are organized and qualify as a REIT, we are generally not subject to federal income taxes, but are subject to certain state and local taxes. Certain entities through which we own real estate either have undergone, or are currently undergoing, tax audits. Although we believe that we have substantial arguments in favor of our positions in the ongoing audits, in some instances there is no controlling precedent or interpretive guidance on the specific point at issue. Collectively, tax deficiency notices received to date from the jurisdictions conducting the ongoing audits have not been material. However, there can be no assurance that future audits will not occur with increased frequency or that the ultimate result of such audits will not have a material adverse effect on our results of operations. Legislative or regulatory tax changes related to REITs could materially and adversely affect our business. At any time, the federal income tax laws or regulations governing REITs or the administrative interpretations of those laws or regulations may be changed, possibly with retroactive effect. We cannot predict if or when any new federal income tax law, regulation or administrative interpretation, or any amendment to any existing federal income tax law, regulation or administrative interpretation, will be adopted, promulgated or become effective or whether any such law, regulation or interpretation may take effect retroactively. We and our shareholders could be adversely affected by any such change in, or any new, federal income tax law, regulation or administrative interpretation. The TCJA made significant changes to the U.S. federal income tax rules for taxation of individuals and corporations, generally effective for taxable years beginning after December 31, 2017. In addition to reducing corporate and non-corporate tax rates, the TCJA made changes to the number of provisions of the Code that may affect the taxation of REITs and their security holders. While the changes in the TCJA generally appear to be favorable with respect to REITs, certain changes to the U.S. federal income tax laws enacted by the TCJA could have a material and adverse effect on us. For example, certain changes in law pursuant to the TCJA could reduce the relative competitive advantage of operating as a REIT as compared with operating as a C corporation, including by:   reducing the rate of tax applicable to individuals and C corporations, which could reduce the relative attractiveness of the generally single level of taxation on REIT distributions; permitting immediate expensing of capital expenditures, which could likewise reduce the relative attractiveness of the REIT taxation regime; and  limiting the deductibility of interest expense, which could increase the distribution requirement of REITs. Most of the changes applicable to individuals are temporary and apply only to taxable years beginning after December 31, 2017 and before January 1, 2026. The TCJA made numerous large and small changes to the tax rules that do not affect REITs directly but may affect our shareholders and may indirectly affect us. Shareholders are urged to consult with their tax advisors with respect to the status of the TCJA and any other regulatory or administrative developments and proposals and their potential effect on investment in our capital stock. Dividends paid by REITs do not qualify for the reduced tax rates provided under current law. Dividends paid by REITs are generally not eligible for the reduced 15% maximum tax rate for dividends paid to individuals (20% for those with taxable income above certain thresholds that are adjusted annually under current law). The more favorable rates applicable to regular corporate dividends could cause shareholders who are individuals to perceive investments in REITs to be relatively less attractive 21 than investments in the stock of non-REIT corporations that pay dividends to which more favorable rates apply, which could reduce the value of REIT stocks. Legislation modifies the rules applicable to partnership tax audits. The Bipartisan Budget Act of 2015, effective for taxable years beginning after December 31, 2017, requires our Operating Partnership and any subsidiary partnership to pay the hypothetical increase in partner-level taxes (including interest and penalties) resulting from an adjustment of partnership tax items on audit or in other tax proceedings, unless the partnership elects an alternative method under which the taxes resulting from the adjustment (and interest and penalties) are assessed at the partner level. Many uncertainties remain as to the application of these rules, including the application of the alternative method to partners that are REITs, and the impact they will have on us. However, it is possible that partnerships in which we invest may be subject to U.S. federal income tax, interest and penalties in the event of a U.S. federal income tax audit as a result of these law changes. Risks Related to our Debt Financings We face risks related to current debt maturities, including refinancing risk. Certain of our mortgages, bank loans and unsecured debt (including our senior notes) will have significant outstanding balances on their maturity dates, commonly known as “balloon payments.” We may not have the cash resources available to repay those amounts, and we may have to raise funds for such repayment either through the issuance of equity or debt securities, additional bank borrowings (which may include extension of maturity dates), joint ventures or asset sales. Furthermore, we are restricted from incurring certain additional indebtedness and making certain other changes to our capital and debt structure under the terms of the senior notes and the indenture governing the senior notes. There can be no assurance that we will be able to refinance our debt on favorable terms or at all. To the extent we cannot refinance debt on favorable terms or at all, we may be forced to dispose of properties on disadvantageous terms or pay higher interest rates, either of which would have an adverse impact on our financial performance and ability to pay dividends to our shareholders. As a result of our interest rate hedges, swap agreements and other, similar arrangements, we face counterparty risks. We may be exposed to the potential risk of counterparty default or non-payment with respect to interest rate hedges, swap agreements, floors, caps and other interest rate hedging contracts that we may enter into from time to time, in which event we could suffer a material loss on the value of those agreements. Although these agreements may lessen the impact of rising interest rates on us, they also expose us to the risk that other parties to the agreements will not perform or that we cannot enforce the agreements. There is no assurance that our potential counterparties on these agreements will perform their obligations under such agreements. Financing our future growth plan or refinancing existing debt maturities could be impacted by negative capital market conditions. From time to time, domestic financial markets experience volatility and uncertainty. At times in recent years liquidity has tightened in the domestic financial markets, including the investment grade debt and equity capital markets from which we historically sought financing. Consequently, there is greater uncertainty regarding our ability to access the credit markets in order to attract financing on reasonable terms; there can be no assurance that we will be able to continue to issue common or preferred equity securities at a reasonable price. Our ability to finance new acquisitions and refinance future debt maturities could be adversely impacted by our inability to secure permanent financing on reasonable terms, if at all. The terms and covenants relating to our indebtedness could adversely impact our economic performance. Like other real estate companies that incur debt, we are subject to risks associated with debt financing, such as the insufficiency of cash flow to meet required debt service payment obligations and the inability to refinance outstanding indebtedness at maturity. If our debt cannot be paid, refinanced or extended at maturity, we may not be able to make distributions to shareholders at expected levels or at all and may not be able to acquire new stores. Failure to make distributions to our shareholders could result in our failure to qualify as a REIT for federal income tax purposes. Furthermore, an increase in our interest expense could adversely affect our cash flow and ability to make distributions to shareholders. If we do not meet our debt service obligations, any stores securing such indebtedness could be foreclosed on, which would have a material adverse effect on our cash flow and ability to make distributions and, depending on the number of stores foreclosed on, could threaten our continued viability. 22 Our Credit Facility (defined below) contains (and any new or amended facility we may enter into from time to time will likely contain) customary affirmative and negative covenants, including financial covenants that, among other things, require us to comply with certain liquidity and other tests. Our ability to borrow under the Credit Facility is (and any new or amended facility we may enter into from time to time will be) subject to compliance with such financial and other covenants. In the event that we fail to satisfy these covenants, we would be in default under the Credit Facility and may be required to repay such debt with capital from other sources. Under such circumstances, other sources of debt or equity capital may not be available to us, or may be available only on unattractive terms. Moreover, the presence of such covenants in our credit agreements could cause us to operate our business with a view toward compliance with such covenants, which might not produce optimal returns for shareholders. Similarly, the indenture under which we have issued unsecured senior notes contains customary financial covenants, including limitations on incurrence of additional indebtedness. Increases in interest rates on variable-rate indebtedness would increase our interest expense, which could adversely affect our cash flow and ability to make distributions to shareholders. Rising interest rates could also restrict our ability to refinance existing debt when it matures. In addition, an increase in interest rates could decrease the amounts that third parties are willing to pay for our assets, thereby limiting our ability to alter our portfolio promptly in relation to economic or other conditions. Our organizational documents contain no limitation on the amount of debt we may incur. As a result, we may become highly leveraged in the future. Our organizational documents do not limit the amount of indebtedness that we may incur. We could alter the balance between our total outstanding indebtedness and the value of our assets at any time. If we become more highly leveraged, then the resulting increase in debt service could adversely affect our ability to make payments on our outstanding indebtedness and to pay our anticipated distributions and/or the distributions required to maintain our REIT status, and could harm our financial condition. Changes in the method of determining LIBOR, or the replacement of LIBOR with an alternative reference rate, may adversely affect our financial results. As of December 31, 2019, we did not have any outstanding debt that was indexed to the London Interbank Offered Rate (“LIBOR”), however future borrowings under our Revolver are subject to variable interest rates based on LIBOR. On July 27, 2017, the Financial Conduct Authority (“FCA”), which regulates LIBOR, announced its intention to phase out LIBOR rates by the end of 2021. It is not possible to predict the further effect of the FCA’s announcement, any changes in the methods by which LIBOR is determined, or any other reforms to LIBOR that may be enacted in the United Kingdom, the European Union or elsewhere. Such developments may cause LIBOR to perform differently than in the past, or cease to exist. In addition, any other legal or regulatory changes made by the FCA, ICE Benchmark Administration Limited, the European Money Markets Institute (formerly Euribor-EBF), the European Commission or any other successor governance or oversight body, or future changes adopted by such body, in the method by which LIBOR is determined or the transition from LIBOR to a successor benchmark may result in, among other things, a sudden or prolonged increase or decrease in LIBOR, a delay in the publication of LIBOR, and changes in the rules or methodologies in LIBOR, which may discourage market participants from continuing to administer or to participate in LIBOR’s determination, and, in certain situations, could result in LIBOR no longer being determined and published. If a published U.S. dollar LIBOR rate is unavailable after 2021, the interest rates on our debt which is indexed to LIBOR will be determined using alternative methods, which may result in interest obligations which are more than or do not otherwise correlate over time with the payments that would have been made on such debt if U.S. dollar LIBOR was available in its current form. Further, the same costs and risks that may lead to the unavailability of U.S. dollar LIBOR may make one or more of the alternative methods impossible or impracticable to determine. Any of these proposals or consequences could have a material adverse effect on our financing costs, and as a result, our financial condition, operating results and cash flows. Risks Related to our Organization and Structure We are dependent upon our senior management team whose continued service is not guaranteed. Our executive team, including our named executive officers, has extensive self-storage, real estate and public company experience. Our Chief Executive Officer, Chief Financial Officer and Chief Legal Officer are parties to the Company’s executive severance plan, however, we cannot provide assurance that any of them will remain in our employment. The loss of services of one or more members of our senior management team could adversely affect our operations and our future growth. 23 We are dependent upon our on-site personnel to maximize customer satisfaction; any difficulties we encounter in hiring, training and retaining skilled field personnel may adversely affect our rental revenues. As of December 31, 2019, we had 2,621 property-level personnel involved in the management and operation of our stores. The customer service, marketing skills and knowledge of local market demand and competitive dynamics of our store managers are contributing factors to our ability to maximize our rental income and to achieve the highest sustainable rent levels at each of our stores. We compete with various other companies in attracting and retaining qualified and skilled personnel. Competitive pressures may require that we enhance our pay and benefits package to compete effectively for such personnel. If there is an increase in these costs or if we fail to attract and retain qualified and skilled personnel, our business and operating results could be adversely affected. Certain provisions of Maryland law could inhibit changes in control, which may discourage third parties from conducting a tender offer or seeking other change of control transactions that could involve a premium price for our shares or otherwise benefit our shareholders. Certain provisions of Maryland law may have the effect of inhibiting a third party from making a proposal to acquire us or of impeding a change of control under circumstances that otherwise could provide the holders of our common shares with the opportunity to realize a premium over the then-prevailing market price of those shares, including:   “business combination moratorium/fair price” provisions that, subject to limitations, prohibit certain business combinations between us and an “interested shareholder” (defined generally as any person who beneficially owns 10% or more of the voting power of our shares or an affiliate thereof) for five years after the most recent date on which the shareholder becomes an interested shareholder, and thereafter imposes stringent fair price and super-majority shareholder voting requirements on these combinations; and “control share” provisions that provide that “control shares” of our company (defined as shares which, when aggregated with other shares controlled by the shareholder, entitle the shareholder to exercise one of three increasing ranges of voting power in electing Trustees) acquired in a “control share acquisition” (defined as the direct or indirect acquisition of ownership or control of “control shares” from a party other than the issuer) have no voting rights except to the extent approved by our shareholders by the affirmative vote of at least two thirds of all the votes entitled to be cast on the matter, excluding all interested shares, and are subject to redemption in certain circumstances. We have opted out of these provisions of Maryland law. However, our Board may opt to make these provisions applicable to us at any time without shareholder approval. Our Trustees also have the discretion, granted in our bylaws and Maryland law, without shareholder approval to, among other things (1) create a staggered Board, (2) amend our bylaws or repeal individual bylaws in a manner that provides the Board with greater authority, and (3) issue additional equity securities. Any such action could inhibit or impede a third party from making a proposal to acquire us at a price that could be beneficial to our shareholders. Our shareholders have limited control to prevent us from making any changes to our investment and financing policies. Our Board has adopted policies with respect to certain activities. These policies may be amended or revised from time to time at the discretion of our Board without a vote of our shareholders. This means that our shareholders have limited control over changes in our policies. Such changes in our policies intended to improve, expand or diversify our business may not have the anticipated effects and consequently may adversely affect our business and prospects, results of operations and share price. Our rights and the rights of our shareholders to take action against our Trustees and officers are limited. Maryland law provides that a trustee or officer has no liability in that capacity if he or she performs his or her duties in good faith, in a manner he or she reasonably believes to be in our best interests and with the care that an ordinarily prudent person in a like position would use under similar circumstances. Our declaration of trust and bylaws require us to indemnify our Trustees and officers for actions taken by them in those capacities on our behalf, to the extent permitted by Maryland law. Accordingly, in the event that actions taken in good faith by any Trustee or officer impede our performance, our shareholders’ ability to recover damages from that Trustee or officer will be limited. 24 Our declaration of trust permits our Board to issue preferred shares with terms that may discourage third parties from conducting a tender offer or seeking other change of control transactions that could involve a premium price for our shares or otherwise benefit our shareholders. Our declaration of trust permits our Board to issue up to 40,000,000 preferred shares, having those preferences, conversion or other rights, voting powers, restrictions, limitations as to distributions, qualifications or terms or conditions of redemption as determined by our Board. In addition, our Board may reclassify any unissued common shares into one or more classes or series of preferred shares. Thus, our Board could authorize, without shareholder approval, the issuance of preferred shares with terms and conditions that could have the effect of discouraging a takeover or other transaction in which holders of some or a majority of our shares might receive a premium for their shares over the then-prevailing market price of our shares. We currently do not expect that the Board would require shareholder approval prior to such a preferred issuance. In addition, any preferred shares that we issue would rank senior to our common shares with respect to the payment of distributions, in which case we could not pay any distributions on our common shares until full distributions have been paid with respect to such preferred shares. Risks Related to our Securities Additional issuances of equity securities may be dilutive to shareholders. The interests of our shareholders could be diluted if we issue additional equity securities to finance future acquisitions or developments or to repay indebtedness. Our Board may authorize the issuance of additional equity securities, including preferred shares, without shareholder approval. Our ability to execute our business strategy depends upon our access to an appropriate blend of debt financing, including unsecured lines of credit and other forms of secured and unsecured debt, and equity financing, including common and preferred equity. Many factors could have an adverse effect on the market value of our securities. A number of factors might adversely affect the price of our securities, many of which are beyond our control. These factors include:         increases in market interest rates, relative to the dividend yield on our shares. If market interest rates go up, prospective purchasers of our securities may require a higher yield. Higher market interest rates would not, however, result in more funds for us to distribute and, to the contrary, would likely increase our borrowing costs and potentially decrease funds available for distribution. Thus, higher market interest rates could cause the market price of our equity securities to go down; anticipated benefit of an investment in our securities as compared to investment in securities of companies in other industries (including benefits associated with tax treatment of dividends and distributions); perception by market professionals of REITs generally and REITs comparable to us in particular; level of institutional investor interest in our securities; relatively low trading volumes in securities of REITs; our results of operations and financial condition; investor confidence in the stock market generally; and additions and departures of key personnel. The market value of our equity securities is based primarily upon the market’s perception of our growth potential and our current and potential future earnings and cash distributions. Consequently, our equity securities may trade at prices that are higher or lower than our net asset value per equity security. If our future earnings or cash distributions are less than expected, it is likely that the market price of our equity securities will diminish. 25 The market price of our common shares has been, and may continue to be, particularly volatile, and our shareholders may be unable to resell their shares at a profit. The market price of our common shares has been subject to fluctuation and may continue to fluctuate or decline. Between January 1, 2017 and December 31, 2019, the closing price per share of our common shares has ranged from a high of $36.31 (on September 4, 2019) to a low of $22.94 (on July 10, 2017). In the past, following periods of volatility in the market price of a company’s securities, securities class action litigation has often been brought against that company. If our share price is volatile, we may become the target of securities litigation, which could result in substantial costs and divert our management’s attention and resources from our business. ITEM 1B. UNRESOLVED STAFF COMMENTS None. ITEM 2. PROPERTIES As of December 31, 2019, we owned 523 self-storage properties that contain approximately 36.6 million rentable square feet and are located in 24 states and the District of Columbia. The following table sets forth summary information regarding our stores by state as of December 31, 2019. State Florida Texas New York California Illinois Arizona New Jersey Georgia Maryland Ohio Connecticut Massachusetts Virginia North Carolina Tennessee Colorado Nevada Pennsylvania South Carolina Washington D.C. Rhode Island Utah New Mexico Minnesota Indiana Total/Weighted average Number of Stores Cubes Total Rentable Square Feet % of Total Rentable Square Feet Period-end Occupancy 85 66 48 43 42 31 26 20 17 20 22 19 10 11 9 11 8 9 8 5 4 4 3 1 1 523 61,362 39,280 64,397 29,439 25,265 17,700 18,422 12,426 13,998 11,069 10,718 11,969 7,903 6,651 5,631 6,020 5,127 6,057 3,873 5,296 2,010 2,308 1,683 1,033 578 370,215 6,322,178 4,642,072 3,664,270 3,124,044 2,695,389 1,905,617 1,809,740 1,454,927 1,399,402 1,290,003 1,190,691 1,172,820 787,595 760,177 755,515 697,299 643,062 611,007 432,419 409,850 245,545 239,198 182,261 100,928 67,600 36,603,609 17.2 % 12.6 % 9.9 % 8.5 % 7.4 % 5.2 % 4.9 % 4.0 % 3.8 % 3.5 % 3.3 % 3.2 % 2.2 % 2.1 % 2.1 % 1.9 % 1.8 % 1.7 % 1.2 % 1.1 % 0.7 % 0.7 % 0.5 % 0.3 % 0.2 % 100.0 % 90.9 % 90.4 % 84.3 % 91.1 % 91.7 % 91.9 % 87.5 % 87.3 % 89.7 % 91.4 % 91.7 % 83.0 % 90.2 % 88.1 % 88.6 % 89.5 % 91.6 % 90.1 % 88.1 % 82.7 % 89.9 % 90.4 % 93.0 % 88.0 % 89.0 % 89.5 % 26 We have grown by adding stores to our portfolio through acquisitions and development. The tables set forth below show the average occupancy, annual rent per occupied square foot and total revenues for our stores owned as of December 31, 2019, and for each of the previous three years, grouped by the year during which we first owned or operated the store. Stores by Year Acquired - Average Occupancy Year Acquired (1) 2016 and earlier 2017 2018 2019 Rentable Average Occupancy # of Stores Square Feet 2019 2018 2017 472 32,856,176 92.1 % 92.0 % 91.7 % 762,926 68.3 % 45.9 % 39.1 % 994,243 66.1 % 56.7 % 1,990,264 74.2 % — 9 11 31 — — All stores owned as of December 31, 2019 523 36,603,609 90.4 % 90.6 % 91.3 % Stores by Year Acquired - Annual Rent Per Occupied Square Foot (2) Year Acquired (1) 2016 and earlier 2017 2018 2019 All stores owned as of December 31, 2019 Stores by Year Acquired - Total Revenues (dollars in thousands) Year Acquired (1) 2016 and earlier 2017 2018 2019 All stores owned as of December 31, 2019 # of Stores 2019 2018 2017 Rent per Square Foot 472 $ 17.76 $ 17.44 $ 16.83 19.11 — — 523 $ 17.80 $ 17.59 $ 16.85 21.14 22.69 15.18 19.99 24.76 — 9 11 31 # of Stores 2019 Total Revenues 2018 2017 472 $ 570,381 $ 557,719 $ 535,552 2,102 — — 523 $ 609,817 $ 569,419 $ 537,654 11,865 15,730 11,841 7,563 4,137 — 9 11 31 (1) Represents the year acquired for those stores we acquired from a third party or the year placed in service for those stores we developed. (2) Determined by dividing the aggregate rental revenue for each twelve-month period by the average of the month-end occupied square feet for the period. Rental revenue includes the impact of promotional discounts, which reduce rental income over the promotional period, of $21.5 million, $19.9 million and $18.2 million for the periods ended December 31, 2019, 2018 and 2017, respectively. Unconsolidated Real Estate Ventures As of December 31, 2019, we held common ownership interests ranging from 10% to 50% in three unconsolidated real estate ventures for an aggregate investment balance of $91.1 million. We formed interests in these real estate ventures with unaffiliated third parties to acquire, own and operate self-storage properties in select markets. As of December 31, 2019, these three unconsolidated real estate ventures owned 69 self-storage properties that contain an aggregate of approximately 4.8 million net rentable square feet. The self-storage properties owned by these three real estate ventures are managed by us and are located in Arizona (2), Connecticut (5), Florida (4), Georgia (2), Maryland (1), Massachusetts (6), Minnesota (1), North Carolina (1), Pennsylvania (1), Rhode Island (2), Texas (42) and Vermont (2). On September 5, 2018, we invested $5.0 million in exchange for 100% of the Class A preferred units of Capital Storage Partners, LLC (“Capital Storage”), a newly formed venture that acquired 22 self-storage properties that contain an aggregate of approximately 1.6 million 27 net rentable square feet. The stores owned by Capital Storage are located in Florida (4), Oklahoma (5) and Texas (13). The Class A preferred units earn an 11% cumulative dividend prior to any other distributions. Each of these ventures has assets and liabilities that we do not consolidate in our financial statements. We account for our investments in real estate ventures using the equity method when it is determined that we have the ability to exercise significant influence over the venture. See note 5 to the consolidated financial statements for further disclosure regarding the assets, liabilities and operating results of our unconsolidated real estate ventures which we account for using the equity method of accounting. Capital Expenditures We have a capital improvement program that includes office upgrades, adding climate control to select cubes, construction of parking areas and other store upgrades. For 2020, we anticipate spending approximately $24.0 million to $29.0 million associated with these capital expenditures. For 2020, we also anticipate spending approximately $14.0 million to $19.0 million on recurring capital expenditures and approximately $39.0 million to $54.0 million on the development of new self-storage properties. ITEM 3. LEGAL PROCEEDINGS To our knowledge, no legal proceedings are pending against us, other than routine actions and administrative proceedings, and other actions not deemed material, and which, in the aggregate, are not expected to have a material adverse effect on our financial condition, results of operations or cash flows. ITEM 4. MINING SAFETY DISCLOSURES Not applicable. PART II ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Repurchase of Parent Company Common and Preferred Shares The following table provides information about repurchases of the Parent Company’s common and preferred shares during the three months ended December 31, 2019: October 1 - October 31 November 1 - November 30 December 1 - December 31 Total Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Average Price Paid Per Share Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs Total Number of Shares Purchased (1) 318 37 221 576 $ 34.44 $ 31.04 $ 30.61 $ 32.75 3,000,000 N/A 3,000,000 N/A N/A 3,000,000 N/A 3,000,000 (1) Represents common shares withheld by the Parent Company upon the vesting of restricted shares to cover employee tax obligations. On September 27, 2007, the Parent Company announced that the Board of Trustees approved a share repurchase program for up to 3.0 million of the Parent Company’s outstanding common shares. Unless terminated earlier by resolution of the Board of Trustees, the program will expire when the number of authorized shares has been repurchased. The Parent Company has made no repurchases under this program to date. 28 Market Information for and Holders of Record of Common Shares As of December 31, 2019, there were 136 registered record holders of the Parent Company’s common shares and 15 holders (other than the Parent Company) of the Operating Partnership’s common units. These amounts do not include common shares held by brokers and other institutions on behalf of shareholders. The Parent Company’s common stock is traded on the New York Stock Exchange (“NYSE”) under the symbol CUBE. There is no established trading market for units of the Operating Partnership. Since our initial quarter as a publicly-traded REIT, we have made regular quarterly distributions to our shareholders. Distributions to shareholders are usually taxable as ordinary income, although a portion of the distribution may be designated as a capital gain or may constitute a tax-free return of capital. Annually, we provide each of the Parent Company’s common shareholders a statement detailing the tax characterization of dividends paid during the preceding year as ordinary income, capital gain or return of capital. The characterization of the Parent Company’s dividends for 2019 consisted of a 78.413% ordinary income distribution, a 5.207% capital gain distribution and a 16.380% return of capital distribution from earnings and profits. We intend to continue to declare quarterly distributions. However, we cannot provide any assurance as to the amount or timing of future distributions. To the extent that we make distributions in excess of our earnings and profits, as computed for federal income tax purposes, these distributions will represent a return of capital, rather than a dividend, for federal income tax purposes. Distributions that are treated as a return of capital for federal income tax purposes generally will not be taxable as a dividend to a U.S. shareholder, but will reduce the shareholder’s basis in its shares (but not below zero) and therefore can result in the shareholder having a higher gain upon a subsequent sale of such shares. Return of capital distributions in excess of a shareholder’s basis generally will be treated as gain from the sale of such shares for federal income tax purposes. Recent Sales of Unregistered Equity Securities and Use of Proceeds Recent Sales of Operating Partnership Unregistered Equity Securities On October 30, 2019, the Operating Partnership entered into an agreement to acquire a self-storage property located in California for $18.5 million, and agreed to fund a portion of the acquisition price in the form of common units, designated Class B Units. On December 16, 2019, the Operating Partnership closed on the acquisition and funded approximately $3.6 million of the acquisition price through the issuance of 106,738 common units. Following a 13-month lock-up period, the holder may tender the common units for redemption by the Operating Partnership for a cash amount per common unit equal to the market value of an equivalent number of common shares of the Company. The Company has the right, but not the obligation, to assume and satisfy the redemption obligation of the Operating Partnership by issuing one common share in exchange for each common unit tendered for redemption. The common units were sold to accredited investors unaffiliated with the Company in private placement transactions exempt from the registration requirements of the Securities Act of 1933 pursuant to Section 4(a)(2) of such Act. Securities Authorized Under Equity Compensation Plans Other information about our equity compensation plans is incorporated herein by reference to Part III, Item 12 of this Annual Report on Form 10-K. 29 Share Performance Graph The SEC requires us to present a chart comparing the cumulative total shareholder return, assuming reinvestment of dividends, on our common shares with the cumulative total shareholder return of (i) a broad equity index and (ii) a published industry or peer group index. The following chart compares the yearly cumulative total shareholder return for our common shares with the cumulative shareholder return of companies on (i) the S&P 500 Index, (ii) the Russell 2000 Index and (iii) the NAREIT All Equity REIT Index as provided by NAREIT for the period beginning December 31, 2014 and ending December 31, 2019. Index CubeSmart S&P 500 Index Russell 2000 Index NAREIT All Equity REIT Index ITEM 6. SELECTED FINANCIAL DATA CUBESMART For the year ended December 31, 2014 2015 100.00 142.43 100.00 101.38 100.00 95.59 100.00 102.83 2016 128.41 113.51 115.95 111.70 2017 144.74 138.29 132.94 121.39 2018 149.64 132.23 118.30 116.48 2019 168.95 173.86 148.49 149.86 The following table sets forth selected financial and operating data on a historical consolidated basis for the Parent Company. The selected historical financial data as of and for each of the years in the five-year period ended December 31, 2019 are derived from the Parent Company’s consolidated financial statements, which financial statements have been audited by KPMG LLP, an independent registered public accounting firm. The consolidated financial statements as of December 31, 2019 and 2018, and for each of the years in the three-year period ended December 31, 2019, and the report thereon, are included herein. The selected data should be read in conjunction with the consolidated financial statements for the year ended December 31, 2019, the related notes and the independent registered public accounting firm’s report. The other data presented below is not derived from the audited financial statements included herein. 30 The following data should be read in conjunction with the audited financial statements and notes thereto of the Parent Company and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this Report. 2019 For the year ended December 31, 2016 2017 2018 (in thousands, except per share data) 2015 REVENUES Rental income Other property related income Property management fee income Total revenues OPERATING EXPENSES Property operating expenses Depreciation and amortization General and administrative Acquisition related costs Total operating expenses OTHER (EXPENSE) INCOME Interest: Interest expense on loans Loan procurement amortization expense Equity in earnings (losses) of real estate ventures Gains from sale of real estate, net Other Total other expense NET INCOME $ 552,404 $ 517,535 $ 489,043 $ 449,601 $ 392,476 45,189 6,856 444,521 50,255 10,183 510,039 67,558 23,953 643,915 55,001 14,899 558,943 60,156 20,253 597,944 209,739 163,547 38,560 — 411,846 196,866 143,350 37,712 — 377,928 181,508 145,681 34,745 1,294 363,228 165,847 161,865 32,823 6,552 367,087 153,172 151,789 28,371 3,301 336,633 (72,525) (2,819) 11,122 1,508 1,416 (61,298) 170,771 (62,132) (2,313) (865) 10,576 206 (54,528) 165,488 (56,952) (2,638) (1,386) — 872 (60,104) 135,611 (50,399) (2,577) (2,662) — 1,062 (54,576) 88,376 (43,736) (2,324) (411) 17,567 (228) (29,132) 78,756 NET (INCOME) LOSS ATTRIBUTABLE TO NONCONTROLLING INTERESTS Noncontrolling interests in the Operating Partnership Noncontrolling interest in subsidiaries NET INCOME ATTRIBUTABLE TO THE COMPANY Distribution to preferred shareholders Preferred share redemption charge (1,708) 54 169,117 — — (1,820) 221 163,889 — — (1,593) 270 134,288 — — NET INCOME ATTRIBUTABLE TO THE COMPANY’S COMMON SHAREHOLDERS $ 169,117 $ 163,889 $ 134,288 $ (941) 470 87,905 (5,045) (2,937) 79,923 $ (960) (84) 77,712 (6,008) — 71,704 Basic earnings per share attributable to common shareholders Diluted earnings per share attributable to common shareholders $ $ 0.89 $ 0.88 $ 0.89 $ 0.88 $ 0.74 $ 0.74 $ 0.45 $ 0.45 $ 0.43 0.42 Weighted average basic shares outstanding (1) Weighted average diluted shares outstanding (1) 190,874 191,576 184,653 185,495 180,525 181,448 178,246 179,533 168,640 170,191 31 Balance Sheet Data (in thousands): Storage properties, net Total assets Unsecured senior notes, net Revolving credit facility Unsecured term loans, net Mortgage loans and notes payable, net Total liabilities Noncontrolling interests in the Operating Partnership Total CubeSmart shareholders' equity Noncontrolling interests in subsidiaries Total liabilities and equity Other Data: Number of stores Total rentable square feet (in thousands) Occupancy percentage Cash dividends declared per common share (2) 2019 2018 December 31, 2017 2016 2015 $ 3,774,485 4,029,545 1,835,725 — — 96,040 2,160,121 62,088 1,799,346 7,990 4,029,545 $ 3,600,968 3,752,972 1,143,524 195,525 299,799 108,246 1,980,704 55,819 1,709,678 6,771 3,752,972 $ 3,408,790 3,545,336 1,142,460 81,700 299,396 111,434 1,855,646 54,320 1,629,134 6,236 3,545,336 $ 3,326,816 3,475,028 1,039,076 43,300 398,749 114,618 1,759,384 54,407 1,655,382 5,855 3,475,028 $ 2,872,983 3,104,164 741,904 — 398,183 111,455 1,393,183 66,128 1,643,327 1,526 3,104,164 523 36,604 493 34,619 484 33,760 475 32,858 445 30,361 $ 89.5 % $ 1.29 89.0 % $ 1.22 89.2 % $ 1.11 89.7 % $ 0.90 90.2 % 0.69 (1) OP units have been excluded from the earnings per share calculations as the related income or loss is presented in noncontrolling interests in the Operating Partnership. (2) We announced full quarterly dividends of $0.16 and $0.484 per common and preferred share, respectively, on February 24, 2015, May 27, 2015 and August 4, 2015; dividends of $0.21 and $0.484 per common and preferred share, respectively, on December 10, 2015, February 16, 2016, June 1, 2016 and August 2, 2016; dividends of $0.174 per preferred share on September 2, 2016; dividends of $0.27 per common share on December 15, 2016, February 14, 2017, May 31, 2017 and July 25, 2017; dividends of $0.30 per common share on December 14, 2017, February 13, 2018, May 30, 2018 and August 7, 2018; dividends of $0.32 per common share on December 13, 2018, February 19, 2019, May 14, 2019 and July 23, 2019; and dividends of $0.33 per common share on December 12, 2019. CUBESMART, L.P. The following table sets forth selected financial and operating data on a historical consolidated basis for the Operating Partnership. The selected historical financial data as of and for each of the years in the five-year period ended December 31, 2019 are derived from the Operating Partnership’s consolidated financial statements, which financial statements have been audited by KPMG LLP, an independent registered public accounting firm. The consolidated financial statements as of December 31, 2019 and 2018, and for each of the years in the three-year period ended December 31, 2019, and the report thereon, are included herein. The selected data should be read in conjunction with the consolidated financial statements for the year ended December 31, 2019, the related notes and the independent registered public accounting firm’s report. The other data presented below is not derived from the audited financial statements included herein. 32 The following data should be read in conjunction with the audited financial statements and notes thereto of the Operating Partnership and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this Report. 2019 For the year ended December 31, 2016 2017 2018 (in thousands, except per unit data) 2015 REVENUES Rental income Other property related income Property management fee income Total revenues OPERATING EXPENSES Property operating expenses Depreciation and amortization General and administrative Acquisition related costs Total operating expenses OTHER (EXPENSE) INCOME Interest: Interest expense on loans Loan procurement amortization expense Equity in earnings (losses) of real estate ventures Gains from sale of real estate, net Other Total other expense NET INCOME NET LOSS (INCOME) ATTRIBUTABLE TO NONCONTROLLING INTERESTS Noncontrolling interest in subsidiaries NET INCOME ATTRIBUTABLE TO CUBESMART L.P. Operating Partnership interests of third parties NET INCOME ATTRIBUTABLE TO OPERATING PARTNER Distribution to preferred unitholders Preferred unit redemption charge $ 552,404 $ 517,535 $ 489,043 $ 449,601 $ 392,476 45,189 6,856 444,521 60,156 20,253 597,944 67,558 23,953 643,915 50,255 10,183 510,039 55,001 14,899 558,943 209,739 163,547 38,560 — 411,846 196,866 143,350 37,712 — 377,928 181,508 145,681 34,745 1,294 363,228 165,847 161,865 32,823 6,552 367,087 153,172 151,789 28,371 3,301 336,633 (72,525) (2,819) 11,122 1,508 1,416 (61,298) 170,771 54 170,825 (1,708) 169,117 — — (62,132) (2,313) (865) 10,576 206 (54,528) 165,488 221 165,709 (1,820) 163,889 — — (56,952) (2,638) (1,386) — 872 (60,104) 135,611 270 135,881 (1,593) 134,288 — — (50,399) (2,577) (2,662) — 1,062 (54,576) 88,376 (43,736) (2,324) (411) 17,567 (228) (29,132) 78,756 470 88,846 (941) 87,905 (5,045) (2,937) (84) 78,672 (960) 77,712 (6,008) — 71,704 NET INCOME ATTRIBUTABLE TO COMMON UNITHOLDERS $ 169,117 $ 163,889 $ 134,288 $ 79,923 $ Basic earnings per unit attributable to common unitholders Diluted earnings per unit attributable to common unitholders $ $ 0.89 $ 0.88 $ 0.89 $ 0.88 $ 0.74 $ 0.74 $ 0.45 $ 0.45 $ 0.43 0.42 Weighted average basic units outstanding (1) Weighted average diluted units outstanding (1) 190,874 191,576 184,653 185,495 180,525 181,448 178,246 179,533 168,640 170,191 33 Balance Sheet Data (in thousands): Storage properties, net Total assets Unsecured senior notes, net Revolving credit facility Unsecured term loans, net Mortgage loans and notes payable, net Total liabilities Operating Partnership interests of third parties Total CubeSmart L.P. Capital Noncontrolling interests in subsidiaries Total liabilities and capital Other Data: Number of stores Total rentable square feet (in thousands) Occupancy percentage Cash dividends declared per common unit (2) 2019 2018 December 31, 2017 2016 2015 $ 3,774,485 4,029,545 1,835,725 — — 96,040 2,160,121 62,088 1,799,346 7,990 4,029,545 $ 3,600,968 3,752,972 1,143,524 195,525 299,799 108,246 1,980,704 55,819 1,709,678 6,771 3,752,972 $ 3,408,790 3,545,336 1,142,460 81,700 299,396 111,434 1,855,646 54,320 1,629,134 6,236 3,545,336 $ 3,326,816 3,475,028 1,039,076 43,300 398,749 114,618 1,759,384 54,407 1,655,382 5,855 3,475,028 $ 2,872,983 3,104,164 741,904 — 398,183 111,455 1,393,183 66,128 1,643,327 1,526 3,104,164 523 36,604 493 34,619 484 33,760 475 32,858 445 30,361 $ 89.5 % $ 1.29 89.0 % $ 1.22 89.2 % $ 1.11 89.7 % $ 0.90 90.2 % 0.69 (1) OP units have been excluded from the earnings per unit calculations as the related income or loss is presented in Operating Partnership interest of third parties. (2) We announced full quarterly dividends of $0.16 and $0.484 per common and preferred unit, respectively, on February 24, 2015, May 27, 2015 and August 4, 2015; dividends of $0.21 and $0.484 per common and preferred unit, respectively, on December 10, 2015, February 16, 2016, June 1, 2016 and August 2, 2016; dividends of $0.174 per preferred unit on September 2, 2016; dividends of $0.27 per common unit on December 15, 2016, February 14, 2017, May 31, 2017 and July 25, 2017; dividends of $0.30 per common unit on December 14, 2017, February 13, 2018, May 30, 2018 and August 7, 2018; dividends of $0.32 per common unit on December 13, 2018, February 19, 2019, May 14, 2019 and July 23, 2019; and dividends of $0.33 per common unit on December 12, 2019. 34 ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion should be read in conjunction with the financial statements and notes thereto appearing elsewhere in this Report. Some of the statements we make in this section are forward-looking statements within the meaning of the federal securities laws. For a complete discussion of forward-looking statements, see the section in this Report entitled “Forward-Looking Statements”. Certain risk factors may cause actual results, performance or achievements to differ materially from those expressed or implied by the following discussion. For a discussion of such risk factors, see the section in this Report entitled “Risk Factors”. Overview We are an integrated self-storage real estate company, and as such we have in-house capabilities in the operation, design, development, leasing, management and acquisition of self-storage properties. The Parent Company’s operations are conducted solely through the Operating Partnership and its subsidiaries. The Parent Company has elected to be taxed as a REIT for U.S. federal income tax purposes. As of December 31, 2019 and December 31, 2018, we owned 523 self-storage properties totaling approximately 36.6 million rentable square feet and 493 self-storage properties totaling approximately 34.6 million rentable square feet, respectively. As of December 31, 2019, we owned stores in the District of Columbia and the following 24 states: Arizona, California, Colorado, Connecticut, Florida, Georgia, Illinois, Indiana, Maryland, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, North Carolina, Ohio, Pennsylvania, Rhode Island, South Carolina, Tennessee, Texas, Utah and Virginia. In addition, as of December 31, 2019, we managed 649 stores for third parties (including 91 stores containing an aggregate of approximately 6.3 million net rentable square feet as part of four separate unconsolidated real estate ventures), bringing the total number of stores we owned and/or managed to 1,172. As of December 31, 2019, we managed stores for third parties in the District of Columbia and the following 38 states: Alabama, Arizona, California, Colorado, Connecticut, Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, Tennessee, Texas, Utah, Vermont, Virginia, Washington and Wisconsin. We derive revenues principally from rents received from customers who rent cubes at our self-storage properties under month-to-month leases. Therefore, our operating results depend materially on our ability to retain our existing customers and lease our available self- storage cubes to new customers while maintaining and, where possible, increasing our pricing levels. In addition, our operating results depend on the ability of our customers to make required rental payments to us. Our approach to the management and operation of our stores combines centralized marketing, revenue management and other operational support with local operations teams that provide market-level oversight and management. We believe this approach allows us to respond quickly and effectively to changes in local market conditions and maximize revenues by managing rental rates and occupancy levels. We typically experience seasonal fluctuations in the occupancy levels of our stores, which are generally slightly higher during the summer months due to increased moving activity. Our results of operations may be sensitive to changes in overall economic conditions that impact consumer spending, including discretionary spending and moving trends, as well as to increased bad debts due to recessionary pressures. Adverse economic conditions affecting disposable consumer income, such as employment levels, business conditions, interest rates, tax rates, fuel and energy costs, and other matters could reduce consumer spending or cause consumers to shift their spending to other products and services. A general reduction in the level of discretionary spending or shifts in consumer discretionary spending could adversely affect our growth and profitability. We continue our focus on maximizing internal growth opportunities and selectively pursuing targeted acquisitions and developments of self-storage properties. We have one reportable segment: we own, operate, develop, manage and acquire self-storage properties. Our self-storage properties are located in major metropolitan and suburban areas and have numerous customers per store. No single customer represents a significant concentration of our revenues. Our stores in Florida, New York, Texas and California provided approximately 16%, 16%, 10%, and 8%, respectively, of total revenues for the year ended December 31, 2019. Summary of Critical Accounting Policies and Estimates Set forth below is a summary of the accounting policies and estimates that management believes are critical to the preparation of the consolidated financial statements included in this Report. Certain of the accounting policies used in the preparation of these consolidated financial statements are particularly important for an understanding of the financial position and results of operations presented in the 35 historical consolidated financial statements included in this Report. A summary of significant accounting policies is also provided in the notes to our consolidated financial statements (see note 2 to the consolidated financial statements). These policies require the application of judgment and assumptions by management and, as a result, are subject to a degree of uncertainty. Due to this uncertainty, actual results could differ materially from estimates calculated and utilized by management. Basis of Presentation The accompanying consolidated financial statements include all of the accounts of the Company, and its majority-owned and/or controlled subsidiaries. The portion of these entities not owned by the Company is presented as noncontrolling interests as of and during the periods presented. All significant intercompany accounts and transactions have been eliminated in consolidation. When the Company obtains an economic interest in an entity, the Company evaluates the entity to determine if the entity is deemed a variable interest entity (“VIE”) and if the Company is deemed to be the primary beneficiary, in accordance with authoritative guidance issued by the Financial Accounting Standards Board (“FASB”) on the consolidation of VIEs. When an entity is not deemed to be a VIE, the Company considers the provisions of additional FASB guidance to determine whether a general partner, or the general partners as a group, control a limited partnership or similar entity when the limited partners have certain rights. The Company consolidates (i) entities that are VIEs and of which the Company is deemed to be the primary beneficiary and (ii) entities that are non-VIEs which the Company controls and in which the limited partners do not have substantive participating rights, or the ability to dissolve the entity or remove the Company without cause. Self-Storage Properties The Company records self-storage properties at cost less accumulated depreciation. Depreciation on the buildings, improvements and equipment is recorded on a straight-line basis over their estimated useful lives, which range from five to 39 years. Expenditures for significant renovations or improvements that extend the useful life of assets are capitalized. Repairs and maintenance costs are expensed as incurred. When stores are acquired, the purchase price is allocated to the tangible and intangible assets acquired and liabilities assumed based on estimated fair values. In allocating the purchase price for an acquisition, the Company determines whether the acquisition includes intangible assets or liabilities. The Company allocates a portion of the purchase price to an intangible asset attributable to the value of in-place leases. This intangible asset is generally amortized to expense over the expected remaining term of the respective leases. Substantially all of the leases in place at acquired stores are at market rates, as the majority of the leases are month-to-month contracts. Accordingly, to date no portion of the purchase price has been allocated to above- or below-market lease intangibles. To date, no intangible asset has been recorded for the value of customer relationships because the Company does not have any concentrations of significant customers and the average customer turnover is fairly frequent. Long-lived assets classified as “held for use” are reviewed for impairment when events and circumstances such as declines in occupancy and operating results indicate that there may be an impairment. The carrying value of these long-lived assets is compared to the undiscounted future net operating cash flows, plus a terminal value, attributable to the assets to determine if the store’s basis is recoverable. If a store’s basis is not considered recoverable, an impairment loss is recorded to the extent the net carrying value of the asset exceeds the fair value. The impairment loss recognized equals the excess of net carrying value over the related fair value of the asset. There were no impairment losses recognized in accordance with these procedures during the years ended December 31, 2019, 2018 and 2017. The Company considers long-lived assets to be “held for sale” upon satisfaction of the following criteria: (a) management commits to a plan to sell a store (or group of stores), (b) the store is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such stores, (c) an active program to locate a buyer and other actions required to complete the plan to sell the store have been initiated, (d) the sale of the store is probable and transfer of the asset is expected to be completed within one year, (e) the store is being actively marketed for sale at a price that is reasonable in relation to its current fair value and (f) actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. Typically these criteria are all met when the relevant asset is under contract, significant non-refundable deposits have been made by the potential buyer, the assets are immediately available for transfer and there are no contingencies related to the sale that may prevent the transaction from closing. However, each potential transaction is evaluated based on its separate facts and circumstances. Stores classified 36 as held for sale are reported at the lesser of carrying value or fair value less estimated costs to sell and are not depreciated. There were no stores classified as held for sale as of December 31, 2019. Investments in Unconsolidated Real Estate Ventures The Company accounts for its investments in unconsolidated real estate ventures under the equity method of accounting when it is determined that the Company has the ability to exercise significant influence over the venture. Under the equity method, investments in unconsolidated real estate ventures are recorded initially at cost, as investments in real estate entities, and subsequently adjusted for equity in earnings (losses) and cash contributions, less cash distributions and impairments. On a periodic basis, management also assesses whether there are any indicators that the carrying value of the Company’s investments in unconsolidated real estate entities may be other than temporarily impaired. An investment is impaired only if the fair value of the investment, as estimated by management, is less than the carrying value of the investment and the decline is other than temporary. To the extent impairment that is other than temporary has occurred, the loss shall be measured as the excess of the carrying amount of the investment over the fair value of the investment, as estimated by management. Fair value is determined through various valuation techniques, including but not limited to, discounted cash flow models, quoted market values and third party appraisals. There were no impairment losses related to the Company’s investments in unconsolidated real estate ventures recognized during the years ended December 31, 2019, 2018 and 2017. Recent Accounting Pronouncements For a discussion of recent accounting pronouncements affecting our business, see note 2 to the consolidated financial statements. Results of Operations The following discussion of our results of operations should be read in conjunction with the consolidated financial statements and the accompanying notes thereto. Historical results set forth in the consolidated statements of operations reflect only the existing stores for each period presented and should not be taken as indicative of future operations. We consider our same-store portfolio to consist of only those stores owned and operated on a stabilized basis at the beginning and at the end of the applicable years presented. We consider a store to be stabilized once it has achieved an occupancy rate that we believe, based on our assessment of market-specific data, is representative of similar self-storage assets in the applicable market for a full year measured as of the most recent January 1 and has not been significantly damaged by natural disaster or undergone significant renovation. We believe that same-store results are useful to investors in evaluating our performance because they provide information relating to changes in store-level operating performance without taking into account the effects of acquisitions, developments or dispositions. As of December 31, 2019, we owned 466 same-store properties and 57 non same-store properties. All of the non same-store properties were 2018 and 2019 acquisitions, dispositions, developed stores, stores with a significant portion of net rentable square footage taken out of service or stores that have not yet reached stabilization as defined above. For analytical presentation, all percentages are calculated using the numbers presented in the financial statements contained in this Report. The comparability of our results of operations is affected by the timing of acquisition and disposition activities during the periods reported. As of December 31, 2019, 2018 and 2017, we owned 523, 493 and 484 self-storage properties and related assets, respectively. 37 The following table summarizes the change in number of owned stores from January 1, 2017 through December 31, 2019: Balance - January 1 Stores acquired Stores developed Balance - March 31 Stores acquired Stores developed Stores combined (1) Balance - June 30 Stores acquired Stores developed Balance - September 30 Stores acquired Stores developed Stores combined (1) Stores sold Balance - December 31 2019 2018 2017 493 1 — 494 21 2 (1) 516 2 1 519 5 — — (1) 523 484 1 — 485 1 — — 486 3 1 490 5 — — (2) 493 475 — 1 476 3 — (1) 478 — 2 480 4 1 (1) — 484 (1) On May 16, 2017, October 2, 2017 and May 24, 2019, we acquired stores located in Sacramento, CA, Keller, TX and Tempe, AZ for approximately $3.7 million, $4.1 million and $1.6 million, respectively. In each case, the store acquired is located directly adjacent to an existing wholly-owned store. Given their proximity to each other, each acquired store has been combined with the existing adjacent store in our store count, as well as for operational and reporting purposes. Comparison of the Year Ended December 31, 2019 to the Year Ended December 31, 2018 (dollars in thousands) Same-Store Property Portfolio 2019 2018 Increase/ % (Decrease) Change Non Same-Store Properties Other/ Eliminations Total Portfolio Increase/ % 2019 2018 2019 2018 2019 2018 (Decrease) Change REVENUES: Rental income Other property related income Property management fee income Total revenues OPERATING EXPENSES: Property operating expenses NET OPERATING INCOME (LOSS): $ 508,696 53,130 — 561,826 $ 499,729 51,490 — 551,219 $ 8,967 1,640 — 10,607 1.8 % $ 43,708 5,139 3.2 % 0.0 % — 1.9 % 48,847 $ 17,806 2,503 — 20,309 $ — $ 9,289 23,953 33,242 — $ 552,404 67,558 23,953 643,915 6,163 20,253 26,416 $ 517,535 60,156 20,253 597,944 $ 34,869 7,402 3,700 45,971 6.7 % 12.3 % 18.3 % 7.7 % 164,616 397,210 158,307 392,912 6,309 4,298 4.0 % 19,430 1.1 % 29,417 9,776 10,533 25,693 7,549 28,783 (2,367) 209,739 434,176 196,866 401,078 12,873 33,098 6.5 % 8.3 % Store count Total square footage Period end occupancy (1) Period average occupancy (2) Realized annual rent per occupied sq. ft. (3) 466 32,377 466 32,377 91.2 % 92.4 % $ 17.01 91.1 % 92.4 % 16.70 $ 57 4,227 27 2,242 75.8 % 58.9 % 523 36,604 493 34,619 89.5 % 89.0 % Depreciation and amortization General and administrative Subtotal OTHER (EXPENSE) INCOME Interest: Interest expense on loans Loan procurement amortization expense Equity in earnings (losses) of real estate ventures Gains from sale of real estate, net Other Total other expense NET INCOME 163,547 38,560 202,107 143,350 37,712 181,062 20,197 848 21,045 14.1 % 2.2 % 11.6 % (72,525) (2,819) 11,122 1,508 1,416 (61,298) 170,771 (62,132) (2,313) (865) 10,576 206 (54,528) 165,488 (10,393) (506) (16.7)% (21.9)% 11,987 1,385.8 % (85.7)% 587.4 % (12.4)% 3.2 % (9,068) 1,210 (6,770) 5,283 NET (INCOME) LOSS ATTRIBUTABLE TO NONCONTROLLING INTERESTS Noncontrolling interests in the Operating Partnership Noncontrolling interests in subsidiaries NET INCOME ATTRIBUTABLE TO THE COMPANY’S COMMON SHAREHOLDERS (1,708) 54 $ 169,117 (1,820) 221 $ 163,889 $ 112 (167) 5,228 6.2 % (75.6)% 3.2 % (1) Represents occupancy as of December 31 of the respective year. (2) Represents the weighted average occupancy for the period. (3) Realized annual rent per occupied square foot is computed by dividing rental income by the weighted average occupied square feet for the period. 38 Revenues Rental income increased from $517.5 million in 2018 to $552.4 million in 2019, an increase of $34.9 million, or 6.7%. The $9.0 million increase in same-store rental income was due primarily to higher rental rates. Realized annual rent per square foot on our same-store portfolio increased 1.9% as a result of higher rental rates for new and existing customers in 2019 as compared to 2018. The remaining increase was primarily attributable to $25.9 million of additional rental income from the stores acquired or opened in 2018 and 2019 included in our non-same store portfolio. Other property related income increased from $60.2 million in 2018 to $67.6 million in 2019, an increase of $7.4 million, or 12.3%. The $1.6 million increase in same-store other property related income was mainly attributable to increased customer insurance participation. The remainder of the increase was attributable to $2.6 million of additional other property related income derived from the stores acquired or opened in 2018 and 2019 included in our non-same store portfolio and $3.1 million resulting primarily from increased customer insurance participation at our managed stores. Property management fee income increased from $20.3 million in 2018 to $24.0 million in 2019, an increase of $3.7 million, or 18.3%. This increase was attributable to an increase in management fees related to the third-party management business resulting from more stores under management (649 stores as of December 31, 2019 compared to 593 stores as of December 31, 2018) and higher revenue at these managed stores. Operating Expenses Property operating expenses increased from $196.9 million in 2018 to $209.7 million in 2019, an increase of $12.9 million, or 6.5%. This increase was primarily attributable to a $6.3 million increase in property operating expenses on the same-store portfolio primarily due to higher property taxes and personnel expenses. The remainder of the increase was attributable to $9.7 million of increased expenses associated with newly acquired or developed stores. Depreciation and amortization increased from $143.4 million in 2018 to $163.5 million in 2019, an increase of $20.2 million, or 14.1%. This increase was primarily attributable to depreciation and amortization expense related to stores acquired and developed during 2018 and 2019. Other (expense) income Interest expense increased from $62.1 million in 2018 to $72.5 million in 2019, an increase of $10.4 million, or 16.7%. The increase was attributable to a higher amount of outstanding debt during 2019 compared to 2018, and higher interest rates during 2019. The average outstanding debt balance increased $163.5 million to $1,854.4 million during 2019 as compared to $1,690.9 million during 2018 as the result of borrowings to fund a portion of the Company’s acquisition activity. The weighted average effective interest rate on our outstanding debt increased from 3.93% during 2018 to 4.06% during 2019. Equity in earnings (losses) of real estate ventures increased $12.0 million from 2018 to 2019. The change was mainly driven by our share of the gains attributable to HVP III, a real estate venture in which we previously owned a 10% interest. The gains were recorded in connection with HVP III’s sale of 50 properties during 2019, prior to the Company’s acquisition of its partner’s 90% interest in the venture. Gains from sale of real estate, net were $1.5 million in 2019 compared to $10.6 million in 2018, a decrease of $9.1 million. These gains are determined on a transactional basis and, accordingly, are not comparable across reporting periods. Other income increased $1.2 million from 2018 to 2019, primarily due to fees earned in connection with joint venture property transactions that occurred during 2019. Comparison of the Year Ended December 31, 2018 to the Year Ended December 31,2017 Refer to the section entitled “Results of Operations” within Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the year ended December 31, 2018 for a comparison of the year ended December 31, 2018 to the year ended December 31, 2017. 39 Non-GAAP Financial Measures NOI We define net operating income, which we refer to as “NOI”, as total continuing revenues less continuing property operating expenses. NOI also can be calculated by adding back to net income (loss): interest expense on loans, loan procurement amortization expense, loan procurement amortization expense — early repayment of debt, acquisition related costs, equity in losses of real estate ventures, other expense, depreciation and amortization expense, general and administrative expense and deducting from net income (loss): gains from sale of real estate, net, other income, gains from remeasurement of investments in real estate ventures and interest income. NOI is not a measure of performance calculated in accordance with GAAP. We use NOI as a measure of operating performance at each of our stores, and for all of our stores in the aggregate. NOI should not be considered as a substitute for operating income, net income, cash flows provided by operating, investing and financing activities, or other income statement or cash flow statement data prepared in accordance with GAAP. We believe NOI is useful to investors in evaluating our operating performance because:    it is one of the primary measures used by our management and our store managers to evaluate the economic productivity of our stores, including our ability to lease our stores, increase pricing and occupancy and control our property operating expenses; it is widely used in the real estate industry and the self-storage industry to measure the performance and value of real estate assets without regard to various items included in net income that do not relate to or are not indicative of operating performance, such as depreciation and amortization, which can vary depending upon accounting methods and the book value of assets; and it helps our investors to meaningfully compare the results of our operating performance from period to period by removing the impact of our capital structure (primarily interest expense on our outstanding indebtedness) and depreciation of our basis in our assets from our operating results. There are material limitations to using a measure such as NOI, including the difficulty associated with comparing results among more than one company and the inability to analyze certain significant items, including depreciation and interest expense, that directly affect our net income. We compensate for these limitations by considering the economic effect of the excluded expense items independently as well as in connection with our analysis of net income. NOI should be considered in addition to, but not as a substitute for, other measures of financial performance reported in accordance with GAAP, such as total revenues, operating income and net income. FFO Funds from operations (“FFO”) is a widely used performance measure for real estate companies and is provided here as a supplemental measure of operating performance. The April 2002 National Policy Bulletin of the National Association of Real Estate Investment Trusts, as amended and restated, defines FFO as net income (computed in accordance with GAAP), excluding gains (or losses) from sales of real estate and related impairment charges, plus real estate depreciation and amortization and after adjustments for unconsolidated partnerships and joint ventures. Management uses FFO as a key performance indicator in evaluating the operations of our stores. Given the nature of our business as a real estate owner and operator, we consider FFO a key measure of our operating performance that is not specifically defined by accounting principles generally accepted in the United States. We believe that FFO is useful to management and investors as a starting point in measuring our operational performance because FFO excludes various items included in net income that do not relate to or are not indicative of our operating performance such as gains (or losses) from sales of real estate, gains from remeasurement of investments in real estate ventures, impairments of depreciable assets and depreciation, which can make periodic and peer analyses of operating performance more difficult. Our computation of FFO may not be comparable to FFO reported by other REITs or real estate companies. FFO should not be considered as an alternative to net income (determined in accordance with GAAP) as an indication of our performance. FFO does not represent cash generated from operating activities determined in accordance with GAAP and is not a measure of liquidity or an indicator of our ability to make cash distributions. We believe that to further understand our performance, FFO should be compared with our reported net income and considered in addition to cash flows computed in accordance with GAAP, as presented in our consolidated financial statements. 40 FFO, as adjusted FFO, as adjusted represents FFO as defined above, excluding the effects of acquisition related costs, gains or losses from early extinguishment of debt, and non-recurring items, which we believe are not indicative of the Company’s operating results. We present FFO, as adjusted because we believe it is a helpful measure in understanding our results of operations insofar as we believe that the items noted above that are included in FFO, but excluded from FFO, as adjusted are not indicative of our ongoing operating results. We also believe that the analyst community considers our FFO, as adjusted (or similar measures using different terminology) when evaluating us. Because other REITs or real estate companies may not compute FFO, as adjusted in the same manner as we do, and may use different terminology, our computation of FFO, as adjusted may not be comparable to FFO, as adjusted reported by other REITs or real estate companies. The following table presents a reconciliation of net income to FFO and FFO, as adjusted, for the years ended December 31, 2019 and 2018: Net income attributable to the Company’s common shareholders Add (deduct): Real estate depreciation and amortization: Real property Company’s share of unconsolidated real estate ventures Gains from sale of real estate, net (1) Noncontrolling interests in the Operating Partnership FFO attributable to common shareholders and OP unitholders Add: Loan procurement amortization expense - early repayment of debt Loss related to settlement of legal action (2) FFO, as adjusted, attributable to common shareholders and OP unitholders Weighted average diluted shares outstanding Weighted average diluted units outstanding Weighted average diluted shares and units outstanding For the year ended December 31, 2019 2018 (dollars in thousands) $ 169,117 $ 163,889 $ $ 160,485 7,052 (12,175) 1,708 326,187 $ 140,538 10,286 (10,576) 1,820 305,957 141 — 326,328 $ — 1,828 307,785 191,576 1,886 193,462 185,495 2,021 187,516 (1) The year ended December 31, 2019 includes $10.7 million of gains from sale of real estate, net that are included in the Company’s share of equity in earnings of real estate ventures. (2) Loss related to settlement of legal action for the year ended December 31, 2018, represents a charge related to a settlement agreement for a class action alleging violations of a state specific deceptive and unfair trade practices act. Cash Flows Comparison of the Year Ended December 31, 2019 to the Year Ended December 31, 2018 A comparison of cash flow related to operating, investing and financing activities for the years ended December 31, 2019 and 2018 is as follows: Net cash provided by (used in): Operating activities Investing activities Financing activities For the year ended December 31, 2019 2018 Change (in thousands) $ 331,768 $ (375,664) 95,855 $ $ 304,335 $ 27,433 $ (322,259) $ (53,405) 15,248 $ 80,607 $ Cash provided by operating activities for the years ended December 31, 2019 and 2018 was $331.8 million and $304.3 million, respectively, reflecting an increase of $27.4 million. Our increased cash flow from operating activities was primarily attributable to stores 41 acquired and developed during 2018 and 2019, as well as increased net operating income levels on the same-store portfolio in 2019 as compared to 2018. Cash used in investing activities increased from $322.3 million in 2018 to $375.7 million in 2019, reflecting an increase of $53.4 million. The change was primarily driven by an increase in cash used for acquisitions of storage properties and the remaining interest in HVP III, a previously unconsolidated real estate venture. Including the HVP III membership interest acquisition, cash used during 2019 related to the acquisition of 29 stores for an aggregate net purchase price of $238.3 million, inclusive of $3.6 million of OP units issued, while cash used during 2018 related to the acquisition of ten stores for an aggregate purchase price of $227.5 million, inclusive of $7.2 million of assumed debt and $4.8 million of OP units issued. Additionally, there was a $16.7 million increase in development costs from the 2018 to 2019 resulting from the payment of put liabilities associated with three previously consolidated development joint ventures during 2019. The remainder of the change was due to a $12.5 million decrease in the proceeds from sale of real estate, net from 2018 to 2019 resulting from the sale of one property for a sales price of $4.1 million in 2019 compared to the sale of two properties for an aggregate sales price of $17.5 million in 2018. Cash provided by financing activities increased from $15.2 million in 2018 to $95.9 million in 2019, reflecting an increase of $80.6 million. This change was primarily the result of $696.4 million of net proceeds from our issuance of the 2029 Notes and 2030 Notes (defined below) during 2019 as well as an increase of $64.5 million in proceeds received from the issuance of common shares during 2019 compared to 2018. These cash inflows were offset by a $200.0 million cash payment made to repay our unsecured term loan in January 2019 and a $413.8 million net increase in revolving credit facility payments from 2018 to 2019. The change was also impacted by the combined $35.8 million cash outflow for the acquisition of the noncontrolling members’ interests in four separate consolidated development joint ventures during 2019 with no comparable cash outflow during 2018. Additionally, cash distributions paid to common shareholders and noncontrolling interests in the Operating Partnership increased $22.6 million from 2018 to 2019 resulting from the increase in the common dividend per share and number of shares outstanding. Comparison of the Year Ended December 31, 2018 to the Year Ended December 31, 2017 Refer to the section entitled “Cash Flows” within Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the year ended December 31, 2018 for a comparison of the year ended December 31, 2018 to the year ended December 31, 2017. Liquidity and Capital Resources Liquidity Overview Our cash flow from operations has historically been one of our primary sources of liquidity used to fund debt service, distributions and capital expenditures. We derive substantially all of our revenue from customers who lease space at our stores and fees earned from managing stores. Therefore, our ability to generate cash from operations is dependent on the rents that we are able to charge and collect from our customers. We believe that the properties in which we invest, self-storage properties, are less sensitive than other real estate product types to near-term economic downturns. However, prolonged economic downturns will adversely affect our cash flows from operations. In order to qualify as a REIT for federal income tax purposes, the Parent Company is required to distribute at least 90% of REIT taxable income, excluding capital gains, to its shareholders on an annual basis or pay federal income tax. The nature of our business, coupled with the requirement that we distribute a substantial portion of our income on an annual basis, will cause us to have substantial liquidity needs over both the short and long term. Our short-term liquidity needs consist primarily of funds necessary to pay operating expenses associated with our stores, refinancing of certain mortgage indebtedness, interest expense and scheduled principal payments on debt, expected distributions to limited partners and shareholders, capital expenditures and the development of new stores. These funding requirements will vary from year to year, in some cases significantly. In the 2020 fiscal year, we expect recurring capital expenditures to be approximately $14.0 million to $19.0 million, planned capital improvements and store upgrades to be approximately $24.0 million to $29.0 million and costs associated with the development of new stores to be approximately $39.0 million to $54.0 million. Our currently scheduled principal payments on debt are approximately $12.8 million in 2020. Our most restrictive financial covenants limit the amount of additional leverage we can add; however, we believe cash flows from operations, access to equity financing, including through our at-the-market equity program and available borrowings under our Revolver provide adequate sources of liquidity to enable us to execute our current business plan and remain in compliance with our covenants. 42 Our liquidity needs beyond 2020 consist primarily of contractual obligations which include repayments of indebtedness at maturity, as well as potential discretionary expenditures such as (i) non-recurring capital expenditures; (ii) redevelopment of operating stores; (iii) acquisitions of additional stores; and (iv) development of new stores. We will have to satisfy the portion of our needs not covered by cash flow from operations through additional borrowings, including borrowings under our Revolver, sales of common or preferred shares of the Parent Company and common or preferred units of the Operating Partnership and/or cash generated through store dispositions and joint venture transactions. We believe that, as a publicly traded REIT, we will have access to multiple sources of capital to fund our long-term liquidity requirements, including the incurrence of additional debt and the issuance of additional equity. However, we cannot provide any assurance that this will be the case. Our ability to incur additional debt will be dependent on a number of factors, including our degree of leverage, the value of our unencumbered assets and borrowing restrictions that may be imposed by lenders. In addition, dislocation in the United States debt markets may significantly reduce the availability and increase the cost of long-term debt capital, including conventional mortgage financing and commercial mortgage-backed securities financing. There can be no assurance that such capital will be readily available in the future. Our ability to access the equity capital markets will be dependent on a number of factors as well, including general market conditions for REITs and market perceptions about us. As of December 31, 2019, we had approximately $54.9 million in available cash and cash equivalents. In addition, we had approximately $749.3 million of availability for borrowings under the revolving portion of our Amended and Restated Credit Facility (defined below). Unsecured Senior Notes On January 30, 2019, we issued $350.0 million in aggregate principal amount of unsecured senior notes due February 15, 2029, which bear interest at a rate of 4.375% per annum (the “2029 Notes”). The 2029 Notes were priced at 99.356% of the principal amount to yield 4.455% to maturity. Net proceeds from the offering were used to repay all of the outstanding indebtedness under our $200.0 million unsecured term loan portion of our credit facility that was scheduled to mature in January 2019. The remaining proceeds from the offering were used to repay a portion of the outstanding indebtedness under the revolving portion of our Credit Facility (defined below). Additionally, on October 11, 2019, we issued $350.0 million in aggregate principal amount of unsecured senior notes due February 15, 2030, which bear interest at a rate of 3.000% per annum (the “2030 Notes”). The 2030 Notes were priced at 99.623% of the principal amount to yield 3.043% to maturity. Net proceeds from the offering were used to repay all of the outstanding indebtedness under the Revolver and for working capital and other general corporate purposes. Our unsecured senior notes are summarized as follows (collectively referred to as the “Senior Notes”): Unsecured Senior Notes $250M 4.800% Guaranteed Notes due 2022 $300M 4.375% Guaranteed Notes due 2023 (1) $300M 4.000% Guaranteed Notes due 2025 (2) $300M 3.125% Guaranteed Notes due 2026 $350M 4.375% Guaranteed Notes due 2029 $350M 3.000% Guaranteed Notes due 2030 Principal balance outstanding Less: Discount on issuance of unsecured senior notes, net Less: Loan procurement costs, net Total unsecured senior notes, net $ 250,000 $ 300,000 300,000 300,000 350,000 350,000 1,850,000 (3,860) (10,415) 250,000 300,000 300,000 300,000 — — 1,150,000 (568) (5,908) $ 1,835,725 $ 1,143,524 December 31, 2019 2018 (in thousands) Effective Interest Rate Issuance Date Maturity Date 4.82 % Jun-12 4.33 % Various (1) 3.99 % Various (2) Aug-16 3.18 % Jan-19 4.46 % Oct-19 3.04 % Jul-22 Dec-23 Nov-25 Sep-26 Feb-29 Feb-30 (1) On April 4, 2017, the Operating Partnership issued $50.0 million of its 4.375% senior notes due 2023, which are part of the same series as the $250.0 million principal amount of the Operating Partnership’s 4.375% senior notes due December 15, 2023 issued on December 17, 2013. The $50.0 million and $250.0 million tranches were priced at 105.040% and 98.995%, respectively, of the principal amount to yield 3.495% and 4.501%, respectively, to maturity. The combined weighted average effective interest rate of the 2023 notes is 4.330%. 43 (2) On April 4, 2017, the Operating Partnership issued $50.0 million of its 4.000% senior notes due 2025, which are part of the same series as the $250.0 million principal amount of the Operating Partnership’s 4.000% senior notes due November 15, 2025 issued on October 26, 2015. The $50.0 million and $250.0 million tranches were priced at 101.343% and 99.735%, respectively, of the principal amount to yield 3.811% and 4.032%, respectively, to maturity. The combined weighted average effective interest rate of the 2025 notes is 3.994%. The indenture under which the Senior Notes were issued restricts the ability of the Operating Partnership and its subsidiaries to incur debt unless the Operating Partnership and its consolidated subsidiaries comply with a leverage ratio not to exceed 60% and an interest coverage ratio of more than 1.5:1.0 after giving effect to the incurrence of the debt. The indenture also restricts the ability of the Operating Partnership and its subsidiaries to incur secured debt unless the Operating Partnership and its consolidated subsidiaries comply with a secured debt leverage ratio not to exceed 40% after giving effect to the incurrence of the debt. The indenture also contains other financial and customary covenants, including a covenant not to own unencumbered assets with a value less than 150% of the unsecured indebtedness of the Operating Partnership and its consolidated subsidiaries. As of and for the year ended December 31, 2019, the Operating Partnership was in compliance with all of the financial covenants under the Senior Notes. Revolving Credit Facility and Unsecured Term Loans On December 9, 2011, we entered into a credit agreement (the “Credit Facility”), which was subsequently amended on April 5, 2012, June 18, 2013 and April 22, 2015 to provide for, among other things, a $500.0 million unsecured revolving facility with a maturity date of April 22, 2020. On June 19, 2019, we amended and restated, in its entirety, the Credit Facility (the “Amended and Restated Credit Facility”) which, subsequent to the amendment and restatement, is comprised of a $750.0 million unsecured revolving credit facility (the “Revolver”) maturing on June 19, 2024. Under the Amended and Restated Credit Facility, pricing on the Revolver is dependent upon our unsecured debt credit ratings. At our current Baa2/BBB level, amounts drawn under the Revolver are priced at 1.10% over LIBOR, inclusive of a facility fee of 0.15%. We incurred costs of $3.9 million in 2019 in connection with amending and restating the Credit Facility and capitalized such costs as a component of Loan procurement costs, net of amortization on the consolidated balance sheets. As of December 31, 2019, borrowings under the Revolver had an effective weighted average interest rate of 2.86%. Additionally, as of December 31, 2019, $749.3 million was available for borrowing under the Revolver. The available balance under the Revolver is reduced by an outstanding letter of credit of $0.7 million. On June 20, 2011, we entered into an unsecured term loan agreement (the “Term Loan Facility”), which was subsequently amended on June 18, 2013 and August 5, 2014, consisting of, among other things, a $100.0 million unsecured term loan with a seven-year maturity that was repaid on June 19, 2019. Our unsecured term loans under the Credit Facility and Term Loan Facility are summarized below: Unsecured Term Loans Credit Facility Unsecured term loan (1) Term Loan Facility Unsecured term loan (2) Principal balance outstanding Less: Loan procurement costs, net Total unsecured term loans, net Carrying Value as of: December 31, Effective Interest Rate as of 2019 2018 December 31, 2019 Maturity Date (in thousands) $ — $ 200,000 — % Jan-19 — — — — $ 100,000 300,000 (201) 299,799 $ — % Jan-20 (1) On January 31, 2019, we used a portion of the net proceeds from the issuance of the 2029 Notes to repay all of the outstanding indebtedness under the unsecured term loan portion of the Credit Facility. (2) On June 19, 2019, we used an initial advance at closing of the Amended and Restated Credit Facility to repay all of the outstanding indebtedness under the unsecured term loan portion of the Term Loan Facility that was scheduled to mature in January 2020. Unamortized loan procurement costs of $0.1 million were written off in conjunction with the repayment. Under the Amended and Restated Credit Facility, our ability to borrow under the Revolver is subject to ongoing compliance with certain financial covenants which include, among other things, (1) a maximum total indebtedness to total asset value of 60.0%, and (2) a 44 minimum fixed charge coverage ratio of 1.5:1.0. As of and for the year ended December 31, 2019, the Operating Partnership was in compliance with all of its financial covenants. Issuance of Common Shares We maintain an at-the-market equity program that enables us to offer and sell up to 50.0 million common shares through sales agents pursuant to equity distribution agreements (the “Equity Distribution Agreements”). Our sales activity under the program for the years ended December 31, 2019, 2018 and 2017 is summarized below: For the year ended December 31, 2018 (dollars and shares in thousands, except per share amounts) 2017 2019 Number of shares sold Average sales price per share Net proceeds after deducting offering costs $ $ 5,899 33.64 $ 196,304 $ 4,291 31.09 $ 131,835 $ 1,036 29.13 29,642 We used proceeds from sales of common shares under the program during the years ended December 31, 2019, 2018 and 2017 to fund acquisitions of storage properties and for general corporate purposes. As of December 31, 2019, 2018 and 2017, 4.6 million common shares, 10.5 million common shares and 4.7 million common shares, respectively, remained available for issuance under the Equity Distribution Agreements. Other Material Changes in Financial Position Selected Assets Storage properties, net Other assets, net Selected Liabilities Unsecured senior notes, net Revolving credit facility Unsecured term loans, net December 31, 2019 2018 (in thousands) Change $ $ 3,774,485 101,443 1,835,725 — — $ $ 3,600,968 48,763 1,143,524 195,525 299,799 $ $ 173,517 52,680 692,201 (195,525) (299,799) Storage properties, net increased $173.5 million from December 31, 2018 to December 31, 2019, primarily as a result of the acquisition of 29 storage properties, additions and improvements to storage properties, and development costs incurred during the year. Other assets, net increased $52.7 million from December 31, 2018 to December 31, 2019 primarily due to the adoption of Accounting Standard Update (“ASU”) No. 2016-02 - Leases (Topic 842) on January 1, 2019, which required the Company to record right-of-use assets associated with leases in which it serves as lessee (see note 13). Unsecured senior notes, net increased $692.2 million from December 31, 2018 to December 31, 2019 as a result of the issuance of the 2029 Notes and 2030 Notes on January 31, 2019 and October 11, 2019, respectively. Revolving credit facility decreased $195.5 million from December 31, 2018 to December 31, 2019 as a result of the Company using a portion of the net proceeds from the issuance of the 2030 Notes to repay all of the outstanding indebtedness under the Revolver. Unsecured term loans, net decreased $299.8 million from December 31, 2018 to December 31, 2019 as a result of the Company using a portion of the net proceeds from the issuance of the 2029 Notes to repay all of the outstanding indebtedness under the unsecured term loan portion of the Credit Facility, and an initial advance at closing of the Amended and Restated Credit Facility to repay all of the outstanding indebtedness under the unsecured term loan portion of the Term Loan Facility. 45 Contractual Obligations The following table summarizes our known contractual obligations as of December 31, 2019 (in thousands): Payments Due by Period Mortgage loans and notes payable (1) Unsecured senior notes (2) Interest payments Operating lease payments Software and service contracts Properties under contract to be acquired (3) Development commitments 2022 $ 923 $ Total 94,494 $ — 1,300,000 143,280 91,241 — — — $ 2,633,287 $ 195,326 $ 132,798 $ 321,914 $ 394,371 $ 54,357 $ 1,534,521 1,850,000 472,242 103,171 1,873 54,853 56,654 250,000 68,532 2,459 — — — 300,000 60,829 2,523 — — — 2024 4,704 $ — 47,280 2,373 — — — 2020 12,791 $ — 77,071 2,273 1,735 54,853 46,603 2021 45,057 $ — 75,250 2,302 138 — 10,051 2023 31,019 $ 2025 and thereafter (1) Amounts do not include $1.8 million of unamortized fair value adjustments for discounts/premiums and $0.3 million of unamortized loan procurement costs as of December 31, 2019. (2) Amounts do not include $3.9 million of unamortized discounts on the issuance of unsecured senior notes and $10.4 million of unamortized loan procurement costs as of December 31, 2019. (3) Amounts do not include $2.6 million of aggregate deposits made by the Company as of December 31, 2019. The deposits are associated with two properties that were under contract to be acquired as of December 31, 2019 and are to be applied towards the purchase price of each property upon acquisition. Off-Balance Sheet Arrangements We do not have off-balance sheet arrangements, financings or other relationships with other unconsolidated entities (other than our co- investment partnerships) or other persons, also known as variable interest entities not previously discussed. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Our future income, cash flows and fair values relevant to financial instruments depend upon prevailing market interest rates. Market Risk Our investment policy relating to cash and cash equivalents is to preserve principal and liquidity while maximizing the return through investment of available funds. Effect of Changes in Interest Rates on our Outstanding Debt Our interest rate risk objectives are to limit the impact of interest rate fluctuations on earnings and cash flows and to lower our overall borrowing costs. To achieve these objectives, we manage our exposure to fluctuations in market interest rates for a portion of our borrowings through the use of derivative financial instruments such as interest rate swaps or caps to mitigate our interest rate risk on a related financial instrument or to effectively lock the interest rate on a portion of our variable-rate debt. The analysis below presents the sensitivity of the market value of our financial instruments to selected changes in market interest rates. The range of changes chosen reflects our view of changes which are reasonably possible over a one-year period. Market values are the present value of projected future cash flows based on the market interest rates chosen. As of December 31, 2019 our consolidated debt consisted of $1,944.5 million of outstanding mortgage loans and notes payable and unsecured senior notes that are subject to fixed rates. Borrowings under our Revolver are subject to floating rates. Changes in market interest rates have different impacts on the fixed- and variable-rate portions of our debt portfolio. A change in market interest rates on the fixed portion of the debt portfolio impacts the net financial instrument position, but has no impact on interest incurred or cash flows. A change in market interest rates on the variable portion of the debt portfolio impacts the interest incurred and cash flows, but does not impact the net financial instrument position. 46 If market interest rates increase by 100 basis points, the fair value of our outstanding fixed-rate mortgage debt and unsecured senior notes would decrease by approximately $110.2 million. If market interest rates decrease by 100 basis points, the fair value of our outstanding fixed-rate mortgage debt and unsecured senior notes would increase by approximately $122.5 million. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Financial statements required by this item appear with an Index to Financial Statements and Schedules, starting on page F-1 of this Report. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. ITEM 9A. CONTROLS AND PROCEDURES Controls and Procedures (Parent Company) Evaluation of Disclosure Controls and Procedures As of the end of the period covered by this Report, the Parent Company carried out an evaluation, under the supervision and with the participation of its management, including its chief executive officer and chief financial officer, of the effectiveness of the design and operation of its disclosure controls and procedures (as defined in Rules 13a-15(e) under the Exchange Act). Based on that evaluation, the Parent Company’s chief executive officer and chief financial officer have concluded that the Parent Company’s disclosure controls and procedures are designed at a reasonable assurance level and are effective to provide reasonable assurance that information required to be disclosed by the Parent Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and that such information is accumulated and communicated to the Parent Company’s management, including its chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure. Changes in Internal Control Over Financial Reporting There has been no change in the Parent Company’s internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) during its most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, its internal control over financial reporting. Management’s Report on Internal Control Over Financial Reporting Management’s report on internal control over financial reporting of the Parent Company is set forth on page F-2 of this Report, and is incorporated herein by reference. The effectiveness of the Parent Company’s internal control over financial reporting as of December 31, 2019 has been audited by KPMG LLP, an independent registered public accounting firm, as stated in its report which is included herein. Controls and Procedures (Operating Partnership) Evaluation of Disclosure Controls and Procedures As of the end of the period covered by this Report, the Operating Partnership carried out an evaluation, under the supervision and with the participation of its management, including the Operating Partnership’s chief executive officer and chief financial officer, of the effectiveness of the design and operation of the Operating Partnership’s disclosure controls and procedures (as defined in Rules 13a- 15(e) under the Exchange Act). Based on that evaluation, the Operating Partnership’s chief executive officer and chief financial officer have concluded that the Operating Partnership’s disclosure controls and procedures are designed at a reasonable assurance level and are effective to provide reasonable assurance that information required to be disclosed by the Operating Partnership in reports that it files or submits under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms and that such information is accumulated and communicated to the Operating Partnership’s management, including the Operating Partnership’s chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure. 47 Changes in Internal Control Over Financial Reporting There has been no change in the Operating Partnership’s internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Operating Partnership’s internal control over financial reporting. Management’s Report on Internal Control Over Financial Reporting Management’s report on internal control over financial reporting of the Operating Partnership is set forth on page F-3 of this Report, and is incorporated herein by reference. The effectiveness of the Operating Partnership’s internal control over financial reporting as of December 31, 2019 has been audited by KPMG LLP, an independent registered public accounting firm, as stated in its report which is included herein. ITEM 9B. OTHER INFORMATION Not applicable. ITEM 10. TRUSTEES, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE PART III We have adopted a Code of Ethics for all of our employees, officers and trustees, including our principal executive officer and principal financial officer, which is available on our website at www.cubesmart.com. We intend to disclose any amendment to, or a waiver from, a provision of our Code of Ethics on our website within four business days following the date of the amendment or waiver. The remaining information required by this item regarding trustees, executive officers and corporate governance is hereby incorporated by reference to the material appearing in the Parent Company’s Proxy Statement for the Annual Shareholders Meeting to be held in 2020 (the “Proxy Statement”) under the captions “Proposal 1: Election of Trustees,” “Executive Officers,” “Meetings and Committees of the Board of Trustees,” and “Shareholder Proposals and Nominations for the 2020 Annual Meeting.” The information required by this item regarding compliance with Section 16(a) of the Exchange Act is hereby incorporated by reference to the material appearing in the Parent Company’s Proxy Statement under the caption “Delinquent Section 16(a) Reports.” ITEM 11. EXECUTIVE COMPENSATION The information required by this item is hereby incorporated by reference to the material appearing in the Parent Company’s Proxy Statement under the captions “Compensation Committee Report,” “Meetings and Committees of the Board of Trustees Compensation Committee Interlocks and Insider Participation,” “Compensation Discussion and Analysis,” “Executive Compensation,” “Severance Plan and Potential Payments Upon Termination or Change in Control,” and “Trustee Compensation.” ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED SHAREHOLDER MATTERS The following table sets forth certain information regarding our equity compensation plans as of December 31, 2019. Plan Category Equity compensation plans approved by shareholders Equity compensation plans not approved by shareholders Total Number of securities to Weighted average be issued upon exercise exercise price of of outstanding options, outstanding options, warrants and rights warrants and rights (b) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column(a)) (c) (a) 1,602,353 $ — 1,602,353 $ 24.10 (1) — 24.10 4,015,223 — 4,015,223 (1) This number reflects the weighted average exercise price of outstanding options and has been calculated exclusive of outstanding restricted unit awards. 48 The information regarding security ownership of certain beneficial owners and management required by this item is hereby incorporated by reference to the material appearing in the Parent Company’s Proxy Statement under the caption “Security Ownership of Management” and “Security Ownership of Beneficial Owners.” ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND TRUSTEE INDEPENDENCE The information required by this item is hereby incorporated by reference to the material appearing in the Parent Company’s Proxy Statement under the captions “Corporate Governance - Independence of Trustees,” “Policies and Procedures Regarding Review, Approval or Ratification of Transactions With Related Persons,” and “Transactions With Related Persons.” ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES The information required by this item is hereby incorporated by reference to the material appearing in the Parent Company’s Proxy Statement under the captions “Audit Committee Matters - Fees Paid to Our Independent Registered Public Accounting Firm” and “- Audit Committee Pre-Approval Policies and Procedures.” ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES PART IV (a) Documents filed as part of this report: 1. Financial Statements. The response to this portion of Item 15 is submitted as a separate section of this report. 2. Financial Statement Schedules. The response to this portion of Item 15 is submitted as a separate section of this report. 3. Exhibits. The list of exhibits filed with this Report is set forth in response to Item 15(b). The required exhibit index has been filed with the exhibits. (b) Exhibits. The following documents are filed as exhibits to this report: 3.1* 3.2* 3.3* 3.4* 3.5* 3.6* Articles of Amendment to the Declaration of Trust of CubeSmart, incorporated by reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K, filed on May 28, 2015. Articles of Restatement of the Declaration of Trust of CubeSmart, incorporated by reference to Exhibit 99.2 to the Company’s Current Report on Form 8-K, filed on May 28, 2015. Articles Supplementary to Declaration of Trust of CubeSmart classifying and designating CubeSmart’s 7.75% Series A Cumulative Redeemable Preferred Shares of Beneficial Interest, incorporated by reference to Exhibit 3.3 to CubeSmart’s Form 8-A, filed on October 31, 2011. Articles of Amendment to the Declaration of Trust of CubeSmart, incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed on November 3, 2016. Third Amended and Restated Bylaws of CubeSmart, effective September 14, 2011, incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K, filed on September 16, 2011. Certificate of Limited Partnership of U-Store-It, L.P., incorporated by reference to Exhibit 3.1 to CubeSmart, L.P.’s Registration Statement on Form 10, filed on July 15, 2011. 49 3.7* 3.8* 3.9* 3.10* 3.11* 3.12* 3.13* 4.1* 4.2* 4.3* 4.4* 4.5* 4.6* 4.7* 4.8* 4.9* Amendment No. 1 to Certificate of Limited Partnership of CubeSmart, L.P., dated September 14, 2011, incorporated by reference to Exhibit 3.3 to the Company’s Current Report on Form 8-K, filed on September 16, 2011. Second Amended and Restated Agreement of Limited Partnership of U-Store-It, L.P. dated as of October 27, 2004, incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed on November 2, 2004. Amendment No. 1 to Second Amended and Restated Agreement of Limited Partnership of CubeSmart, L.P. dated as of September 14, 2011, incorporated by reference to Exhibit 3.4 to the Company’s Current Report on Form 8-K, filed on September 16, 2011. Amendment No. 2 to Second Amended and Restated Agreement of Limited Partnership of CubeSmart, L.P. dated as of November 2, 2011, incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K, filed on November 2, 2011. Class C Unit Supplement No. 1 to Second Amended and Restated Agreement of Limited Partnership of CubeSmart, L.P. dates as of April 12, 2017, incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed on April 18, 2017. Articles of Amendment to the Declaration of Trust of CubeSmart, incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed on June 2, 2017. First Amendment to Third Amended and Restated Bylaws of CubeSmart, effective June 1, 2017, incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K, filed on June 2, 2017. Form of Common Share Certificate, incorporated by reference to Exhibit 4.1 to Amendment No. 3 to the Company’s Registration Statement on Form S-11, filed on October 20, 2004, File No. 333-117848. Form of Certificate for CubeSmart’s 7.75% Series A Cumulative Redeemable Preferred Shares of Beneficial Interest, incorporated by reference to Exhibit 4.1 to CubeSmart’s Form 8-A, filed on October 31, 2011. Indenture, dated as of September 16, 2011, among CubeSmart, L.P., CubeSmart and U.S. Bank National Association, incorporated by reference to Exhibit 4.5 to the Company’s Registration Statement on Form S-3, filed on September 16, 2011. First Supplemental Indenture, dated as of June 26, 2012, among the Company, the Operating Partnership and U.S. Bank National Association, incorporated herein by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed on June 26, 2012. Form of $250 million aggregate principal amount of 4.80% senior note due July 15, 2022, incorporated herein by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K, filed on June 26, 2012. Form of CubeSmart Notation of Guarantee, incorporated herein by reference to Exhibit 4.3 to the Company’s Current Report on Form 8-K, filed on June 26, 2012. Second Supplemental Indenture, dated as of December 17, 2013, among the Company, the Operating Partnership and U.S. Bank National Association, incorporated herein by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed on December 17, 2013. Form of $250 million aggregate principal amount of 4.375% senior notes due December 15, 2023, incorporated herein by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K, filed on December 17, 2013. Form of CubeSmart Notation of Guarantee, incorporated herein by reference to Exhibit 4.3 to the Company’s Current Report on Form 8-K, filed on December 17, 2013. 4.10* Third Supplemental Indenture, dated as of October 26, 2015, among CubeSmart, CubeSmart, L.P. and U.S. Bank National Association, incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed on October 26, 2015. 50 4.11* 4.12* 4.13* 4.14* 4.15* 4.16* 4.17* 4.18* 4.19* 4.20* 4.21* 4.22* Form of $250 million aggregate principal amount of 4.000% senior note due November 15, 2025, incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K, filed on October 26, 2015. Fourth Supplemental Indenture, dated as of August 15, 2016, among CubeSmart, CubeSmart, L.P. and U.S. Bank National Association, incorporated herein by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed on August 15, 2016. Form of $300 million aggregate principal amount of 3.125% senior notes due September 1, 2026, incorporated herein by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K, filed on August 15, 2016. Form of CubeSmart Notation of Guarantee, incorporated herein by reference to Exhibit 4.3 to the Company’s Current Report on Form 8-K, filed on August 15, 2016. Form of $50 million aggregate principal amount of 4.375% senior notes due December 15, 2023, incorporated herein by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed on April 5, 2017. Form of $50 million aggregate principal amount of 4.000% senior notes due November 15, 2025, incorporated herein by reference to Exhibit 4.3 to the Company’s Current Report on Form 8-K, filed on April 5, 2017. Fifth Supplemental Indenture, dated as of April 4, 2017, among CubeSmart, CubeSmart, L.P. and U.S. Bank National Association, incorporated herein by reference to Exhibit 4.5 to the Company’s Current Report on Form 8-K, filed on April 5, 2017. Form of $350 million aggregate principal amount of 4.375% senior notes due February 15, 2029, incorporated herein by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed on January 30, 2019. Sixth Supplemental Indenture, dated as of January 30, 2019, among CubeSmart, CubeSmart, L.P. and U.S. Bank National Association, incorporated herein by reference to Exhibit 4.3 to the Company’s Current Report on Form 8-K, filed on January 30, 2019. Form of $350 million aggregate principal amount of 3.000% senior notes due February 15, 2030, incorporated herein by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed on October 11, 2019. Form of CubeSmart Notation of Guarantee, incorporated herein by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed on October 11, 2019. Seventh Supplemental Indenture, dated of as October 11, 2019, among CubeSmart, CubeSmart, L.P. and U.S. Bank National Association, incorporated herein by reference to Exhibit 4.3 to the Company’s Current Report on Form 8-K, filed on October 11, 2019. 4.23 Description of Registrant’s Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934. 10.1*† 10.2*† 10.3*† Indemnification Agreement, dated as of October 27, 2004, by and among U-Store-It Trust, U-Store-It, L.P. and David J. LaRue (substantially identical agreements have been entered into with Christopher P. Marr, Timothy M. Martin, Jeffrey P. Foster, Joel D. Keaton, Piero Bussani, Dorothy Dowling, John W. Fain, Marianne M. Keler, John F. Remondi, Jeffrey F. Rogatz and Deborah R. Salzberg), incorporated by reference to Exhibit 10.19 to the Company’s Current Report on Form 8- K, filed on November 2, 2004. Form of Restricted Share Agreement for Non-Employee Trustees under the U-Store-It Trust 2007 Equity Incentive Plan, incorporated by reference to Exhibit 10.83 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2007, filed on February 29, 2008. Form of Nonqualified Share Option Agreement under the U-Store-It Trust 2004 Equity Incentive Plan, incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2007, filed on May 10, 2007. 51 10.4*† 10.5*† 10.6*† 10.7*† 10.8*† Form of Restricted Share Agreement under the U-Store-It Trust 2004 Equity Incentive Plan, incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2007, filed on May 10, 2007. Form of Nonqualified Share Option Agreement under the U-Store-It Trust 2007 Equity Incentive Plan, incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed on January 25, 2008. Form of Restricted Share Agreement under the U-Store-It Trust 2007 Equity Incentive Plan, incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed on January 25, 2008. U-Store-It Trust Trustees Deferred Compensation Plan, amended and restated effective January 1, 2009, incorporated by reference to Exhibit 10.78 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2008, filed on March 2, 2009. U-Store-It Trust Executive Deferred Compensation Plan, amended and restated effective January 1, 2009, incorporated by reference to Exhibit 10.79 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2008, filed on March 2, 2009. 10.9*† U-Store-It Trust Deferred Trustees Plan, effective as of May 31, 2005, incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed on June 6, 2005. 10.10*† Form of Restricted Share Agreement under the CubeSmart 2007 Equity Incentive Plan, incorporated herein by reference to Exhibit 10.42 to the Company’s Annual Report on Form 10-K, filed on February 28, 2013. 10.11*† Form of Non-Qualified Share Option Agreement under the CubeSmart 2007 Equity Incentive Plan, incorporated herein by reference to Exhibit 10.43 to the Company’s Annual Report on Form 10-K, filed on February 28, 2013. 10.12*† 10.13*† 10.14*† 10.15* 10.16* Form of 2012 Performance-Vested Restricted Share Unit Award Agreement under the CubeSmart 2007 Equity Incentive Plan, incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed on January 31, 2012. Form of Restricted Share Unit Award Agreement (2-Year Vesting) under the CubeSmart 2007 Equity Incentive Plan, incorporated herein by reference to Exhibit 10.47 to the Company’s Annual Report on Form 10-K, filed on February 28, 2013. Form of Performance-Vested Restricted Share Unit Award Agreement under the CubeSmart 2007 Equity Incentive Plan, incorporated herein by reference to Exhibit 10.48 to the Company’s Annual Report on Form 10-K, filed on February 28, 2013. Waiver of Ownership Limitation, incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10- Q for the quarter ended March 31, 2013, filed on May 6, 2013. Underwriting Agreement, dated as of January 24, 2019, among CubeSmart, CubeSmart, L.P., Wells Fargo Securities, LLC, Barclays Capital Inc. and Jefferies LLC, as representatives of each of the other underwriters named in Exhibit A thereto, incorporated by reference to Exhibit 1.1 to the Company’s Current Report on Form 8-K, filed on January 25, 2019. 10.17*† Advisory Agreement, incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2013, filed on November 8, 2013. 10.18*† Form of Non-Qualified Share Option Agreement for Executive Officers (3-Year Vesting) under the CubeSmart 2007 Equity Incentive Plan, incorporated by reference to Exhibit 10.58 to the Company’s Annual Report on Form 10-K, filed on February 28, 2014. 10.19*† Form of Non-Qualified Share Option Agreement (3-Year Vesting) under the CubeSmart 2007 Equity Incentive Plan, incorporated by reference to Exhibit 10.59 to the Company’s Annual Report on Form 10-K, filed on February 28, 2014. 52 10.20*† Form of Performance Share Award Agreement for Executive Officers (3-Year Vesting) under the CubeSmart 2007 Equity Incentive Plan, incorporated by reference to Exhibit 10.60 to the Company’s Annual Report on Form 10-K, filed on February 28, 2014. 10.21*† Form of Performance Share Award Agreement (3-Year Vesting) under the CubeSmart 2007 Equity Incentive Plan, incorporated by reference to Exhibit 10.61 to the Company’s Annual Report on Form 10-K, filed on February 28, 2014. 10.22*† Form of Restricted Share Award Agreement for Executive Officers (3-Year Vesting) under the CubeSmart 2007 Equity Incentive Plan, incorporated by reference to Exhibit 10.63 to the Company’s Annual Report on Form 10-K, filed on February 28, 2014. 10.23*† Form of Restricted Share Award Agreement (3-Year Vesting) under the CubeSmart 2007 Equity Incentive Plan, incorporated by reference to Exhibit 10.64 to the Company’s Annual Report on Form 10-K, filed on February 28, 2014. 10.24*† Form of Restricted Share Award Agreement (5-Year Vesting) under the CubeSmart 2004 Equity Incentive Plan, incorporated by reference to Exhibit 10.65 to the Company’s Annual Report on Form 10-K, filed on February 28, 2014. 10.25*† Amended and Restated CubeSmart 2007 Equity Incentive Plan, effective June 1, 2016, incorporated by reference to Appendix A to the Company’s Definitive Proxy Statement, filed on April 14, 2016. 10.26*† CubeSmart Executive Severance Plan, effective January 1, 2017, incorporated by reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K, filed on November 4, 2016. 10.27*† 10.28*† 10.29*† 10.30*† 10.31*† 10.32*† 10.33*† 10.34*† Form of Non-Qualified Share Option Agreement for Executive Officers (3-Year Vesting) under the CubeSmart 2007 Equity Incentive Plan, as amended and restated, effective June 1, 2016, incorporated by reference to Exhibit 10.42 to the Company’s Annual Report on Form 10-K, filed on February 17, 2017. Form of Non-Qualified Share Option Agreement (3-Year Vesting) under the CubeSmart 2007 Equity Incentive Plan, as amended and restated, effective June 1, 2016, incorporated by reference to Exhibit 10.43 to the Company’s Annual Report on Form 10-K, filed on February 17, 2017. Form of Restricted Share Award Agreement for Executive Officers (3-Year Vesting) under the CubeSmart 2007 Equity Incentive Plan, as amended and restated, effective June 1, 2016, incorporated by reference to Exhibit 10.44 to the Company’s Annual Report on Form 10-K, filed on February 17, 2017. Form of Restricted Share Award Agreement (3-Year Vesting) under the CubeSmart 2007 Equity Incentive Plan, as amended and restated, effective June 1, 2016, incorporated by reference to Exhibit 10.45 to the Company’s Annual Report on Form 10-K, filed on February 17, 2017. Form of Restricted Share Award Agreement (5-Year Vesting) under the CubeSmart 2007 Equity Incentive Plan, as amended and restated, effective June 1, 2016, incorporated by reference to Exhibit 10.46 to the Company’s Annual Report on Form 10-K, filed on February 17, 2017. Form of Restricted Share Unit Award Agreement for Executive Officers (3-Year Vesting) under the CubeSmart 2007 Equity Incentive Plan, as amended and restated, effective June 1, 2016, incorporated by reference to Exhibit 10.47 to the Company’s Annual Report on Form 10-K, filed on February 17, 2017. Form of Restricted Share Unit Award Agreement (3-Year Vesting) under the CubeSmart 2007 Equity Incentive Plan, as amended and restated, effective June 1, 2016, incorporated by reference to Exhibit 10.48 to the Company’s Annual Report on Form 10-K, filed on February 17, 2017. Form of Performance-Vested Restricted Share Award Agreement for Executive Officers (3-Year Vesting) under the CubeSmart 2007 Equity Incentive Plan, as amended and restated, effective June 1, 2016, incorporated by reference to Exhibit 10.49 to the Company’s Annual Report on Form 10-K, filed on February 17, 2017. 53 10.35*† 10.36*† 10.37*† 10.38* 10.39* 10.40* 10.41* 10.42* 10.43* 10.44*† 10.45*† 10.46*† 10.47* 10.48* Form of Performance-Vested Restricted Share Award Agreement (3-Year Vesting) under the CubeSmart 2007 Equity Incentive Plan, as amended and restated, effective June 1, 2016, incorporated by reference to Exhibit 10.50 to the Company’s Annual Report on Form 10-K, filed on February 17, 2017. Form of Performance-Vested Restricted Share Unit Award Agreement for Executive Officers (3-Year Vesting) under the CubeSmart 2007 Equity Incentive Plan, as amended and restated, effective June 1, 2016, incorporated by reference to Exhibit 10.51 to the Company’s Annual Report on Form 10-K, filed on February 17, 2017. Form of Performance-Vested Restricted Share Unit Award Agreement (3-Year Vesting) under the CubeSmart 2007 Equity Incentive Plan, as amended and restated, effective June 1, 2016, incorporated by reference to Exhibit 10.52 to the Company’s Annual Report on Form 10-K, filed on February 17, 2017. Amended and Restated Equity Distribution Agreement, dated July 27, 2018, by and among CubeSmart, CubeSmart, L.P. and Wells Fargo Securities, LLC, incorporated by reference to Exhibit 1.1 to the Company’s Current Report on Form 8-K, filed on July 27, 2018. Amended and Restated Equity Distribution Agreement, dated July 27, 2018, by and among CubeSmart, CubeSmart, L.P. and Merrill Lynch, Pierce, Fenner & Smith Incorporated, incorporated by reference to Exhibit 1.2 to the Company’s Current Report on Form 8-K, filed on July 27, 2018. Amended and Restated Equity Distribution Agreement, dated July 27, 2018, by and among CubeSmart, CubeSmart, L.P. and BMO Capital Markets Corp., incorporated by reference to Exhibit 1.3 to the Company’s Current Report on Form 8-K, filed on July 27, 2018. Amended and Restated Equity Distribution Agreement, dated July 27, 2018, by and among CubeSmart, CubeSmart, L.P. and Jeffries LLC, incorporated by reference to Exhibit 1.4 to the Company’s Current Report on Form 8-K, filed on July 27, 2018. Amended and Restated Equity Distribution Agreement, dated July 27, 2018, by and among CubeSmart, CubeSmart, L.P. and RBC Capital Markets, LLC, incorporated by reference to Exhibit 1.5 to the Company’s Current Report on Form 8-K, filed on July 27, 2018. Amended and Restated Equity Distribution Agreement, dated July 27, 2018, by and among CubeSmart, CubeSmart, L.P. and Barclays Capital Inc., incorporated by reference to Exhibit 1.6 to the Company’s Current Report on Form 8-K, filed on July 27, 2018. Form of Restricted Share Agreement under the CubeSmart 2007 Equity Incentive Plan, as amended and restated, effective June 1, 2016, incorporated by reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K, filed on January 3, 2019. Form of Non-Qualified Share Option Agreement under the CubeSmart 2007 Equity Incentive Plan, as amended and restated, effective June 1, 2016, incorporated by reference to Exhibit 99.2 to the Company’s Current Report on Form 8-K, filed on January 3, 2019. Form of Performance-Vested Restricted Share Agreement under the CubeSmart 2007 Equity Incentive Plan, as amended and restated, effective June 1, 2016, incorporated by reference to Exhibit 99.3 to the Company’s Current Report on Form 8-K, filed on January 3, 2019. Amended and Restated Credit Agreement, dated as of June 19, 2019, by and among CubeSmart, L.P., CubeSmart, the lenders referred to therein, and Wells Fargo Bank, National Association, as administrative agent for the Lenders, incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed on June 21, 2019. First Amendment to the Amended and Restated Equity Distribution Agreement, dated July 29, 2019, by and among CubeSmart, CubeSmart, L.P. and Wells Fargo Securities, LLC, incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2019, filed on October 25, 2019. 54 10.49* 10.50* 10.51* 10.52* First Amendment to the Amended and Restated Equity Distribution Agreement, dated July 29, 2019, by and among CubeSmart, CubeSmart, L.P. and Barclays Capital Inc, incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2019, filed on October 25, 2019. First Amendment to the Amended and Restated Equity Distribution Agreement, dated July 29, 2019, by and among CubeSmart, CubeSmart, L.P. and BofA Securities, Inc, incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2019, filed on October 25, 2019. First Amendment to the Amended and Restated Equity Distribution Agreement, dated July 29, 2019, by and among CubeSmart, CubeSmart, L.P. and Jefferies LLC, incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2019, filed on October 25, 2019. First Amendment to the Amended and Restated Equity Distribution Agreement, dated July 29, 2019, by and among CubeSmart, CubeSmart, L.P. and RBC Capital Markets, LLC, incorporated by reference to Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2019, filed on October 25, 2019. 21.1 List of Subsidiaries. 23.1 Consent of KPMG LLP relating to financial statements of CubeSmart. 23.2 Consent of KPMG LLP relating to financial statements of CubeSmart, L.P. 31.1 31.2 31.3 31.4 32.1 32.2 Certification of Chief Executive Officer of CubeSmart required by Rule 13a-14(a)/15d-14(a) under the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Certification of Chief Financial Officer of CubeSmart required by Rule 13a-14(a)/15d-14(a) under the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Certification of Chief Executive Officer of CubeSmart, L.P. required by Rule 13a-14(a)/15d-14(a) under the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Certification of Chief Financial Officer of CubeSmart, L.P. required by Rule 13a-14(a)/15d-14(a) under the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Certification of Chief Executive Officer and Chief Financial Officer of CubeSmart pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Certification of Chief Executive Officer and Chief Financial Officer of CubeSmart, L.P. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 99.1 Material United States Federal Income Tax Considerations. 101 The following CubeSmart and CubeSmart, L.P. financial information for the year ended December 31, 2019, formatted in Inline XBRL (eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statement of Equity, (iv) the Consolidated Statements of Cash Flows and (v) Notes to Consolidated Financial Statements, detailed tagged and filed herewith. 104 Cover Page Interactive Data File – embedded within the Inline XBRL document (included as Exhibit 101). * † Incorporated herein by reference as above indicated. Denotes a management contract or compensatory plan, contract or arrangement. ITEM 16. FORM 10-K SUMMARY None. 55 Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized. SIGNATURES CUBESMART By: /s/ Timothy M. Martin Timothy M. Martin Chief Financial Officer Date: February 21, 2020 Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated: Signature Title Date /s/ Marianne M. Keler Marianne M. Keler /s/ Christopher P. Marr Christopher P. Marr /s/ Timothy M. Martin Timothy M. Martin /s/ Piero Bussani Piero Bussani /s/ Dorothy Dowling Dorothy Dowling /s/ John W. Fain John W. Fain /s/ John F. Remondi John F. Remondi /s/ Jeffrey F. Rogatz Jeffrey F. Rogatz /s/ Deborah Ratner Salzberg Deborah Ratner Salzberg Chair of the Board of Trustees February 21, 2020 February 21, 2020 February 21, 2020 February 21, 2020 February 21, 2020 February 21, 2020 February 21, 2020 February 21, 2020 February 21, 2020 Chief Executive Officer and Trustee (Principal Executive Officer) Chief Financial Officer (Principal Financial and Accounting Officer) Trustee Trustee Trustee Trustee Trustee Trustee 56 FINANCIAL STATEMENTS INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS Consolidated Financial Statements of CUBESMART and CUBESMART, L.P. (the “Company”) Page No. Management’s Report on CubeSmart Internal Control Over Financial Reporting Management’s Report on CubeSmart, L.P. Internal Control Over Financial Reporting Reports of Independent Registered Public Accounting Firm CubeSmart and Subsidiaries Consolidated Balance Sheets as of December 31, 2019 and 2018 CubeSmart and Subsidiaries Consolidated Statements of Operations for the years ended December 31, 2019, 2018 and 2017 CubeSmart and Subsidiaries Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2019, 2018 and 2017 CubeSmart and Subsidiaries Consolidated Statements of Equity for the years ended December 31, 2019, 2018 and 2017 CubeSmart and Subsidiaries Consolidated Statements of Cash Flows for the years ended December 31, 2019, 2018 and 2017 CubeSmart, L.P. and Subsidiaries Consolidated Balance Sheets as of December 31, 2019 and 2018 CubeSmart, L.P. and Subsidiaries Consolidated Statements of Operations for the years ended December 31, 2019, 2018 and 2017 CubeSmart, L.P. and Subsidiaries Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2019, 2018 and 2017 CubeSmart, L.P. and Subsidiaries Consolidated Statements of Capital for the years ended December 31, 2019, 2018 and 2017 CubeSmart, L.P. and Subsidiaries Consolidated Statements of Cash Flows for the years ended December 31, 2019, 2018 and 2017 Notes to Consolidated Financial Statements F-2 F-3 F-4 F-10 F-11 F-12 F-13 F-14 F-15 F-16 F-17 F-18 F-19 F-20 F-1 MANAGEMENT’S REPORT ON CUBESMART INTERNAL CONTROL OVER FINANCIAL REPORTING Management of CubeSmart (the “REIT”) is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Under Section 404 of the Sarbanes-Oxley Act of 2002, the REIT’s management is required to assess the effectiveness of the REIT’s internal control over financial reporting as of the end of each fiscal year, and report on the basis of that assessment whether the REIT’s internal control over financial reporting is effective. The REIT’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles. The REIT’s internal control over financial reporting includes those policies and procedures that:    pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and the disposition of the assets of the REIT; provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. generally accepted accounting principles, and that the receipts and expenditures of the REIT are being made only in accordance with the authorization of the REIT’s management and its Board of Trustees; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the REIT’s assets that could have a material effect on the financial statements. There are inherent limitations in the effectiveness of any system of internal control, including the possibility of human error and the circumvention or overriding of controls. Accordingly, even an effective internal control system can provide only reasonable assurance with respect to financial statement preparation. Further, because of changes in conditions, the effectiveness of an internal control system may vary over time. Under the supervision, and with the participation, of the REIT’s management, including the principal executive officer and principal financial officer, management conducted a review, evaluation and assessment of the effectiveness of our internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In performing its assessment of the effectiveness of internal control over financial reporting, management has concluded that, as of December 31, 2019, the REIT’s internal control over financial reporting was effective based on the COSO framework. The effectiveness of our internal control over financial reporting as of December 31, 2019, has been audited by KPMG LLP, an independent registered public accounting firm, as stated in their report that appears herein. February 21, 2020 F-2 MANAGEMENT’S REPORT ON CUBESMART, L.P. INTERNAL CONTROL OVER FINANCIAL REPORTING Management of CubeSmart, L.P. (the “Partnership”) is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Under Section 404 of the Sarbanes-Oxley Act of 2002, the Partnership’s management is required to assess the effectiveness of the Partnership’s internal control over financial reporting as of the end of each fiscal year, and report on the basis of that assessment whether the Partnership’s internal control over financial reporting is effective. The Partnership’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles. The Partnership’s internal control over financial reporting includes those policies and procedures that:    pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and the disposition of the assets of the Partnership; provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. generally accepted accounting principles, and that the receipts and expenditures of the Partnership are being made only in accordance with the authorization of the Partnership’s management and its Board of Trustees; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Partnership’s assets that could have a material effect on the financial statements. There are inherent limitations in the effectiveness of any system of internal control, including the possibility of human error and the circumvention or overriding of controls. Accordingly, even an effective internal control system can provide only reasonable assurance with respect to financial statement preparation. Further, because of changes in conditions, the effectiveness of an internal control system may vary over time. Under the supervision, and with the participation, of the Partnership’s management, including the principal executive officer and principal financial officer, management conducted a review, evaluation and assessment of the effectiveness of our internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In performing its assessment of the effectiveness of internal control over financial reporting, management has concluded that, as of December 31, 2019, the Partnership’s internal control over financial reporting was effective based on the COSO framework. The effectiveness of our internal control over financial reporting as of December 31, 2019, has been audited by KPMG LLP, an independent registered public accounting firm, as stated in their report that appears herein. February 21, 2020 F-3 Report of Independent Registered Public Accounting Firm To the Shareholders and Board of Trustees CubeSmart: Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of CubeSmart and subsidiaries (the Company) as of December 31, 2019 and 2018, the related consolidated statements of operations, comprehensive income (loss), equity, and cash flows for each of the years in the three-year period ended December 31, 2019, and the related notes and financial statement schedule III (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2019, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 21, 2020 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting. Change in Accounting Principle As discussed in Note 2 to the consolidated financial statements, the Company has changed its method of accounting for leases as of January 1, 2019 due to the adoption of Accounting Standards Codification Topic 842, Leases. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgment. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Evaluation of self-storage properties for impairment As discussed in notes 2 and 3 to the consolidated financial statements, the Company had $3.8 billion of self-storage properties, net of accumulated depreciation as of December 31, 2019. The Company performs an impairment assessment whenever events or changes in circumstances indicate that there may be an impairment. This involves comparing the undiscounted future net operating cash flows plus a terminal value to the carrying amount of the self-storage property. We identified the evaluation of self-storage properties for impairment as a critical audit matter. The Company uses revenue and expense growth rates, and terminal value capitalization rate assumptions in determining estimated future cash flows as part of its impairment assessment. Changes to these assumptions could have a significant impact on the determination of recoverability of the carrying amount of a self-storage property, and involved subjective auditor judgement. The primary procedures we performed to address this critical audit matter included the following. We tested certain internal F-4 controls over the Company’s self-storage property impairment process, including controls related to the selection of the revenue and expense growth rates, and terminal value capitalization rate. We assessed the Company’s forecasted growth rates against the Company’s historical growth rates and published reports of industry data. We evaluated the Company’s expected terminal value capitalization rates by comparing them to published reports of industry data and historical transactions of the Company. We also identified the threshold rates at which the revenue and expense growth rates and terminal value capitalization rate assumptions would indicate the self-storage property may be impaired and analyzed those threshold rates against the published industry data and historical results. /s/ KPMG LLP We have served as the Company’s auditor since 2009. Philadelphia, Pennsylvania February 21, 2020 F-5 Report of Independent Registered Public Accounting Firm To the Partners of CubeSmart, L.P. and the Board of Trustees of CubeSmart: Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of CubeSmart, L.P. and subsidiaries (the Partnership) as of December 31, 2019 and 2018, the related consolidated statements of operations, comprehensive income (loss), capital, and cash flows for each of the years in the three-year period ended December 31, 2019, and the related notes and financial statement schedule III (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Partnership as of December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2019, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Partnership’s internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 21, 2020 expressed an unqualified opinion on the effectiveness of the Partnership’s internal control over financial reporting. Change in Accounting Principle As discussed in Note 2 to the consolidated financial statements, the Partnership has changed its method of accounting for leases as of January 1, 2019 due to the adoption of Accounting Standards Codification Topic 842, Leases. Basis for Opinion These consolidated financial statements are the responsibility of the Partnership’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Partnership in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgment. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Evaluation of self-storage properties for impairment As discussed in notes 2 and 3 to the consolidated financial statements, the Partnership had $3.8 billion of self-storage properties, net of accumulated depreciation as of December 31, 2019. The Partnership performs an impairment assessment whenever events or changes in circumstances indicate that there may be an impairment. This involves comparing the undiscounted future net operating cash flows plus a terminal value to the carrying amount of the self-storage property. We identified the evaluation of self-storage properties for impairment as a critical audit matter. The Partnership uses revenue and expense growth rates, and terminal value capitalization rate assumptions in determining estimated future cash flows as part of its impairment assessment. Changes to these assumptions could have a significant impact on the determination of recoverability of the carrying amount of a self-storage property, and involved subjective auditor judgement. The primary procedures we performed to address this critical audit matter included the following. We tested certain internal F-6 controls over the Partnership’s self-storage property impairment process, including controls related to the selection of the revenue and expense growth rates, and terminal value capitalization rate. We assessed the Partnership’s forecasted growth rates against the Partnership’s historical growth rates and published reports of industry data. We evaluated the Partnership’s expected terminal value capitalization rates by comparing them to published reports of industry data and historical transactions of the Partnership. We also identified the threshold rates at which the revenue and expense growth rates and terminal value capitalization rate assumptions would indicate the self-storage property may be impaired and analyzed those threshold rates against the published industry data and historical results. /s/ KPMG LLP We have served as the Partnership’s auditor since 2009. Philadelphia, Pennsylvania February 21, 2020 F-7 Report of Independent Registered Public Accounting Firm To the Shareholders and Board of Trustees CubeSmart: Opinion on Internal Control Over Financial Reporting We have audited Cubesmart and subsidiaries’ (the Company) internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2019 and 2018, the related consolidated statements of operations, comprehensive income (loss), equity, and cash flows for each of the years in the three-year period ended December 31, 2019, and the related notes and financial statement schedule III (collectively, the consolidated financial statements), and our report dated February 21, 2020 expressed an unqualified opinion on those consolidated financial statements. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on CubeSmart Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ KPMG LLP Philadelphia, Pennsylvania February 21, 2020 F-8 Report of Independent Registered Public Accounting Firm To the Partners of CubeSmart, L.P. and the Board of Trustees of CubeSmart: Opinion on Internal Control Over Financial Reporting We have audited Cubesmart, L.P. and subsidiaries’ (the Partnership) internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Partnership maintained, in all material respects, effective internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Partnership as of December 31, 2019 and 2018, the related consolidated statements of operations, comprehensive income (loss), capital, and cash flows for each of the years in the three-year period ended December 31, 2019, and the related notes and financial statement schedule III (collectively, the consolidated financial statements), and our report dated February 21, 2020 expressed an unqualified opinion on those consolidated financial statements. Basis for Opinion The Partnership’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on CubeSmart, L.P. Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Partnership’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Partnership in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ KPMG LLP Philadelphia, Pennsylvania February 21, 2020 F-9 CUBESMART AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands, except share data) ASSETS Storage properties Less: Accumulated depreciation Storage properties, net (including VIE assets of $92,612 and $330,986, respectively) Cash and cash equivalents Restricted cash Loan procurement costs, net of amortization Investment in real estate ventures, at equity Other assets, net Total assets LIABILITIES AND EQUITY Unsecured senior notes, net Revolving credit facility Unsecured term loans, net Mortgage loans and notes payable, net Accounts payable, accrued expenses and other liabilities Distributions payable Deferred revenue Security deposits Total liabilities Noncontrolling interests in the Operating Partnership Commitments and contingencies Equity Common shares $.01 par value, 400,000,000 shares authorized, 193,557,024 and 187,145,103 shares issued and outstanding at December 31, 2019 and 2018, respectively Additional paid-in capital Accumulated other comprehensive loss Accumulated deficit Total CubeSmart shareholders’ equity Noncontrolling interests in subsidiaries Total equity Total liabilities and equity See accompanying notes to the consolidated financial statements. December 31, 2019 2018 $ 4,699,844 $ 4,463,455 (862,487) 3,600,968 3,764 2,718 963 95,796 48,763 $ 4,029,545 $ 3,752,972 (925,359) 3,774,485 54,857 3,584 4,059 91,117 101,443 $ 1,835,725 $ 1,143,524 195,525 299,799 108,246 149,914 60,627 22,595 474 1,980,704 — — 96,040 137,880 64,688 25,313 475 2,160,121 62,088 55,819 1,936 2,674,745 (729) (876,606) 1,799,346 7,990 1,807,336 1,871 2,500,751 (1,029) (791,915) 1,709,678 6,771 1,716,449 $ 4,029,545 $ 3,752,972 F-10 CUBESMART AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) REVENUES Rental income Other property related income Property management fee income Total revenues OPERATING EXPENSES Property operating expenses Depreciation and amortization General and administrative Acquisition related costs Total operating expenses OTHER (EXPENSE) INCOME Interest: Interest expense on loans Loan procurement amortization expense Equity in earnings (losses) of real estate ventures Gains from sale of real estate, net Other Total other expense NET INCOME NET (INCOME) LOSS ATTRIBUTABLE TO NONCONTROLLING INTERESTS Noncontrolling interests in the Operating Partnership Noncontrolling interest in subsidiaries NET INCOME ATTRIBUTABLE TO THE COMPANY’S COMMON For the year ended December 31, 2018 2017 2019 $ 552,404 $ 517,535 $ 67,558 23,953 643,915 209,739 163,547 38,560 — 411,846 (72,525) (2,819) 11,122 1,508 1,416 (61,298) 170,771 60,156 20,253 597,944 196,866 143,350 37,712 — 377,928 (62,132) (2,313) (865) 10,576 206 (54,528) 165,488 489,043 55,001 14,899 558,943 181,508 145,681 34,745 1,294 363,228 (56,952) (2,638) (1,386) — 872 (60,104) 135,611 (1,708) 54 (1,820) 221 (1,593) 270 SHAREHOLDERS $ 169,117 $ 163,889 $ 134,288 Basic earnings per share attributable to common shareholders Diluted earnings per share attributable to common shareholders $ $ 0.89 $ 0.88 $ 0.89 $ 0.88 $ 0.74 0.74 Weighted average basic shares outstanding Weighted average diluted shares outstanding 190,874 191,576 184,653 185,495 180,525 181,448 See accompanying notes to the consolidated financial statements. F-11 CUBESMART AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (in thousands) For the year ended December 31, 2018 2017 2019 $ 170,771 $ 165,488 $ 135,611 232 70 302 171,073 (979) (60) (1,039) 164,449 195 1,680 1,875 137,486 (1,615) 270 136,141 NET INCOME Other comprehensive income (loss): Unrealized gains (losses) on interest rate swaps Reclassification of realized losses (gains) on interest rate swaps OTHER COMPREHENSIVE INCOME (LOSS) COMPREHENSIVE INCOME Comprehensive income attributable to noncontrolling interests in the Operating Partnership Comprehensive loss attributable to noncontrolling interest in subsidiaries COMPREHENSIVE INCOME ATTRIBUTABLE TO THE COMPANY $ (1,710) 54 169,417 $ (1,814) 221 162,856 $ See accompanying notes to the consolidated financial statements. F-12 CUBESMART AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EQUITY (in thousands) Common Shares Additional Accumulated Other Paid-in Number Amount Capital 180,083 $ 1,801 $ 2,314,014 $ Comprehensive (Loss) Income (1,850) $ Accumulated Shareholders’ Deficit Equity Total Noncontrolling Interests in Total Subsidiaries Equity Noncontrolling Interests in the Operating Partnership 54,407 (658,583) $ 1,655,382 $ (8,626) 29,642 1 15,706 2,364 2,009 1,531 5,855 $ 1,661,237 $ 1,058 (407) 1,058 (9,033) 29,642 1 12,324 (15,706) 15,706 2,364 2,009 1,531 (3,965) 134,288 1,853 (201,051) 3 $ (729,311) $ (3,965) 134,288 1,853 (201,051) 1,629,134 $ (270) (3,965) 134,018 1,853 (201,051) 6,236 $ 1,635,370 $ 3,965 1,593 22 (2,285) 54,320 131,829 1 4,404 3,835 2,570 1,541 (299) 163,889 405 (226,599) (791,915) $ (299) 163,889 (627) (226,599) 1,709,678 $ (1,032) (1,029) $ 1,036 106 594 397 10 1 6 4 (8,626) 29,632 15,700 2,360 2,009 1,531 182,216 $ 1,822 $ 2,356,620 $ 4,291 86 147 405 43 1 1 4 131,786 4,403 3,831 2,570 1,541 187,145 $ 1,871 $ 2,500,751 $ Balance at December 31, 2016 Contributions from noncontrolling interest in subsidiaries Acquisition of noncontrolling interest in subsidiary Issuance of common shares, net Issuance of restricted shares Issuance of OP units Conversion from units to shares Exercise of stock options Amortization of restricted shares Share compensation expense Adjustment for noncontrolling interests in the Operating Partnership Net income (loss) Other comprehensive income, net: Common share distributions ($1.11 per share) Balance at December 31, 2017 Contributions from noncontrolling interest in subsidiaries Distributions paid to noncontrolling interest in subsidiaries Issuance of common shares, net Issuance of restricted shares Issuance of OP units Conversion from units to shares Exercise of stock options Amortization of restricted shares Share compensation expense Adjustment for noncontrolling interests in the Operating Partnership Net income (loss) Other comprehensive (loss) income, net: Common share distributions ($1.22 per share) Balance at December 31, 2018 Contributions from noncontrolling interest in subsidiaries Distributions paid to noncontrolling interest in subsidiaries Acquisition of noncontrolling interest in subsidiary Issuance of common shares, net Issuance of restricted shares Issuance of OP units Conversion from units to shares Exercise of stock options Amortization of restricted shares Share compensation expense Adjustment for noncontrolling interests in the Operating 5,899 52 80 381 60 1 4 (34,690) 196,244 2,485 3,682 4,487 1,786 (34,690) 196,304 2,486 3,686 4,487 1,786 Partnership Net income (loss) Other comprehensive income, net: Common share distributions ($1.29 per share) Balance at December 31, 2019 193,557 $ 1,936 $ 2,674,745 $ (729) $ (5,918) 169,117 300 (5,918) 169,117 300 (247,890) (247,890) (876,606) $ 1,799,346 $ See accompanying notes to the consolidated financial statements. F-13 925 (169) (221) 925 (169) 131,829 1 4,404 3,835 2,570 1,541 (299) 163,668 (627) (226,599) 6,771 $ 1,716,449 $ 7,376 (188) (5,915) 7,376 (188) (40,605) 196,304 2,486 3,686 4,487 1,786 (5,918) 169,063 300 (247,890) (54) 7,990 $ 1,807,336 $ 6,242 (4,404) 299 1,820 (6) (2,452) 55,819 3,576 (2,486) 5,918 1,708 2 (2,449) 62,088 CUBESMART AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Operating Activities Net income Adjustments to reconcile net income to cash provided by operating activities: Depreciation and amortization Equity in (earnings) losses of real estate ventures Gains from sale of real estate, net Equity compensation expense Accretion of fair market value adjustment of debt Changes in other operating accounts: Other assets Accounts payable and accrued expenses Other liabilities Net cash provided by operating activities Investing Activities Acquisitions of storage properties Additions and improvements to storage properties Development costs Cash paid for partner's interest in real estate venture, net of cash, cash equivalents and restricted cash acquired Investment in real estate ventures Cash distributed from real estate ventures Proceeds from sale of real estate, net Net cash used in investing activities Financing Activities Proceeds from: Unsecured senior notes Revolving credit facility Principal payments on: Revolving credit facility Unsecured term loans Mortgage loans and notes payable Loan procurement costs Settlement of hedge transactions Acquisition of noncontrolling interest in subsidiary, net Proceeds from issuance of common shares, net Cash paid upon vesting of restricted shares Exercise of stock options Contributions from noncontrolling interests in subsidiaries Distributions paid to noncontrolling interests in subsidiaries Distributions paid to common shareholders Distributions paid to noncontrolling interests in Operating Partnership Net cash provided by (used in) financing activities Change in cash, cash equivalents and restricted cash Cash, cash equivalents and restricted cash at beginning of year Cash, cash equivalents and restricted cash at end of year Supplemental Cash Flow and Noncash Information Cash paid for interest, net of interest capitalized Supplemental disclosure of noncash activities: Proceeds held in escrow from real estate venture's sale of real estate (see note 4) Noncash consideration for acquisition of partner's interest in real estate venture (see note 4) Discount on issuance of unsecured senior notes Noncash drawdown on revolving credit facility Mortgage loan assumptions Repayment of unsecured term loan through noncash drawdown on revolving credit facility Accretion of put liability Derivative valuation adjustment Loan procurement costs Issuance of OP units Liability for acquisition of storage property Contribution of storage property to real estate venture Acquisition of noncontrolling interest in subsidiary Contributions from noncontrolling interests in subsidiaries For the year ended December 31, 2018 2017 2019 $ 170,771 $ 165,488 $ 135,611 166,366 (11,122) (1,508) 6,694 (718) (6,578) 6,042 1,821 331,768 $ (117,998) (37,569) (102,826) (117,959) (10,264) 7,096 3,856 (375,664) $ 145,663 865 (10,576) 5,572 (735) (4,937) 2,653 342 304,335 $ (214,510) (27,626) (86,002) — (19,216) 8,706 16,389 (322,259) $ 696,426 859,313 — 679,535 (1,158,776) (200,000) (11,652) (6,023) (807) (35,777) 196,304 (421) 3,686 48 (188) (243,859) (2,419) 95,855 $ 51,959 6,482 58,441 $ (565,710) — (9,816) — — — 131,830 (1,461) 3,835 925 (169) (221,328) (2,393) 15,248 $ (2,676) 9,158 6,482 $ 148,319 1,386 — 5,586 (559) (10,429) 10,846 1,154 291,914 (69,629) (27,378) (68,778) — (301) 15,783 — (150,303) 103,192 628,400 (590,000) (100,000) (8,666) (953) — (9,033) 29,643 (2,046) 2,364 1,058 — (195,006) (2,272) (143,319) (1,708) 10,866 9,158 69,283 $ 66,829 $ 63,407 8,288 $ (8,288) $ 3,574 $ 103,938 $ — $ (100,000) $ 5,895 $ 302 $ (3,770) $ 3,576 $ — $ — $ (4,828) $ 7,328 $ — $ — $ — $ — $ 7,166 $ — $ 24,747 $ (633) $ — $ 6,242 $ — $ — $ — $ — $ — — — — 6,201 — 35,122 1,875 — 12,324 1,470 9,400 — — $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ See accompanying notes to the consolidated financial statements. F-14 CUBESMART, L.P. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands) ASSETS Storage properties Less: Accumulated depreciation Storage properties, net (including VIE assets of $92,612 and $330,986, respectively) Cash and cash equivalents Restricted cash Loan procurement costs, net of amortization Investment in real estate ventures, at equity Other assets, net Total assets LIABILITIES AND CAPITAL Unsecured senior notes, net Revolving credit facility Unsecured term loans, net Mortgage loans and notes payable, net Accounts payable, accrued expenses and other liabilities Distributions payable Deferred revenue Security deposits Total liabilities December 31, 2019 2018 $ $ 4,699,844 $ (925,359) 3,774,485 54,857 3,584 4,059 91,117 101,443 4,029,545 $ $ 1,835,725 $ — — 96,040 137,880 64,688 25,313 475 2,160,121 4,463,455 (862,487) 3,600,968 3,764 2,718 963 95,796 48,763 3,752,972 1,143,524 195,525 299,799 108,246 149,914 60,627 22,595 474 1,980,704 Limited Partnership interests of third parties 62,088 55,819 Commitments and contingencies Capital Operating Partner Accumulated other comprehensive loss Total CubeSmart, L.P. capital Noncontrolling interests in subsidiaries Total capital Total liabilities and capital 1,800,075 (729) 1,799,346 7,990 1,807,336 4,029,545 $ 1,710,707 (1,029) 1,709,678 6,771 1,716,449 3,752,972 $ See accompanying notes to the consolidated financial statements. F-15 CUBESMART, L.P. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per common unit data) For the year ended December 31, 2018 2017 2019 REVENUES Rental income Other property related income Property management fee income Total revenues OPERATING EXPENSES Property operating expenses Depreciation and amortization General and administrative Acquisition related costs Total operating expenses OTHER (EXPENSE) INCOME Interest: Interest expense on loans Loan procurement amortization expense Equity in earnings (losses) of real estate ventures Gains from sale of real estate, net Other Total other expense NET INCOME NET LOSS ATTRIBUTABLE TO NONCONTROLLING INTERESTS Noncontrolling interest in subsidiaries NET INCOME ATTRIBUTABLE TO CUBESMART L.P. Operating Partnership interests of third parties NET INCOME ATTRIBUTABLE TO COMMON UNITHOLDERS $ $ 552,404 $ 517,535 $ 67,558 23,953 643,915 209,739 163,547 38,560 — 411,846 (72,525) (2,819) 11,122 1,508 1,416 (61,298) 170,771 60,156 20,253 597,944 196,866 143,350 37,712 — 377,928 (62,132) (2,313) (865) 10,576 206 (54,528) 165,488 54 170,825 (1,708) 169,117 $ 221 165,709 (1,820) 163,889 $ 489,043 55,001 14,899 558,943 181,508 145,681 34,745 1,294 363,228 (56,952) (2,638) (1,386) — 872 (60,104) 135,611 270 135,881 (1,593) 134,288 Basic earnings per unit attributable to common unitholders Diluted earnings per unit attributable to common unitholders $ $ 0.89 $ 0.88 $ 0.89 $ 0.88 $ 0.74 0.74 Weighted average basic units outstanding Weighted average diluted units outstanding 190,874 191,576 184,653 185,495 180,525 181,448 See accompanying notes to the consolidated financial statements. F-16 CUBESMART, L.P. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (in thousands) NET INCOME Other comprehensive income (loss): Unrealized gains (losses) on interest rate swaps Reclassification of realized losses (gains) on interest rate swaps OTHER COMPREHENSIVE INCOME (LOSS) COMPREHENSIVE INCOME Comprehensive income attributable to Operating Partnership interests of third parties Comprehensive loss attributable to noncontrolling interest in subsidiaries COMPREHENSIVE INCOME ATTRIBUTABLE TO OPERATING For the year ended December 31, 2018 2017 2019 $ 170,771 $ 165,488 $ 135,611 232 70 302 171,073 (1,710) 54 (979) (60) (1,039) 164,449 (1,814) 221 195 1,680 1,875 137,486 (1,615) 270 PARTNER $ 169,417 $ 162,856 $ 136,141 See accompanying notes to the consolidated financial statements. F-17 CUBESMART, L.P. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CAPITAL (in thousands) Number of Common OP Units Outstanding Accumulated Other Operating Comprehensive (Loss) Income Partner Total CubeSmart L.P. Capital Noncontrolling Interest in Subsidiaries Operating Partnership Interests of Third Parties Total Capital 5,855 $ 1,661,237 $ 1,058 (407) 1,058 (9,033) 29,642 1 15,706 2,364 2,009 1,531 (3,965) 134,018 1,853 (201,051) (270) 6,236 $ 1,635,370 $ 925 (169) (221) 925 (169) 131,829 1 4,404 3,835 2,570 1,541 (299) 163,668 (627) (226,599) 6,771 $ 1,716,449 $ 7,376 (188) (5,915) 7,376 (188) (40,605) 196,304 2,486 3,686 4,487 1,786 (5,918) 169,063 300 (247,890) (54) 7,990 $ 1,807,336 $ 54,407 12,324 (15,706) 3,965 1,593 22 (2,285) 54,320 6,242 (4,404) 299 1,820 (6) (2,452) 55,819 3,576 (2,486) 5,918 1,708 2 (2,449) 62,088 Balance at December 31, 2016 Contributions from noncontrolling interest in subsidiaries Acquisition of noncontrolling interest in subsidiary Issuance of common OP units, net Issuance of restricted OP units Issuance of OP units Conversion from OP units to shares Exercise of OP unit options Amortization of restricted OP units OP unit compensation expense Adjustment for Operating Partnership interests of third parties Net income (loss) Other comprehensive income, net: Common OP unit distributions ($1.11 per unit) Balance at December 31, 2017 Contributions from noncontrolling interest in subsidiaries Distributions paid to noncontrolling interest in subsidiaries Issuance of common OP units, net Issuance of restricted OP units Issuance of OP units Conversion from OP units to shares Exercise of OP unit options Amortization of restricted OP units OP unit compensation expense Adjustment for Operating Partnership interests of third parties Net income (loss) Other comprehensive income (loss), net: Common OP unit distributions ($1.22 per unit) Balance at December 31, 2018 Contributions from noncontrolling interest in subsidiaries Distributions paid to noncontrolling interest in subsidiaries Acquisition of noncontrolling interest in subsidiary Issuance of common OP units, net Issuance of restricted OP units Issuance of OP units Conversion from OP units to shares Exercise of OP unit options Amortization of restricted OP units OP unit compensation expense Adjustment for Operating Partnership interests of third parties Net income (loss) Other comprehensive income, net: Common OP unit distributions ($1.29 per unit) Balance at December 31, 2019 180,083 $ 1,657,232 $ (1,850) $ 1,655,382 $ 1,036 106 594 397 (8,626) 29,642 1 15,706 2,364 2,009 1,531 (3,965) 134,288 (201,051) 1,853 182,216 $ 1,629,131 $ 3 $ 4,291 86 147 405 131,829 1 4,404 3,835 2,570 1,541 (299) 163,889 405 (226,599) (1,032) 187,145 $ 1,710,707 $ (1,029) $ 5,899 52 80 381 (34,690) 196,304 2,486 3,686 4,487 1,786 (5,918) 169,117 (247,890) 300 193,557 $ 1,800,075 $ (729) $ (8,626) 29,642 1 15,706 2,364 2,009 1,531 (3,965) 134,288 1,853 (201,051) 1,629,134 $ 131,829 1 4,404 3,835 2,570 1,541 (299) 163,889 (627) (226,599) 1,709,678 $ (34,690) 196,304 2,486 3,686 4,487 1,786 (5,918) 169,117 300 (247,890) 1,799,346 $ See accompanying notes to the consolidated financial statements. F-18 CUBESMART, L.P. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Operating Activities Net income Adjustments to reconcile net income to cash provided by operating activities: $ 170,771 $ 165,488 $ 135,611 For the year ended December 31, 2018 2017 2019 Depreciation and amortization Equity in (earnings) losses of real estate ventures Gains from sale of real estate, net Equity compensation expense Accretion of fair market value adjustment of debt Changes in other operating accounts: Other assets Accounts payable and accrued expenses Other liabilities Net cash provided by operating activities Investing Activities Acquisitions of storage properties Additions and improvements to storage properties Development costs Cash paid for partner's interest in real estate venture, net of cash, cash equivalents and restricted cash acquired Investment in real estate ventures Cash distributed from real estate ventures Proceeds from sale of real estate, net Net cash used in investing activities Financing Activities Proceeds from: Unsecured senior notes Revolving credit facility Principal payments on: Revolving credit facility Unsecured term loans Mortgage loans and notes payable Loan procurement costs Settlement of hedge transactions Acquisition of noncontrolling interest in subsidiary, net Proceeds from issuance of common OP units Cash paid upon vesting of restricted OP units Exercise of OP unit options Contributions from noncontrolling interests in subsidiaries Distributions paid to noncontrolling interests in subsidiaries Distributions paid to common OP unitholders Net cash provided by (used in) financing activities Change in cash, cash equivalents and restricted cash Cash, cash equivalents and restricted cash at beginning of year Cash, cash equivalents and restricted cash at end of year Supplemental Cash Flow and Noncash Information Cash paid for interest, net of interest capitalized Supplemental disclosure of noncash activities: Proceeds held in escrow from real estate venture's sale of real estate (see note 4) Noncash consideration for acquisition of partner's interest in real estate venture (see note 4) Discount on issuance of unsecured senior notes Noncash drawdown on revolving credit facility Mortgage loan assumptions Repayment of unsecured term loan through noncash drawdown on revolving credit facility Accretion of put liability Derivative valuation adjustment Loan procurement costs Issuance of OP units Liability for acquisition of storage property Contribution of storage property to real estate venture Acquisition of noncontrolling interest in subsidiary Contributions from noncontrolling interests in subsidiaries $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 166,366 (11,122) (1,508) 6,694 (718) 145,663 865 (10,576) 5,572 (735) (6,578) 6,042 1,821 331,768 $ (4,937) 2,653 342 304,335 $ $ (117,998) (37,569) (102,826) (117,959) (10,264) 7,096 3,856 (375,664) $ (214,510) (27,626) (86,002) — (19,216) 8,706 16,389 (322,259) $ 696,426 859,313 (1,158,776) (200,000) (11,652) (6,023) (807) (35,777) 196,304 (421) 3,686 48 (188) (246,278) — 679,535 (565,710) — (9,816) — — — 131,830 (1,461) 3,835 925 (169) (223,721) 95,855 $ 51,959 6,482 58,441 $ 15,248 $ (2,676) 9,158 6,482 $ 148,319 1,386 — 5,586 (559) (10,429) 10,846 1,154 291,914 (69,629) (27,378) (68,778) — (301) 15,783 — (150,303) 103,192 628,400 (590,000) (100,000) (8,666) (953) — (9,033) 29,643 (2,046) 2,364 1,058 — (197,278) (143,319) (1,708) 10,866 9,158 69,283 $ 66,829 $ 63,407 8,288 $ (8,288) $ 3,574 $ 103,938 $ — $ (100,000) $ 5,895 $ 302 $ (3,770) $ 3,576 $ — $ — $ (4,828) $ 7,328 $ — $ — $ — $ — $ 7,166 $ — $ 24,747 $ (633) $ — $ 6,242 $ — $ — $ — $ — $ — — — — 6,201 — 35,122 1,875 — 12,324 1,470 9,400 — — See accompanying notes to the consolidated financial statements. F-19 CUBESMART AND CUBESMART L.P. NOTES TO 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 December 31, 2019, the Company owned self-storage properties located in the District of Columbia and 24 states throughout the United States which are presented under one reportable segment: the Company owns, operates, develops, manages and acquires self-storage properties. As of December 31, 2019, the Parent Company owned approximately 99.0% 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 properties 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 following a specified restricted period 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 Principles of Consolidation The accompanying consolidated financial statements include all of the accounts of the Company and its majority-owned and/or controlled subsidiaries. The portion of these entities not owned by the Company is presented as noncontrolling interests as of and during the periods consolidated. All significant intercompany accounts and transactions have been eliminated in consolidation. When the Company obtains an economic interest in an entity, the Company evaluates the entity to determine if the entity is deemed a variable interest entity (“VIE”) and if the Company is deemed to be the primary beneficiary in accordance with authoritative guidance issued on the consolidation of VIEs. When an entity is not deemed to be a VIE, the Company considers the provisions of additional guidance to determine whether a general partner, or the general partners as a group, controls a limited partnership or similar entity when the limited partners have certain rights. The Company consolidates (i) entities that are VIEs and of which the Company is deemed to be the primary beneficiary, and (ii) entities that are non-VIEs which the Company controls and which the limited partners do not have the ability to dissolve or remove the Company without cause nor substantive participating rights. The Operating Partnership meets the criteria as a VIE. The Parent Company’s sole significant asset is its investment in the Operating Partnership. As a result, substantially all of the Parent Company’s assets and liabilities represent those assets and liabilities of the Operating Partnership. All of the Parent Company’s debt is an obligation of the Operating Partnership. Noncontrolling Interests The Financial Accounting Standards Board (“FASB”) issued authoritative guidance regarding noncontrolling interests in consolidated financial statements which was effective on January 1, 2009. The guidance states that noncontrolling interests are the portion of equity (net assets) in a subsidiary not attributable, directly or indirectly, to a parent. The ownership interests in the subsidiary that are held by owners other than the parent are noncontrolling interests. Under the guidance, such noncontrolling interests are reported on the consolidated balance sheets within equity, separately from the Company’s equity. On the consolidated statements of operations, revenues, expenses and net income or loss from controlled or consolidated entities that are less than wholly owned are reported at the consolidated amounts, including both the amounts attributable to the Company and noncontrolling interests. Presentation of consolidated equity activity F-20 is included for both quarterly and annual financial statements, including beginning balances, activity for the period and ending balances for shareholders’ equity, noncontrolling interests and total equity. However, per the FASB issued authoritative guidance on the classification and measurement of redeemable securities, securities that are redeemable for cash or other assets at the option of the holder, not solely within the control of the issuer, must be classified outside of permanent equity. This would result in certain outside ownership interests being included as redeemable noncontrolling interests outside of permanent equity in the consolidated balance sheets. The Company makes this determination based on terms in applicable agreements, specifically in relation to redemption provisions. Additionally, with respect to noncontrolling interests for which the Company has a choice to settle the contract by delivery of its own shares, the Company considered the FASB issued guidance on accounting for derivative financial instruments indexed to, and potentially settled in, a Company’s own stock to evaluate whether the Company controls the actions or events necessary to issue the maximum number of shares that could be required to be delivered under share settlement of the contract. The guidance also requires that noncontrolling interests are adjusted each period so that the carrying value equals the greater of its carrying value based on the accumulation of historical cost or its redemption fair value. The consolidated results of the Company include results attributable to units of the Operating Partnership that are not owned by the Company. These interests were issued in the form of OP units and were a component of the consideration the Company paid to acquire certain self-storage properties. Limited partners who acquired OP units have the right to require the Operating Partnership to redeem part or all of their OP units for, at the Company’s option, an equivalent number of common shares of the Company or cash based upon the fair value of an equivalent number of common shares of the Company. However, the operating agreement contains certain circumstances that could result in a net cash settlement outside the control of the Company, as the Company does not have the ability to settle in unregistered shares. Accordingly, consistent with the guidance discussed above, the Company will continue to record these noncontrolling interests outside of permanent equity in the consolidated balance sheets. Net income or loss related to these noncontrolling interests is excluded from net income or loss in the consolidated statements of operations. The Company has adjusted the carrying value of its noncontrolling interests subject to redemption value to the extent applicable. Based on the Company’s evaluation of the redemption value of the redeemable noncontrolling interests, the Operating Partnership reflected these interests at their redemption value as of December 31, 2019, as the estimated redemption value exceeded their carrying value. The Operating Partnership recorded an increase to OP Units owned by third parties and a corresponding decrease to capital of $5.9 million as of December 31, 2019. Disclosure of such redemption provisions is provided in note 12. Estimates The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Although management believes the assumptions and estimates made are reasonable and appropriate, as discussed in the applicable sections throughout these consolidated financial statements, different assumptions and estimates could materially impact the Company’s reported results. The current economic environment has increased the degree of uncertainty inherent in these estimates and assumptions, and changes in market conditions could impact the Company’s future operating results. Self-Storage Properties Self-storage properties are carried at historical cost less accumulated depreciation and impairment losses. The cost of self-storage properties reflects their purchase price or development cost. Acquisition costs are accounted for in accordance with Accounting Standard Update (“ASU”) No. 2017-01 - Business Combinations (Topic 805): Clarifying the Definition of a Business, which was adopted on January 1, 2018, and are generally capitalized. Costs incurred for the renovation of a store are capitalized to the Company’s investment in that store. Ordinary repairs and maintenance are expensed as incurred; major replacements and betterments, which improve or extend the life of the asset, are capitalized and depreciated over their estimated useful lives. The costs to develop self-storage properties are capitalized to construction in progress while the project is under development. Purchase Price Allocation When stores are acquired, the purchase price is allocated to the tangible and intangible assets acquired and liabilities assumed based on estimated fair values. Allocations to land, building and improvements and equipment are recorded based upon their respective fair values as estimated by management. If appropriate, the Company allocates a portion of the purchase price to an intangible asset attributed to the value of in-place leases. This intangible is generally amortized to expense over the expected remaining term of the respective leases. Substantially all of the leases in place at acquired stores are at market rates, as the majority of the leases are month-to-month F-21 contracts. Accordingly, to date, no portion of the purchase price has been allocated to above- or below-market lease intangibles. To date, no intangible asset has been recorded for the value of customer relationships, because the Company does not have any concentrations of significant customers and the average customer turnover is fairly frequent. Depreciation and Amortization The costs of self-storage properties and improvements are depreciated using the straight-line method based on useful lives ranging from five to 39 years. Impairment of Long-Lived Assets We evaluate long-lived assets for impairment when events and circumstances such as declines in occupancy and operating results indicate that there may be an impairment. The carrying value of these long-lived assets is compared to the undiscounted future net operating cash flows, plus a terminal value, attributable to the assets to determine if the store’s basis is recoverable. If a store’s basis is not considered recoverable, an impairment loss is recorded to the extent the net carrying value of the asset exceeds the fair value. The impairment loss recognized equals the excess of net carrying value over the related fair value of the asset. There were no impairment losses recognized during the years ended December 31, 2019, 2018 and 2017. Long-Lived Assets Held for Sale We consider long-lived assets to be “held for sale” upon satisfaction of the following criteria: (a) management commits to a plan to sell a store (or group of stores), (b) the store is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such stores, (c) an active program to locate a buyer and other actions required to complete the plan to sell the store have been initiated, (d) the sale of the store is probable and transfer of the asset is expected to be completed within one year, (e) the store is being actively marketed for sale at a price that is reasonable in relation to its current fair value and (f) actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. Typically these criteria are all met when the relevant asset is under contract, significant non-refundable deposits have been made by the potential buyer, the assets are immediately available for transfer, and there are no contingencies related to the sale that may prevent the transaction from closing. However, each potential transaction is evaluated based on its separate facts and circumstances. Stores classified as held for sale are reported at the lesser of carrying value or fair value less estimated costs to sell and are not depreciated. There were no stores classified as held for sale as of December 31, 2019. Cash and Cash Equivalents Cash and cash equivalents are highly-liquid investments with original maturities of three months or less. The Company may maintain cash equivalents in financial institutions in excess of insured limits, but believes this risk is mitigated by only investing in or through major financial institutions. Restricted Cash Restricted cash consists of purchase deposits and cash deposits required for debt service requirements, capital replacement and expense reserves in connection with the requirements of our loan agreements. Loan Procurement Costs Loan procurement costs related to borrowings were $31.5 million and $21.5 million as of December 31, 2019 and 2018, respectively, and are reported net of accumulated amortization of $12.9 million and $13.4 million as of December 31, 2019 and 2018, respectively. In accordance with ASU No. 2015-03, Loan procurement costs, net are presented as a direct deduction from the carrying amount of the related debt liability. If there is not an associated debt liability recorded on the consolidated balance sheets, the costs are recorded as an asset net of accumulated amortization. Loan procurement costs associated with the Company’s revolving credit facility remain in Loan procurement costs, net of amortization on the Company’s consolidated balance sheets. The costs are amortized over the estimated life of the related debt using the effective interest method and are reported as Loan procurement amortization expense on the Company’s consolidated statements of operations. F-22 Other Assets Other assets are comprised of the following as of December 31, 2019 and 2018: Intangible assets, net of accumulated amortization of $10,170 and $3,124 Accounts receivable, net Prepaid property taxes Prepaid insurance Amounts due from affiliates (see note 14) Assets held in trust related to deferred compensation arrangements Right-of-use assets (see note 13) Equity investment recorded at cost (1) Other Total other assets, net December 31, 2019 2018 (in thousands) $ $ 10,283 $ 6,386 4,706 2,191 10,450 13,280 41,698 5,000 7,449 101,443 $ 8,145 5,672 4,406 1,479 10,584 9,645 — 5,000 3,832 48,763 (1) On September 5, 2018, the Company invested $5.0 million in exchange for 100% of the Class A preferred units of Capital Storage Partners, LLC (“Capital Storage”), a newly formed venture that acquired 22 self-storage properties located in Florida (4), Oklahoma (5) and Texas (13). The Class A preferred units earn an 11% cumulative dividend prior to any other distributions. The Company’s investment in Capital Storage and the related dividends are included in Other assets, net on the Company’s consolidated balance sheets and in Other income on the Company’s consolidated statements of operations, respectively. Environmental Costs Our practice is to conduct or obtain environmental assessments in connection with the acquisition or development of additional stores. Whenever the environmental assessment for one of the Company’s stores indicates that a store is impacted by soil or groundwater contamination from prior owners/operators or other sources, the Company will work with environmental consultants and where appropriate, state governmental agencies, to ensure that the store is either cleaned up, that no cleanup is necessary because the low level of contamination poses no significant risk to public health or the environment or that the responsibility for cleanup rests with a third party. Revenue Recognition Management has determined that all of our leases are operating leases. Rental income is recognized in accordance with the terms of the leases, which generally are month-to-month. The Company recognizes gains from sale of real estate in accordance with the guidance on transfer of nonfinancial assets. Payments received from purchasers prior to closing are recorded as deposits. Profit on real estate sold is recognized when a valid contract exists, the collectability of the sales price is reasonably assured and the control of the property has transferred. Advertising and Marketing Costs The Company incurs advertising and marketing costs primarily attributable to internet marketing and other media advertisements. The Company incurred $11.5 million, $10.3 million and $9.7 million in advertising and marketing expenses for the years ended December 31, 2019, 2018 and 2017, respectively, which are included in Property operating expenses on the Company’s consolidated statements of operations. Equity Offering Costs Underwriting discounts and commissions, financial advisory fees and offering costs are reflected as a reduction to additional paid-in capital. For the years ended December 31, 2019, 2018 and 2017, the Company recognized $2.1 million, $1.6 million and $0.6 million, respectively, of equity offering costs related to the issuance of common shares. F-23 Other Property Related Income Other property related income consists of late fees, administrative charges, customer insurance fees, sales of storage supplies and other ancillary revenues and is recognized in the period that it is earned. Capitalized Interest The Company capitalizes interest incurred that is directly associated with construction activities until the asset is placed into service. Interest is capitalized to the related asset(s) using the weighted average rate of the Company’s outstanding debt. For the years ended December 31, 2019, 2018 and 2017, the Company capitalized $3.0 million, $4.4 million and $5.6 million, respectively, of interest incurred that is directly associated with construction activities. Derivative Financial Instruments The Company carries all derivatives on the balance sheet at fair value. The Company determines the fair value of derivatives by observable prices that are based on inputs not quoted on active markets, but corroborated by market data. The accounting for changes in the fair value of a derivative instrument depends on whether the derivative has been designated and qualifies as part of a hedging relationship and, if so, the reason for holding it. The Company’s use of derivative instruments has been limited to cash flow hedges of certain interest rate risks. The Company had interest rate swap agreements for notional principal amounts aggregating $150.0 million as of December 31, 2018, the fair values of which are included in Accounts payable, accrued expenses and other liabilities on the Company’s consolidated balance sheets. The Company had no outstanding derivatives as of December 31, 2019. Income Taxes The Company has elected to be taxed as a real estate investment trust under Sections 856-860 of the Internal Revenue Code since the Company’s commencement of operations in 2004. In management’s opinion, the requirements to maintain these elections are being met. Accordingly, no provision for federal income taxes has been reflected in the consolidated financial statements other than for operations conducted through our taxable REIT subsidiaries. Earnings and profits, which determine the taxability of distributions to shareholders, differ from net income reported for financial reporting purposes due to differences in cost basis, the estimated useful lives used to compute depreciation, and the allocation of net income and loss for financial versus tax reporting purposes. The net tax basis in the Company’s assets was approximately $3,909.1 million and $3,645.7 million as of December 31, 2019 and 2018, respectively. Since the Company's initial quarter as a publicly-traded REIT, it has made regular quarterly distributions to its shareholders. Distributions to shareholders are usually taxable as ordinary income, although a portion of the distribution may be designated as capital gain or may constitute a tax-free return of capital. Annually, the Company provides each of its shareholders a statement detailing the tax characterization of dividends paid during the preceding year as ordinary income, capital gain or return of capital. The characterization of the Company’s dividends for 2019 consisted of a 78.413% ordinary income distribution, a 5.207% capital gain distribution and a 16.380% return of capital distribution from earnings and profits. The Company is subject to a 4% federal excise tax if sufficient taxable income is not distributed within prescribed time limits. The excise tax equals 4% of the annual amount, if any, by which the sum of (a) 85% of the Company’s ordinary income, (b) 95% of the Company’s net capital gains and (c) 100% of prior taxable income exceeds cash distributions and certain taxes paid by the Company. No excise tax was incurred in 2019, 2018 or 2017. Taxable REIT subsidiaries are subject to federal and state income taxes. Our taxable REIT subsidiaries had a net deferred tax asset related to expenses which are deductible for tax purposes in future periods of $0.7 million and $1.4 million as of December 31, 2019 and 2018, respectively. Earnings per Share and Unit Basic earnings per share and unit are calculated based on the weighted average number of common shares and restricted shares outstanding during the period. Diluted earnings per share and unit is calculated by further adjusting for the dilutive impact of share options, unvested restricted shares and contingently issuable shares outstanding during the period using the treasury stock method. Potentially dilutive securities calculated under the treasury stock method were 702,000; 842,000 and 923,000 in 2019, 2018 and 2017, respectively. F-24 Share-Based Payments We apply the fair value method of accounting for contingently issued shares and share options issued under our incentive award plan. Accordingly, share compensation expense is recorded ratably over the vesting period relating to such contingently issued shares and options. The Company has recognized compensation expense on a straight-line method over the requisite service period, which is included in general and administrative expense on the Company’s consolidated statement of operations. Investments in Unconsolidated Real Estate Ventures The Company accounts for its investments in unconsolidated real estate ventures under the equity method of accounting when it is determined that the Company has the ability to exercise significant influence over the venture. Under the equity method, investments in unconsolidated real estate ventures are recorded initially at cost, as investments in real estate ventures, and subsequently adjusted for equity in earnings (losses), cash contributions, less distributions and impairments. On a periodic basis, management assesses whether there are any indicators that the value of the Company’s investments in unconsolidated real estate ventures may be other than temporarily impaired. An investment is impaired only if the fair value of the investment, as estimated by management, is less than the carrying value of the investment and the decline is other than temporary. To the extent impairment that is other than temporary has occurred, the loss shall be measured as the excess of the carrying amount of the investment over the fair value of the investment, as estimated by management. The determination as to whether impairment exists requires significant management judgment about the fair value of the Company’s ownership interest. Fair value is determined through various valuation techniques, including but not limited to, discounted cash flow models, quoted market values and third-party appraisals. There were no impairment losses related to the Company’s investments in unconsolidated real estate ventures recognized during the years ended December 31, 2019 and 2018. Recent Accounting Pronouncements In August 2017, the FASB issued ASU No. 2017-12 – Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. The purpose of this updated guidance is to better align a company’s financial reporting for hedging activities with the economic objectives of those activities. The standard became effective on January 1, 2020 and is not expected to have a material impact on the Company’s consolidated financial statements. In June 2016, the FASB issued ASU No. 2016-13 – Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The new guidance changes how entities measure credit losses for most financial assets. This standard requires an entity to estimate its lifetime expected credit loss and record an allowance that, when deducted from the amortized cost basis of the financial asset, presents the net amount expected to be collected on the financial asset. In November 2018, the FASB issued ASU No. 2018-19 – Codification Improvements to Topic 326, Financial Instruments - Credit Losses, which clarifies that receivables arising from operating leases are within the scope of the leasing standard (ASU No. 2016-02), and not within the scope of ASU No. 2016-13. The standard became effective on January 1, 2020 and is not expected to have a material impact on the Company’s consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02 - Leases (Topic 842), which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e. lessees and lessors). The new standard requires lessees to apply a dual approach, classifying leases as either financing or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification determines whether lease expense is recognized based on an effective interest method or on a straight line basis over the term of the lease. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less are accounted for similar to previous guidance for operating leases. The new standard requires lessors to account for leases using an approach that is substantially equivalent to previous guidance for sales-type leases, direct financing leases and operating leases. The Company adopted the standard on January 1, 2019, the date it became effective for public companies, using the modified retrospective approach whereby the cumulative effect of adoption was recognized on the adoption date and prior periods were not restated. There was no net cumulative effect adjustment to retained earnings as of January 1, 2019 as a result of this adoption. Upon adoption, the Company elected the package of practical expedients permitted within the standard, which among other things, allows for the carryforward of historical lease classification. The Company also elected the practical expedient provided to lessors in a subsequent amendment to the standard that removed the requirement to separate lease and nonlease components, provided certain conditions were met. Refer to note 13 for the impact of the adoption of ASU No. 2016-02 – Leases (Topic 842) on the Company’s consolidated financial statements. F-25 Concentration of Credit Risk The Company’s stores are located in major metropolitan and rural areas and have numerous customers per store. No single customer represents a significant concentration of our revenues. The stores in Florida, New York, Texas and California provided approximately 16%, 16%, 10% and 8%, respectively, of the Company’s total revenues for the year ended December 31, 2019. The stores in Florida, New York, Texas and California provided approximately 17%, 16%, 10% and 8%, respectively, of the Company’s total revenues for each of the years ended December 31, 2018 and 2017. 3. STORAGE PROPERTIES The book value of the Company’s real estate assets is summarized as follows: Land Buildings and improvements Equipment Construction in progress Storage properties Less: Accumulated depreciation Storage properties, net 2019 December 31, (in thousands) 2018 $ 858,541 $ 3,619,594 128,111 93,598 4,699,844 (925,359) 3,774,485 $ $ 806,916 3,343,173 176,583 136,783 4,463,455 (862,487) 3,600,968 F-26 The following table summarizes the Company’s acquisition and disposition activity for the years ended December 31, 2019, 2018 and 2017: Asset/Portfolio 2019 Acquisitions: Maryland Asset Florida Assets Arizona Asset HVP III Assets Georgia Asset South Carolina Asset Texas Asset Florida Assets California Asset 2019 Disposition: Texas Asset 2018 Acquisitions: Texas Asset Texas Asset Metro DC Asset Nevada Asset North Carolina Asset California Asset Texas Asset California Asset New York Asset Illinois Asset 2018 Dispositions: Arizona Assets 2017 Acquisitions: Illinois Asset Maryland Asset California Asset Texas Asset Florida Asset Illinois Asset Florida Asset Market Transaction Date Stores (in thousands) Number of Purchase / Sale Price Baltimore / DC Florida Markets - Other Phoenix Various (see note 4) Atlanta Charleston Texas Markets - Major Florida Markets - Other Los Angeles March 2019 April 2019 May 2019 June 2019 August 2019 August 2019 October 2019 November 2019 December 2019 1 2 1 18 1 1 1 3 1 29 $ $ 22,000 19,000 1,550 128,250 (1) 14,600 3,300 7,300 32,100 18,500 246,600 Texas Markets - Major October 2019 1 1 $ $ 4,146 4,146 Texas Markets - Major Texas Markets - Major Baltimore / DC Las Vegas Charlotte Los Angeles Texas Markets - Major San Diego New York / Northern NJ Chicago January 2018 May 2018 July 2018 September 2018 September 2018 October 2018 October 2018 November 2018 November 2018 December 2018 Phoenix November 2018 Chicago Baltimore / DC Sacramento Texas Markets - Major Florida Markets - Other Chicago Florida Markets - Other April 2017 May 2017 May 2017 October 2017 October 2017 November 2017 December 2017 1 1 1 1 1 1 1 1 1 1 10 2 2 1 1 1 1 1 1 1 7 $ $ $ $ $ $ 12,200 19,000 34,200 14,350 11,000 53,250 23,150 19,118 37,000 4,250 227,518 17,502 17,502 11,200 18,200 3,650 4,050 14,500 11,300 17,750 80,650 (1) Amount represents the purchase price for 90% of the ownership interest in 191 III CUBE LLC ("HVP III"), which at the time of the acquisition owned 18 storage properties (see note 4). F-27 4. INVESTMENT ACTIVITY 2019 Acquisitions During the year ended December 31, 2019, the Company acquired 11 stores located in Arizona (1), California (1), Florida (5), Georgia (1), Maryland (1), South Carolina (1) and Texas (1) for an aggregate purchase price of approximately $118.3 million. In connection with these transactions, which were accounted for as asset acquisitions, the Company allocated the purchase price and acquisition related costs to the tangible and intangible assets acquired based on fair value. Intangible assets consisted of in-place leases, which aggregated to $6.2 million at the time of the acquisitions and prior to amortization of such amounts. The estimated life of these in-place leases was 12 months and the amortization expense that was recognized during 2019 was approximately $1.9 million. In connection with one of the acquisitions, the Company paid $14.9 million of cash and issued OP Units that were valued at approximately $3.6 million as consideration for the purchase price (see note 12). Additionally, on June 6, 2019, the Company acquired its partner’s 90% ownership interest in HVP III, an unconsolidated real estate venture in which the Company previously owned a 10% noncontrolling interest and that was accounted for under the equity method of accounting. As of the date of acquisition, HVP III owned 18 stores located in Georgia (1), Massachusetts (7), North Carolina (1), South Carolina (7) and Tennessee (2) (the “HVP III Assets”). The purchase price for the 90% ownership interest was $128.3 million, which was comprised of cash consideration of $120.0 million and $8.3 million of the Company’s escrowed proceeds from HVP III’s sale of 50 properties to an unaffiliated buyer on June 5, 2019 (see note 5). The HVP III Assets were recorded by the Company at $137.5 million, which consisted of the $128.3 million purchase price plus the Company’s $10.6 million carryover basis of its previously held equity interest in HVP III, offset by $1.4 million of acquired cash. As a result of the transaction, which was accounted for as an asset acquisition, the HVP III Assets became wholly-owned by the Company and are now consolidated within its financial statements. No gain or loss was recognized as a result of the transaction. In connection with the transaction, the Company allocated the value of the HVP III Assets and acquisition related costs to the tangible and intangible assets acquired based on fair value. Intangible assets consisted of in- place leases, which aggregated to $14.3 million at the time of the acquisition and prior to amortization of such amounts. The estimated life of these in-place leases was 12 months and the amortization expense that was recognized during 2019 was approximately $8.3 million. The following table summarizes the Company’s revenue and earnings associated with the 2019 acquisitions from the respective acquisition dates, that are included in the consolidated statements of operations for the year ended December 31, 2019: Total revenue Net loss For the year ended December 31, 2019 (in thousands) $ 11,130 (6,020) As of December 31, 2019, the Company had made aggregate deposits of $2.6 million associated with two stores that were under contract to be acquired for an aggregate acquisition price of $57.5 million. The deposits are reflected in Other assets, net on the Company’s consolidated balance sheets. 2019 Disposition On October 7, 2019, the Company sold a self-storage property located in Texas for a sales price of $4.1 million. The Company recorded a $1.5 million gain in connection with the sale. Development Activity As of December 31, 2019, the Company had invested in joint ventures to develop five self-storage properties located in Massachusetts (1), New York (2), Pennsylvania (1) and Virginia (1). Construction for all projects is expected to be completed by the second quarter of 2021 (see note 12). As of December 31, 2019, development costs incurred to date for these projects totaled $77.7 million. Total construction costs for these projects are expected to be $137.6 million. These costs are capitalized to construction in progress while the projects are under development and are reflected in Storage properties on the Company’s consolidated balance sheets. The Company has completed the construction and opened for operation the following stores since January 1, 2017. The costs associated with the construction of these stores are capitalized to land, building and improvements, as well as equipment and are reflected in Storage properties on the Company’s consolidated balance sheets. F-28 Store Location Number of Stores Date Opened Waltham, MA (1) Queens, NY (2) Bayonne, NJ (2) (3) Bronx, NY (2) Brooklyn, NY (2) Washington, D.C. New York, NY (1) North Palm Beach, FL 1 1 1 1 1 1 1 1 8 Q3 2019 Q2 2019 Q2 2019 Q3 2018 Q4 2017 Q3 2017 Q3 2017 Q1 2017 CubeSmart Ownership Interest 100% 100% 100% 100% 100% 100% 100% 100% Total Construction Costs (in thousands) $ $ 18,000 47,500 25,100 92,100 49,300 27,800 81,200 9,700 350,700 (1) On September 18, 2017 and August 8, 2019, the Company, through two separate joint ventures in which the Company owned a 90% interest in each and that were previously consolidated, completed the construction and opened for operation a store located in New York, NY and a store located in Waltham, MA, respectively. On June 25, 2019, the Company acquired the noncontrolling member’s 10% interest in the venture that owned the New York, NY store for $18.5 million, and on September 6, 2019, the Company acquired the noncontrolling member’s 10% interest in the venture that owned the Waltham, MA store for $2.6 million. Prior to these transactions, the noncontrolling member’s interest in each venture was reported in Noncontrolling interests in subsidiaries on the consolidated balance sheets. Since the Company retained its controlling interest in each venture and the stores are now wholly owned, these transactions were accounted for as equity transactions. The carrying amount of the noncontrolling interest was reduced to zero to reflect the purchase and the difference between the purchase price paid by the Company and the carrying amount of the noncontrolling interest, which aggregated to $16.1 million, was recorded as an adjustment to equity attributable to the Company, with no gain or loss recorded. In conjunction with the Company’s acquisition of the noncontrolling interest in the venture that owns the Waltham, MA store, the $10.5 million related party loan extended by the Company to the venture during the construction period was repaid in full. (2) These stores were previously owned by four separate consolidated joint ventures, in which the Company held a 51% ownership interest in each. On March 28, 2018, the noncontrolling member in the venture that owned the Brooklyn, NY store put its 49% interest in the venture to the Company for $20.4 million. On February 15, 2019, the noncontrolling member in the venture that owned the Bronx, NY store put its 49% interest in the venture to the Company for $37.8 million. On June 25, 2019, the noncontrolling member in the venture that owned the Bayonne, NJ store put its 49% interest in the venture to the Company for $11.5 million. On September 17, 2019, the noncontrolling member in the venture that owned the Queens, NY store put its 49% interest in the venture to the Company for $15.2 million. These amounts are included in Development costs in the consolidated statements of cash flows. (3) This store is subject to a ground lease. During the fourth quarter of 2015, the Company, through two separate joint ventures in which the Company owned a 90% interest in each and that were previously consolidated, completed the construction and opened for operation a store located in Brooklyn, NY and a store located in Queens, NY. On June 2, 2017, the Company acquired the noncontrolling member’s 10% interest in the venture that owed the Brooklyn, NY store, and on June 28, 2019, the Company acquired the noncontrolling member’s 10% interest in the venture that owned the Queens, NY store, each for $9.0 million. Prior to these transactions, the noncontrolling member’s interest in each venture was reported in Noncontrolling interests in subsidiaries on the consolidated balance sheets. Since the Company retained its controlling interest in each venture and the stores are now wholly owned, these transactions were accounted for as equity transactions. The carrying amount of the noncontrolling interest was reduced to zero to reflect the purchase and the difference between the purchase price paid by the Company and the carrying amount of the noncontrolling interest which aggregated to $17.1 million, was recorded as an adjustment to equity attributable to the Company, with no gain or loss recorded. In conjunction with the Company’s acquisition of the noncontrolling interest in each venture, the $9.8 million and $12.4 million related party loans extended by the Company to the ventures during the construction period for the Brooklyn, NY store and the Queens, NY store, respectively, were repaid in full. F-29 2018 Acquisitions During the year ended December 31, 2018, the Company acquired ten stores located throughout the United States, including one store upon completion of construction and the issuance of a certificate of occupancy, for an aggregate purchase price of approximately $227.5 million. In connection with these transactions, which were accounted for as asset acquisitions, the Company allocated a portion of the purchase price and acquisition related costs to the tangible and intangible assets acquired based on fair value. Intangible assets consist of in-place leases, which aggregated $11.3 million at the time of the acquisitions and prior to any amortization of such amounts. The estimated life of these in-place leases was 12 months, and the amortization expense that was recognized during the years ended December 31, 2019 and 2018 was approximately $8.2 million and $3.1 million, respectively. In connection with one of the acquired stores, the Company assumed a $7.2 million mortgage loan that was immediately repaid by the Company. The remainder of the purchase price was funded with $0.2 million of cash and $4.8 million through the issuance of 168,011 OP Units (see note 12). Following a 13-month lock-up period, the holder may tender the OP Units for redemption by the Operating Partnership for a cash amount per OP Unit equal to the market value of an equivalent number of common shares of the Company. The Company has the right, but not the obligation, to assume and satisfy the redemption obligation of the Operating Partnership by issuing one common share in exchange for each OP Unit tendered for redemption. 2018 Dispositions On November 28, 2018, the Company sold two stores in Arizona for an aggregate sales price of approximately $17.5 million. In connection with these sales, the Company recorded gains that totaled approximately $10.6 million. 2017 Acquisitions During the year ended December 31, 2017, the Company acquired six stores located throughout the United States, including two stores upon completion of construction and the issuance of a certificate of occupancy, for an aggregate purchase price of approximately $69.5 million. In connection with these acquisitions, which were accounted for as business combinations prior to the adoption of ASU No. 2017- 01, the Company allocated a portion of the purchase price to the tangible and intangible assets acquired based on fair value. Intangible assets consist of in-place leases, which aggregated $3.2 million at the time of the acquisitions and prior to any amortization of such amounts. The estimated life of these in-place leases was 12 months, and the amortization expense that was recognized during the years ended December 31, 2018 and 2017 was approximately $1.7 and $1.5 million, respectively. In connection with one of the acquired stores, the Company assumed mortgage debt that was recorded at a fair value of $6.2 million, which fair value includes an outstanding principal balance totaling $5.9 million and a net premium of $0.3 million to reflect the estimated fair value of the debt at the time of assumption. As part of the acquisition of that same store, the Company issued OP Units that were valued at approximately $12.3 million as consideration for the remainder of the purchase price (see note 12). During the year ended December 31, 2017, the Company also acquired a store in Illinois upon completion of construction and the issuance of a certificate of occupancy for $11.2 million. The purchase price was satisfied with $9.7 million of cash and 58,400 newly created Class C OP Units. Each Class C OP Unit had a stated value of $25 and an annual distribution rate of 3% of the stated value. On July 23, 2018, all of the Class C OP Units were exchanged for an aggregate of 46,322 common units of the Operating Partnership. Because the Class C OP Units represented an unconditional obligation that the Company settled by issuing a variable number of its common shares with a monetary value that was known at inception, the Class C OP Units were classified as a liability in Accounts payable, accrued expenses and other liabilities on the Company’s consolidated balance sheets prior to redemption. F-30 5. INVESTMENT IN UNCONSOLIDATED REAL ESTATE VENTURES The Company’s investments in real estate ventures, in which it holds a common ownership interest, are summarized as follows (in thousands): Unconsolidated Real Estate Ventures 191 IV CUBE LLC ("HVP IV") (1) CUBE HHF Northeast Venture LLC ("HHFNE") (2) 191 III CUBE LLC ("HVP III") (3) CUBE HHF Limited Partnership ("HHF") (4) CubeSmart Ownership Interest 20% 10% 10% 50% Number of Stores as of: December 31, 2019 2018 Carrying Value of Investment as of: December 31, 2019 2018 21 13 — 35 69 13 $ 13 68 35 129 $ $ 23,112 1,998 — 66,007 91,117 $ 14,791 2,411 9,183 69,411 95,796 (1) The stores owned by HVP IV are located in Arizona (2), Connecticut (2), Florida (4), Georgia (2), Maryland (1), Minnesota (1) Pennsylvania (1) and Texas (8). The Company’s total contribution to HVP IV in connection with these store acquisitions was $26.3 million. As of December 31, 2019, HVP IV had $82.2 million outstanding on its $107.0 million loan facility, which bears interest at LIBOR plus 1.70% per annum, and matures on May 16, 2021 with options to extend the maturity date through May 16, 2023, subject to satisfaction of certain conditions and payment of the extension fees as stipulated in the loan agreement. As of December 31, 2019, HVP IV also had $55.5 million outstanding under a separate loan that bears interest at LIBOR plus 2.75% per annum, and matures on June 9, 2022 with options to extend the maturity date through June 9, 2024, subject to satisfaction of certain conditions and payment of the extension fees as stipulated in the loan agreement. (2) The stores owned by HHFNE are located in Connecticut (3), Massachusetts (6), Rhode Island (2) and Vermont (2). The Company’s total contribution to HHFNE in connection with these store acquisitions was $3.8 million. As of December 31, 2019, HHFNE had an outstanding $45.0 million loan facility, which bears interest at LIBOR plus 1.20% per annum and matures on December 16, 2024. (3) On June 5, 2019, HVP III sold 50 stores located in Florida (3), Georgia (4), Michigan (17), North Carolina (3), South Carolina (15) and Tennessee (8), to an unaffiliated third party buyer for an aggregate sales price of $293.5 million. As of the transaction date, HVP III had five mortgage loans with an aggregate outstanding balance of $22.9 million, as well as $179.5 million outstanding on its $185.5 million loan facility, all of which were defeased or repaid in full at the time of the sale. Net proceeds to the venture from the transaction totaled $82.9 million. The venture recorded gains which aggregated to approximately $106.7 million in connection with the sale. Subsequent to the sale, the Company acquired its partner’s 90% ownership interest in HVP III, which at the time of the acquisition owned the remaining 18 storage properties (see note 4). (4) The stores owned by HHF are located in North Carolina (1) and Texas (34). As of December 31, 2019, HHF had an outstanding $100.0 million secured loan, which bears interest at 3.59% per annum and matures on April 30, 2021. Based upon the facts and circumstances at formation of HVP IV, HHFNE, HVP III and HHF (the “Ventures”), the Company determined that 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 III, which was consolidated as of June 6, 2019). 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 (losses) of real estate ventures on the Company’s consolidated statements of operations. F-31 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 December 31, 2019 and 2018: Assets Storage properties, net Other assets Total assets Liabilities and equity Other liabilities Debt Equity CubeSmart Joint venture partners Total liabilities and equity December 31, 2019 (1) 2018 (in thousands) 552,791 $ 11,997 564,788 $ 10,064 $ 280,392 91,117 183,215 564,788 $ 741,209 16,042 757,251 7,911 413,848 95,796 239,696 757,251 $ $ $ $ (1) Excludes HVP III as it was consolidated by the Company on June 6, 2019. The following is a summary of results of operations of the Ventures for the years ended December 31, 2019, 2018 and 2017: Total revenues Operating expenses Other expenses Interest expense, net Depreciation and amortization Gains from sale of real estate, net Net income (loss) Company’s share of net income (loss) 2019 For the year ended December 31, 2018 (in thousands) 2017 $ $ $ 72,582 $ (32,134) (3,227) (14,927) (30,107) 106,667 98,854 $ 11,122 $ 90,111 $ (37,899) (938) (13,311) (41,972) — (4,009) $ (865) $ 81,058 (33,922) (783) (11,703) (45,086) — (10,436) (1,386) The results of operations above include the periods from January 1, 2017 through June 6, 2019 (date of consolidation) for HVP III and November 1, 2017 (date of initial store acquisition) through December 31, 2019 for HVP IV. 6. UNSECURED SENIOR NOTES The Company’s unsecured senior notes are summarized as follows (collectively referred to as the “Senior Notes”): Unsecured Senior Notes $250M 4.800% Guaranteed Notes due 2022 $300M 4.375% Guaranteed Notes due 2023 (1) $300M 4.000% Guaranteed Notes due 2025 (2) $300M 3.125% Guaranteed Notes due 2026 $350M 4.375% Guaranteed Notes due 2029 $350M 3.000% Guaranteed Notes due 2030 Principal balance outstanding Less: Discount on issuance of unsecured senior notes, net Less: Loan procurement costs, net Total unsecured senior notes, net $ 250,000 $ 300,000 300,000 300,000 350,000 350,000 1,850,000 (3,860) (10,415) 250,000 300,000 300,000 300,000 — — 1,150,000 (568) (5,908) $ 1,835,725 $ 1,143,524 December 31, 2019 2018 (in thousands) Effective Interest Rate Issuance Date Maturity Date 4.82 % Jun-12 4.33 % Various (1) 3.99 % Various (2) Aug-16 3.18 % Jan-19 4.46 % Oct-19 3.04 % Jul-22 Dec-23 Nov-25 Sep-26 Feb-29 Feb-30 F-32 (1) On April 4, 2017, the Operating Partnership issued $50.0 million of its 4.375% senior notes due 2023, which are part of the same series as the $250.0 million principal amount of the Operating Partnership’s 4.375% senior notes due December 15, 2023 issued on December 17, 2013. The $50.0 million and $250.0 million tranches were priced at 105.040% and 98.995%, respectively, of the principal amount to yield 3.495% and 4.501%, respectively, to maturity. The combined weighted average effective interest rate of the 2023 notes is 4.330%. (2) On April 4, 2017, the Operating Partnership issued $50.0 million of its 4.000% senior notes due 2025, which are part of the same series as the $250.0 million principal amount of the Operating Partnership’s 4.000% senior notes due November 15, 2025 issued on October 26, 2015. The $50.0 million and $250.0 million tranches were priced at 101.343% and 99.735%, respectively, of the principal amount to yield 3.811% and 4.032%, respectively, to maturity. The combined weighted average effective interest rate of the 2025 notes is 3.994%. The indenture under which the Senior Notes were issued restricts the ability of the Operating Partnership and its subsidiaries to incur debt unless the Operating Partnership and its consolidated subsidiaries comply with a leverage ratio not to exceed 60% and an interest coverage ratio of more than 1.5:1.0 after giving effect to the incurrence of the debt. The indenture also restricts the ability of the Operating Partnership and its subsidiaries to incur secured debt unless the Operating Partnership and its consolidated subsidiaries comply with a secured debt leverage ratio not to exceed 40% after giving effect to the incurrence of the debt. The indenture also contains other financial and customary covenants, including a covenant not to own unencumbered assets with a value less than 150% of the unsecured indebtedness of the Operating Partnership and its consolidated subsidiaries. As of and for the year ended December 31, 2019, the Operating Partnership was in compliance with all of the financial covenants under the Senior Notes. 7. REVOLVING CREDIT FACILITY AND UNSECURED TERM LOANS On December 9, 2011, the Company entered into a credit agreement (the “Credit Facility”), which was subsequently amended on April 5, 2012, June 18, 2013 and April 22, 2015 to provide for, among other things, a $500.0 million unsecured revolving facility with a maturity date of April 22, 2020. On June 19, 2019, the Company amended and restated, in its entirety, the Credit Facility (the "Amended and Restated Credit Facility") which, subsequent to the amendment and restatement, is comprised of a $750.0 million unsecured revolving credit facility (the "Revolver") maturing on June 19, 2024. Under the Amended and Restated Credit Facility, pricing on the Revolver is dependent upon the Company’s unsecured debt credit ratings. At the Company’s current Baa2/BBB level, amounts drawn under the Revolver are priced at 1.10% over LIBOR, inclusive of a facility fee of 0.15%. The Company incurred costs of $3.9 million in 2019 in connection with amending and restating the Credit Facility and capitalized such costs as a component of Loan procurement costs, net of amortization on the consolidated balance sheets. As of December 31, 2019, borrowings under the Revolver had an effective weighted average interest rate of 2.86%. Additionally, as of December 31, 2019, $749.3 million was available for borrowing under the Revolver. The available balance under the Revolver is reduced by an outstanding letter of credit of $0.7 million. On June 20, 2011, the Company entered into an unsecured term loan agreement (the “Term Loan Facility”), which was subsequently amended on June 18, 2013 and August 5, 2014, consisting of, among other things, a $100.0 million unsecured term loan with a seven-year maturity that was repaid on June 19, 2019. The Company’s unsecured term loans under the Credit Facility and Term Loan Facility are summarized below: Unsecured Term Loans Credit Facility Unsecured term loan (1) Term Loan Facility Unsecured term loan (2) Principal balance outstanding Less: Loan procurement costs, net Total unsecured term loans, net Carrying Value as of: December 31, Effective Interest Rate as of 2019 2018 December 31, 2019 Maturity Date (in thousands) $ — $ 200,000 — % Jan-19 — — — — $ 100,000 300,000 (201) 299,799 $ — % Jan-20 (1) On January 31, 2019, the Company used a portion of the net proceeds from the issuance of $350.0 million of 4.375% Senior Notes due 2029 (the “2029 Notes”) to repay all of the outstanding indebtedness under the unsecured term loan portion of the Credit Facility. F-33 (2) On June 19, 2019, the Company used an initial advance at closing of the Amended and Restated Credit Facility to repay all of the outstanding indebtedness under the unsecured term loan portion of the Term Loan Facility that was scheduled to mature in January 2020. Unamortized loan procurement costs of $0.1 million were written off in conjunction with the repayment. Under the Amended and Restated Credit Facility, the Company’s ability to borrow under the Revolver is subject to ongoing compliance with certain financial covenants which include, among other things, (1) a maximum total indebtedness to total asset value of 60.0%, and (2) a minimum fixed charge coverage ratio of 1.5:1.0. As of and for the year ended December 31, 2019, the Operating Partnership was in compliance with all of its financial covenants. 8. MORTGAGE LOANS AND NOTES PAYABLE The Company’s mortgage loans and notes payable are summarized as follows: Mortgage Loans and Notes Payable YSI 33 (1) YSI 26 YSI 57 YSI 55 YSI 24 YSI 65 YSI 66 YSI 68 Principal balance outstanding Plus: Unamortized fair value adjustment Less: Loan procurement costs, net Total mortgage loans and notes payable, net $ (1) YSI 33 was repaid in full on July 1, 2019. $ (in thousands) — $ Carrying Value as of: December 31, 2019 2018 Effective Interest Rate Maturity Date 7,805 2,740 21,547 24,042 2,313 30,588 5,459 94,494 1,833 (287) 96,040 $ 6.42 % 4.56 % 4.61 % 4.85 % 4.64 % 3.85 % 3.51 % 3.78 % Jul-19 Nov-20 Nov-20 Jun-21 Jun-21 Jun-23 Jun-23 May-24 9,214 8,022 2,816 22,041 24,893 2,363 31,171 5,626 106,146 2,551 (451) 108,246 As of December 31, 2019 and 2018, the Company's mortgage loans and notes payable were secured by certain of its self-storage properties with net book values of approximately $206.3 million and $231.0 million, respectively. The following table represents the future principal payment requirements on the outstanding mortgage loans and notes payable as of December 31, 2019 (in thousands): 2020 2021 2022 2023 2024 2025 and thereafter Total mortgage payments Plus: Unamortized fair value adjustment Less: Loan procurement costs, net Total mortgage loans and notes payable, net $ $ 12,791 45,057 923 31,019 4,704 — 94,494 1,833 (287) 96,040 F-34 9. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) The following table summarizes the changes in accumulated other comprehensive income (loss) by component for the year ended December 31, 2019: Other comprehensive gain before reclassifications Amounts reclassified from accumulated other comprehensive loss Net current-period other comprehensive income Balance at December 31, 2018 Balance at December 31, 2019 (1) See note 10 for additional information about the effects of the amounts reclassified. 10. RISK MANAGEMENT AND USE OF FINANCIAL INSTRUMENTS Unrealized Gains (Losses) on Interest Rate Swaps (in thousands) $ $ 230 70 (1) 300 (1,029) (729) The Company’s use of derivative instruments is limited to the utilization of interest rate swap agreements or other instruments to manage interest rate risk exposures and not for speculative purposes. The principal objective of such arrangements is to minimize the risks and/or costs associated with the Company’s operating and financial structure, as well as to hedge specific transactions. The counterparties to these arrangements are major financial institutions with which the Company and its subsidiaries may also have other financial relationships. The Company is potentially exposed to credit loss in the event of non-performance by these counterparties. However, because of the high credit ratings of the counterparties, the Company does not anticipate that any of the counterparties will fail to meet these obligations as they come due. The Company does not hedge credit or property value market risks. During 2018, the Company entered into interest rate swap agreements that qualified and were designated as cash flow hedges designed to reduce the impact of interest rate changes on a forecasted issuance of long-term debt. Therefore, the interest rate swaps were recorded on the consolidated balance sheets at fair value and the related gains or losses were deferred in shareholders’ equity as accumulated other comprehensive loss. These deferred gains and losses are amortized into interest expense during the period or periods in which the related interest payments affect earnings. The Company formally assessed, both at inception of the hedge and on an on-going basis, whether each derivative was highly-effective in offsetting changes in cash flows of the hedged item. If management determined that the derivative was highly-effective as a hedge, then the Company accounted for the derivative using hedge accounting, pursuant to which gains or losses inherent in the derivative did not impact the Company’s results of operations. If management determined that the derivative was not highly-effective as a hedge or if a derivative ceased to be a highly-effective hedge, the Company discontinued hedge accounting prospectively and reflected in its statement of operations realized and unrealized gains and losses with respect to the derivative. The following table summarizes the terms and fair values of the Company’s derivative financial instruments as of December 31, 2019 and 2018 (in thousands): Hedge Product Hedge Type Notional Amount December 31, 2019 December 31, 2018 Effective Fair Value Strike Date Maturity December 31, 2019 December 31, 2018 Swap Cash flow (1) Swap Cash flow (1) Swap Cash flow (1) $ $ — $ — — — $ 75,000 50,000 25,000 150,000 2.8015 % 2.8030 % 2.8020 % 6/28/2019 6/28/2019 6/28/2019 6/28/2029 $ 6/28/2029 6/28/2029 $ — $ — — — $ (516) (350) (173) (1,039) (1) These interest rate swaps were entered into on December 24, 2018 to protect the Company against adverse fluctuations in interest rates by reducing exposure to variability in cash flows relating to interest payments on a forecasted issuance of long-term debt. On January 24, 2019, in conjunction with the issuance of the 2029 Notes, the Company settled these interest rate swaps for $0.8 million. The termination premium will be reclassified from accumulated other comprehensive loss as an increase to interest expense over the life of the 2029 Notes, which mature on February 15, 2029. The Company measured its derivative instruments at fair value and recorded them in the balance sheet as a liability. As of December 31, 2019, all derivative instruments had been settled. As of December 31, 2018, all derivative instruments were included in Accounts payable, F-35 accrued expenses and other liabilities on the accompanying consolidated balance sheets. The effective portions of changes in the fair value of the derivatives are reported in accumulated other comprehensive loss. Amounts reported in accumulated other comprehensive loss related to derivatives are reclassified to interest expense as interest payments are made on the Company’s 2029 Notes. The change in unrealized losses on interest rate swaps reflects a reclassification of $0.1 million of unrealized losses from accumulated other comprehensive loss as an increase to interest expense during 2019. The Company estimates that $0.1 million will be reclassified as an increase to interest expense in 2020. 11. FAIR VALUE MEASUREMENTS The Company applies the methods of determining fair value, as described in authoritative guidance, to value its financial assets and liabilities. As defined in the guidance, fair value is based on the price that would be received from the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In order to increase consistency and comparability in fair value measurements, the guidance establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three broad levels, which are described below: Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs. Level 2: Observable prices that are based on inputs not quoted on active markets, but corroborated by market data. Level 3: Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs. In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs, to the extent possible, as well as considering counterparty credit risk in its assessment of fair value. There were no financial assets or liabilities carried at fair value as of December 31, 2019. Financial assets and liabilities carried at fair value as of December 31, 2018 are classified in the table below in one of the three categories described above (dollars in thousands): Interest rate swap derivative liabilities Total liabilities at fair value Level 1 Level 2 (in thousands) Level 3 — $ 1,039 $ — — $ 1,039 $ — $ $ Financial assets and liabilities carried at fair value were classified as Level 2 inputs. For financial liabilities that utilize Level 2 inputs, the Company utilizes both direct and indirect observable price quotes, including LIBOR yield curves, bank price quotes for forward starting swaps, NYMEX futures pricing and common stock price quotes. Below is a summary of valuation techniques for Level 2 financial liabilities:  Interest rate swap derivative assets and liabilities — valued using LIBOR yield curves at the reporting date. Counterparties to these contracts are most often highly rated financial institutions, none of which experienced any significant downgrades that would reduce the amount owed by the Company. Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with the Company’s derivatives utilize Level 3 inputs, such as estimates of current credit spreads, to evaluate the likelihood of default by the Company and the counterparties. However, as of the reporting dates, the Company has assessed the significance of the effect of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation of its derivatives. As a result, the Company has determined that its derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy. The fair values of financial instruments, including cash and cash equivalents, accounts receivable and accounts payable approximate their respective carrying values as of December 31, 2019 and 2018. The aggregate carrying value of the Company’s debt was $1,931.8 million and $1,747.1 million as of December 31, 2019 and 2018, respectively. The estimated fair value of the Company’s debt was $2,037.6 million and $1,731.9 million as of December 31, 2019 and 2018, respectively. These estimates were based on a discounted cash flow analysis assuming market interest rates for comparable obligations as of December 31, 2019 and 2018. The Company estimates the fair value of its fixed-rate debt and the credit spreads over variable market rates on its variable-rate debt by discounting the future cash flows of each instrument at estimated market rates or credit spreads consistent with the maturity of the debt obligation with similar credit F-36 policies, which is classified within level 2 of the fair value hierarchy. Rates and credit spreads take into consideration general market conditions and maturity. 12. NONCONTROLLING INTERESTS Interests in Consolidated Joint Ventures Noncontrolling interests in subsidiaries represent the ownership interests of third parties in the Company’s consolidated joint ventures. The Company has determined that these ventures are variable interest entities, and that the Company is the primary beneficiary. Accordingly, the Company consolidates the assets, liabilities and results of operations of the joint ventures in the table below: Consolidated Joint Ventures Number of Stores Location Date Opened / CubeSmart Estimated Opening Ownership Interest December 31, 2019 Total Assets Total Liabilities CS Valley Forge Village Storage, LLC ("VFV") (1) Shirlington Rd II, LLC ("SH2") (2) CS 2087 Hempstead Tpk, LLC ("Hempstead") (3) CS SDP Newtonville, LLC ("Newton") (1) CS 1158 McDonald Ave, LLC ("McDonald Ave") (3) Shirlington Rd, LLC ("SH1") (2) 1 1 1 1 1 1 6 Arlington, VA King of Prussia, PA Q2 2021 (est.) Q1 2021 (est.) East Meadow, NY Q4 2020 (est.) Q3 2020 (est.) Q1 2020 (est.) Q2 2015 Newton, MA Brooklyn, NY Arlington, VA 70% 90% 51% 90% 51% 90% $ $ (in thousands) $ 4,279 8,965 12,538 10,351 41,995 14,905 93,033 $ 856 339 3,289 3,827 10,713 162 19,186 (1) The Company has a related party commitment to VFV and Newton to fund all or a portion of the construction costs. As of December 31, 2019, the Company has funded $3.1 million of a total $12.1 million loan commitment to Newton, which is included in the total liability amount within the table above. This loan and the related interest were eliminated for consolidation purposes. As of December 31, 2019, the Company had not funded any of its $12.4 million loan commitment to VFV. (2) On March 7, 2019, the Company acquired the noncontrolling member’s ownership interest in SH1, inclusive of its promoted interest in the venture, for $10.0 million. Prior to this transaction, the noncontrolling member’s interest was reported in Noncontrolling interests in subsidiaries on the consolidated balance sheets. Since the Company retained its controlling interest in the joint venture, this transaction was accounted for as an equity transaction. The carrying amount of the noncontrolling interest was reduced to zero to reflect the purchase and the $9.7 million difference between the purchase price paid by the Company and the carrying amount of the noncontrolling interest was recorded as an adjustment to equity attributable to the Company. In conjunction with the Company’s acquisition of the noncontrolling interest in SH1, the $12.2 million related party loan extended by the Company to the venture during the construction period was repaid in full. Subsequently, the noncontrolling member re- acquired a 10% interest in SH1 and a 10% interest in SH2 for a combined $4.8 million, which is included in Noncontrolling interests in subsidiaries on the consolidated balance sheets. (3) The noncontrolling members of Hempstead and McDonald Ave have the option to put their ownership interest in the ventures to the Company for $6.6 million and $10.0 million, respectively, within the one-year period after construction of each store is substantially complete. Additionally, the Company has a one-year option to call the ownership interest of the noncontrolling members of Hempstead and McDonald Ave for $6.6 million and $10.0 million, respectively, beginning on the second anniversary of the respective store’s construction being substantially complete. The Company, at its sole discretion, may pay cash and/or issue OP Units in exchange for the noncontrolling member’s interest in Hempstead and McDonald. The Company is accreting the respective liabilities during the development periods and, as of December 31, 2019, has accrued $2.8 million and $9.7 million related to Hempstead and McDonald Ave, respectively, which are included in Accounts payable, accrued expenses and other liabilities on the Company’s consolidated balance sheets. On May 30, 2019, the Company sold its 90% ownership interest in CS SJM E 92nd Street, LLC, a previously consolidated development joint venture, for $3.7 million. In conjunction with the sale, $0.7 million of the $1.7 million related party loan extended by the Company to the venture was repaid. The remaining $1.0 million was recorded as a note receivable and was repaid during the third quarter of 2019. Additionally, as a result of the transaction, the Company was released from its obligations under the venture’s ground lease, and right-of- use assets and lease liabilities totaling $13.4 million and $14.6 million, respectively, were removed from the Company’s consolidated balance sheets. F-37 Operating Partnership Ownership The Company follows guidance regarding the classification and measurement of redeemable securities. Under this guidance, securities that are redeemable for cash or other assets, at the option of the holder and not solely within the control of the issuer, must be classified outside of permanent equity/capital. This classification results in certain outside ownership interests being included as redeemable noncontrolling interests outside of permanent equity/capital in the consolidated balance sheets. The Company makes this determination based on terms in applicable agreements, specifically in relation to redemption provisions. Additionally, with respect to redeemable ownership interests in the Operating Partnership held by third parties for which CubeSmart has a choice to settle the redemption by delivery of its own shares, the Operating Partnership considered the guidance regarding accounting for derivative financial instruments indexed to, and potentially settled in, a company’s own shares, to evaluate whether CubeSmart controls the actions or events necessary to presume share settlement. The guidance also requires that noncontrolling interests classified outside of permanent capital be adjusted each period to the greater of the carrying value based on the accumulation of historical cost or the redemption value. Approximately 1.0% of the outstanding OP Units as of December 31, 2019 and 2018, were not owned by CubeSmart, the sole general partner. The interests in the Operating Partnership represented by these OP Units were a component of the consideration that the Operating Partnership paid to acquire certain self-storage properties. The holders of the OP Units are limited partners in the Operating Partnership and have the right to require CubeSmart to redeem all or part of their OP Units for, at the general partner’s option, an equivalent number of common shares of CubeSmart or cash based upon the fair value of an equivalent number of common shares of CubeSmart. However, the partnership agreement contains certain provisions that could result in a cash settlement outside the control of CubeSmart and the Operating Partnership, as CubeSmart does not have the ability to settle in unregistered shares. Accordingly, consistent with the guidance, the Operating Partnership records the OP Units owned by third parties outside of permanent capital in the consolidated balance sheets. Net income or loss related to the OP Units owned by third parties is excluded from net income or loss attributable to Operating Partner in the consolidated statements of operations. On December 16, 2019, the Company acquired a store in California for $18.5 million. In conjunction with the closing, the Company paid $14.9 million and issued 106,738 OP Units, valued at approximately $3.6 million, to pay the remaining consideration. On January 31, 2018, the Company acquired a store in Texas for $12.2 million and assumed an existing mortgage loan with an outstanding balance of approximately $7.2 million and immediately repaid the loan. In conjunction with the closing, the Company paid $0.2 million in cash and issued 168,011 OP Units, valued at approximately $4.8 million, to pay the remaining consideration. On April 12, 2017, the Company acquired a store in Illinois for $11.2 million. In conjunction with the closing, the Company paid $9.7 million and issued 58,400 Class C OP Units to pay the remaining consideration. On July 23, 2018, all of the 58,400 Class C OP Units were exchanged for an aggregate of 46,322 common units of the Operating Partnership. On May 9, 2017, the Company acquired a store in Maryland for $18.2 million and assumed an existing mortgage loan with an outstanding balance of approximately $5.9 million. In conjunction with the closing, the Company issued 440,160 OP Units, valued at approximately $12.3 million, to pay the remaining consideration. As of December 31, 2019 and 2018, 1,972,308 and 1,945,570 OP Units, respectively, were held by third parties. The per unit cash redemption amount of the outstanding OP Units was calculated based upon the average of the closing prices of the common shares of CubeSmart on the New York Stock Exchange for the final 10 trading days of the year. Based on the Company’s evaluation of the redemption value of the redeemable noncontrolling interests, the Company has reflected these interests at their redemption value as of December 31, 2019 and 2018. As of December 31, 2019 and 2018, the Operating Partnership recorded an increase to OP Units owned by third parties and a corresponding decrease to capital of $5.9 million and $0.3 million, respectively. F-38 13. LEASES CubeSmart as Lessor The Company derives revenue primarily from rents received from customers who rent cubes at its self-storage properties under month- to-month leases for personal or business use. The self-storage lease agreements utilized by the Company vary slightly to comply with state-specific laws and regulations, but generally provide for automatic monthly renewals, flexibility to increase rental rates over time as market conditions permit and the collection of contingent fees such as administrative and late fees. None of the self-storage lease agreements contain options that allow the customer to purchase the leased space at any time during, or at the expiration of, the lease term. All self-storage leases in which the Company serves as lessor have been classified as operating leases. Accordingly, storage cubes are carried at historical cost less accumulated depreciation and impairment, if any, and are included in Storage properties on the Company’s consolidated balance sheets. Operating lease income for amounts received under the Company’s self-storage lease agreements is recognized on a straight-line basis which, due to the month-to-month nature of the leases, results in the recognition of income during the initial term and each subsequent monthly renewal using the then-in-place rent amount. Operating lease income is included in Rental income within the Company’s consolidated statements of operations. Variable lease income related to the Company’s self-storage lease agreements consists of administrative and late fees charged to customers. For the year ended December 31, 2019, administrative and late fees totaled $22.6 million and are included in Other property related income within the Company’s consolidated statements of operations. CubeSmart as Lessee The Company serves as lessee in lease agreements for land, office space, automobiles and certain equipment, which have remaining lease terms ranging from one year to 45 years. Certain of the Company’s leases contain provisions that (1) provide for one or more options to renew, with renewal options that can extend the lease term from one year to 69 years, (2) allow for early termination at certain points during the lease term and/or (3) give the Company the option to purchase the leased property. In all cases, the exercise of the lease renewal, termination and purchase options, if provided for in the lease, are at the Company’s sole discretion. Certain of the Company’s lease agreements, particularly its land leases, require rental payments that are periodically adjusted for inflation using a defined index. None of the Company’s lease agreements contain any material residual value guarantees or material restrictive covenants. As a result of the Company’s election of the package of practical expedients permitted within ASC 842, which among other things, allows for the carryforward of historical lease classification, all of the Company’s lease agreements have been classified as operating leases. Lease expense for payments related to the Company’s operating leases is recognized on a straight-line basis over the related lease term, which includes options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Right-of-use assets represent the Company’s right to use an underlying asset during the lease term and lease liabilities represent the Company’s obligation to make lease payments as specified in the lease. Right-of-use assets and lease liabilities related to the Company’s operating leases are recognized at the lease commencement date based on the present value of the remaining lease payments over the lease term. As the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available surrounding the Company’s unsecured borrowing rates and implied secured spread at the lease commencement date in determining the present value of lease payments. The right-of-use asset also includes any lease payments made at or before lease commencement less any lease incentives. Upon adoption of ASC 842 on January 1, 2019, the Company had right-of-use assets and lease liabilities related to its operating leases of $55.7 million and $60.7 million, respectively. As of December 31, 2019, the Company had right-of-use assets and lease liabilities related to its operating leases of $41.7 million and $46.4 million, which are included in Other assets, net and Accounts payable, accrued expenses and other liabilities on the Company’s consolidated balance sheets, respectively. As of December 31, 2019, the Company’s weighted average remaining lease term and weighted average discount rate related to its operating leases were 35.9 years and 4.74%, respectively. For the year ended December 31, 2019, the Company’s lease cost consists of the following components, each of which is included in Property operating expenses within the Company’s consolidated statements of operations: Operating lease cost Short-term lease cost (1) Total lease cost For the year ended December 31, 2019 (in thousands) $ $ 3,304 1,227 4,531 F-39 (1) Represents automobile leases that have a lease term of 12 months. The Company has made an accounting policy election not to apply the recognition requirements of ASC 842 to this asset class. The lease cost associated with these leases is recognized on a straight-line basis over the related lease term. The following table represents the future operating lease liability maturities as of December 31, 2019 (in thousands): 2020 2021 2022 2023 2024 2025 and thereafter Total operating lease payments Less: Imputed interest Present value of operating lease liabilities $ $ 2,273 2,302 2,459 2,523 2,373 91,241 103,171 (56,780) 46,391 During the year ended December 31, 2019, the cash paid for amounts included in the measurement of lease liabilities related to the Company’s operating leases was approximately $2.5 million, which is included as an operating cash outflow within the consolidated statements of cash flows. As of December 31, 2019, the Company has not entered into any lease agreements that are set to commence in the future. 14. RELATED PARTY TRANSACTIONS The Company provides management services to certain joint ventures and other related parties. Management agreements provide for fee income to the Company based on a percentage of revenues at the managed stores. Total management fees for unconsolidated real estate ventures or other entities in which the Company held an ownership interest for the years ending December 31, 2019, 2018 and 2017 were $4.0 million, $4.5 million and $3.8 million, respectively. The management agreements for certain joint ventures, other related parties and third-party stores provide for the reimbursement to the Company for certain expenses incurred to manage the stores. These reimbursements consist of amounts due for management fees, payroll and other store expenses. The amounts due to the Company were $10.5 million and $10.6 million as of December 31, 2019 and 2018, respectively, and are included in Other Assets, net on the Company’s consolidated balance sheets. Additionally, as discussed in note 12, the Company had outstanding mortgage loans receivable from consolidated joint ventures of $3.1 million and $33.2 million as of December 31, 2019 and 2018, respectively, which are eliminated for consolidation purposes. The Company believes that all of these related-party receivables are fully collectible. The HVP III, HVP IV and HHFNE operating agreements provide for acquisition, disposition and other fees payable from HVP III, HVP IV and HHFNE to the Company upon the closing of a property transaction by HVP III, HVP IV and HHFNE, or any of their subsidiaries and completion of certain measures as defined in the operating agreements. The Company recognized $2.1 million, $0.6 million and $0.5 million in fees associated with property transactions during the years ended December 31, 2019, 2018 and 2017, respectively, which are included in Other income on the consolidated statements of operations. 15. COMMITMENTS AND CONTINGENCIES Development Commitments The Company has agreements with developers for the construction of five new self-storage properties (see note 4), which will require payments of approximately $56.7 million, due in installments upon completion of certain construction milestones, during 2020 and 2021. Litigation The Company is involved in claims from time to time, which arise in the ordinary course of business. In accordance with applicable accounting guidance, management establishes an accrued liability for claim expenses, insurance retention and litigation costs when those matters present loss contingencies that are both probable and reasonably estimable. In such cases, there may be exposure to loss in excess of those amounts accrued. The estimated loss, if any, is based upon currently available information and is subject to significant judgment, a variety of assumptions and known and unknown uncertainties. In the opinion of management, the Company has made adequate F-40 provisions for potential liabilities, arising from any such matters, which are included in Accounts payable, accrued expenses and other liabilities on the Company’s consolidated balance sheets. On January 11, 2019, a settlement agreement was entered into for a class action alleging violation of a state specific deceptive and unfair trade practices act. During the year ended December 31, 2018, the Company recorded a $1.8 million charge related to this legal action, which is included in General and administrative on the Company’s consolidated statements of operations. On August 2, 2019, the court granted final approval of the settlement for the class action. 16. SHARE-BASED COMPENSATION PLANS On June 1, 2016 the Company’s shareholders approved an amendment and restatement of the Company’s 2007 Equity Incentive Plan, a share-based employee compensation plan originally approved by shareholders on May 8, 2007 and subsequently amended with shareholder approval on June 2, 2010 (as amended and restated, the “2007 Plan”). The purpose of the 2007 Plan is to attract and retain highly qualified executive officers, Trustees and key employees and other persons and to motivate such officers, Trustees, key employees and other persons to serve the Company and its affiliates to expend maximum effort to improve the business results and earnings of the Company, by providing to such persons an opportunity to acquire or increase a direct proprietary interest in the operations and future success of the Company. To this end, the 2007 Plan provides for the grant of share options, share appreciation rights, restricted shares, restricted share units, performance awards, which may be denominated in cash or shares, included restricted shares and restricted share units, and other share-based awards, including unrestricted common shares or awards denominated or payable in, or valued in whole or part by reference to, common shares. Any of these awards may, but need not, be made as performance incentives to reward attainment of annual or long-term performance goals. Share options granted under the 2007 Plan may be non-qualified share options or incentive share options. Upon shareholder approval of the amendment and restatement of the 2007 Plan on June 1, 2016, 4,500,000 additional common shares were made available for award under the 2007 Plan. As a result, these 4,500,000 additional shares, together with the 991,117 shares that remained available for future awards under the 2007 Plan at the time of the shareholder approval, plus any common shares that are restored to availability upon expiration or forfeiture of outstanding options or restricted share awards, would constitute the “Aggregate Share Reserve”. As of December 31, 2019: (i) 4,015,223 common shares remained available for future awards under the 2007 Plan; (ii) 547,266 unvested restricted share awards were outstanding under the 2007 Plan; and (iii) 1,602,353 common shares were subject to outstanding options under the 2007 Plan (with the outstanding options having a weighted average exercise price of $24.10 per share and a weighted average term to maturity of 6.26 years). Prior to the June 1, 2016 amendment, the 2007 Plan used a “Fungible Units” methodology for computing the maximum number of common shares available for issuance under the 2007 Plan. The Fungible Units methodology assigned weighted values to different types of awards under the 2007 Plan without assigning specific numerical limits for different types of awards. As amended on June 1, 2016, the 2007 Plan provides that any common shares made the subject of awards under the 2007 Plan will count against the Aggregate Share Reserve as one (1) unit. The Aggregate Share Reserve and the computation of the number of common shares available for issuance is subject to adjustment upon certain corporate transactions or events, including share splits, reverse share splits and recapitalizations. The number of shares counted against the Aggregate Share Reserve includes the full number of shares subject to the award, and is not reduced in the event shares are withheld to fund withholding tax obligations, or, in the case of options and share appreciation rights, where shares are applied to pay the exercise price. If an option or other award granted under the 2007 Plan expires, is forfeited or otherwise terminates, the common shares subject to any portion of the award that expires, is forfeited or that otherwise terminates, as the case may be, again becomes available for issuance under the 2007 Plan. The 2007 Plan is administered by the Compensation Committee of the Company’s Board of Trustees (the “Compensation Committee”), which is appointed by the Board of Trustees. The Compensation Committee interprets the 2007 Plan and, subject to its right to delegate authority to grant awards, determines the terms and provisions of option grants and share awards. Subject to adjustment upon certain corporate transactions or events, a participant (other than a non-employee trustee) may not receive awards under the 2007 Plan in any one calendar year covering more than 1,000,000 shares. Subject to adjustment upon certain corporate transactions or events, a non-employee trustee may not receive awards under the 2007 Plan in any one calendar year covering more than 250,000 shares. Under the 2007 Plan, the Compensation Committee determines the vesting schedule of each share award and option, subject to a one- year minimum vesting requirement, but with permitted acceleration of vesting in the event of a participant’s death or disability, or in the event of a change in control or certain changes in our capital structure. Notwithstanding the foregoing one-year minimum vesting limitation, up to five percent of the shares subject to the Aggregate Share Reserve may be subject to awards that are not subject to such F-41 limitation. The exercise price for options is equivalent to the fair value of the underlying common shares at the grant date. The Compensation Committee also determines the term of each option, which shall not exceed 10 years from the grant date. On October 19, 2004, the Company’s sole shareholder approved a share-based employee compensation plan, the 2004 Equity Incentive Plan (the “2004 Plan”). The 2004 Plan expired in October 2014. Prior to its expiration, a total of 3.0 million common shares were reserved for issuance under the 2004 Plan. Subsequent to its expiration, no new equity awards may be granted under the 2004 Plan, and to the extent that options expire unexercised or are terminated, surrendered or canceled, the options and share awards no longer become available for future grants under the 2004 Plan. Share Options The fair values for options granted in 2019, 2018 and 2017 were estimated at the time the options were granted using the Black-Scholes option-pricing model applying the following weighted average assumptions: Assumptions: 2019 2018 2017 Risk-free interest rate Expected dividend yield Volatility (1) Weighted average expected life of the options (2) Weighted average grant date fair value of options granted per 2.7 % 3.9 % 32.00 % 6.0 years 2.5 % 3.7 % 32.00 % 6.0 years 2.2 % 3.5 % 33.00 % 6.0 years share $ 6.35 $ 6.24 $ 6.12 (1) Expected volatility is based upon the level of volatility historically experienced. (2) Expected life is based upon our expectations of share option recipients’ expected exercise and termination patterns. The Black-Scholes option-pricing model was developed for use in estimating the fair value of traded options. In addition, option-pricing models require the input of highly subjective assumptions, including the expected share price volatility. Volatility for the 2019, 2018 and 2017 grants was based on the trading history of the Company’s shares. In 2019, 2018 and 2017, the Company recognized compensation expense related to options issued to employees and executives of approximately $1.8 million, $1.5 million and $1.5 million, respectively, which is included in General and administrative expense on the Company’s consolidated statements of operations. During 2019, 324,409 share options were issued for which the fair value of the options at their respective grant dates was approximately $2.1 million. The share options vest over three years. As of December 31, 2019, the Company had approximately $2.0 million of unrecognized option compensation cost related to all grants that will be recorded over the next three years. The table below summarizes the option activity under the 2004 Plan and the 2007 Plan for the years ended December 31, 2019, 2018 and 2017: Balance at December 31, 2016 Options granted Options exercised Balance at December 31, 2017 Options granted Options canceled Options exercised Balance at December 31, 2018 Options granted Options exercised Balance at December 31, 2019 Vested or expected to vest at December 31, 2019 Exercisable at December 31, 2019 Number of Shares Weighted Average Remaining Under Option Strike Price Contractual Term Weighted Average 1,939,690 $ 289,104 (395,621) 1,833,173 $ 305,805 (74,748) (405,227) 1,659,003 $ 324,409 (381,059) 1,602,353 $ 1,602,353 $ 1,015,950 $ 12.94 26.30 5.98 16.55 27.85 26.95 9.47 19.89 28.69 9.67 24.10 24.10 21.81 4.85 9.07 1.14 5.26 9.08 — 1.98 5.52 9.01 1.00 6.26 6.26 5.00 F-42 As of December 31, 2019, the aggregate intrinsic value of options outstanding, of options that vested or are expected to vest, and of options that were exercisable was approximately $11.8 million. The aggregate intrinsic value of options exercised was approximately $9.1 million for the year ended December 31, 2019. Restricted Shares The Company applies the fair value method of accounting for contingently issued shares. As such, each grant is recognized ratably over the related vesting period. There were 180,607 restricted shares and share units issued during the year ended December 31, 2019, which vest over three to five years. The fair value of the restricted shares and share units issued during the year ended December 31, 2019 was approximately $5.8 million at their respective grant dates. There were 165,551 restricted shares and share units issued during the year ended December 31, 2018 for which the fair value of the restricted shares and share units at their respective grant dates was approximately $4.9 million. As of December 31, 2019 the Company had approximately $5.7 million of remaining unrecognized restricted share and share unit compensation costs that will be recognized over the next five years. Restricted share awards are considered to be performance awards and are valued using the share price on the grant date. The compensation expense recognized related to these awards and remaining unrecognized compensation costs are included in the amounts disclosed above. In 2019, 2018 and 2017, the Company recognized compensation expense related to restricted shares and share units issued to employees and Trustees of approximately $4.9 million, $4.0 million and $4.1 million, respectively; these amounts were recorded in general and administrative expense. The following table presents non-vested restricted share and share unit activity during 2019: Non-Vested at January 1, 2019 Granted Vested Forfeited Non-Vested at December 31, 2019 Number of Non- Vested Restricted Shares and Share Units 382,600 180,607 (66,392) (6,851) 489,964 On January 1, 2019, 55,168 restricted share units were granted to certain executives. The restricted share units were granted in the form of deferred share units with a market condition, entitling the holders thereof to receive common shares at a future date. The deferred share units will be awarded based on the Company’s total return to shareholders with respect to a specified peer group consisting of publicly traded REITs over a three-year period. The fair value of the restricted share units on the grant date was approximately $2.1 million. The Company used a Monte Carlo simulation analysis to estimate the fair value of the awards. The restricted share units will cliff vest upon the third anniversary of the effective date, or December 31, 2021. The compensation expense recognized related to these awards and remaining unrecognized compensation costs are included in the amounts disclosed above. On January 23, 2018, 66,872 restricted share units were granted to certain executives. The restricted share units were granted in the form of deferred share units with a market condition, entitling the holders thereof to receive common shares at a future date. The deferred share units will be awarded based on the Company’s total return to shareholders with respect to a specified peer group consisting of publicly traded REITs over a three-year period. The fair value of the restricted share units on the grant date was approximately $1.9 million. The Company used a Monte Carlo simulation analysis to estimate the fair value of the awards. The restricted share units will cliff vest upon the third anniversary of the effective date, or December 31, 2020. The compensation expense recognized related to these awards and remaining unrecognized compensation costs are included in the amounts disclosed above. On January 23, 2017, 52,426 restricted share units were granted to certain executives. The restricted share units were granted in the form of deferred share units with a market condition, entitling the holders thereof to receive common shares at a future date. The deferred share units will be awarded based on the Company’s total return to shareholders with respect to a specified peer group consisting of publicly traded REITs over a three-year period. The fair value of the restricted share units on the grant date was approximately $1.8 million. The Company used a Monte Carlo simulation analysis to estimate the fair value of the awards. The restricted share units will cliff vest upon the third anniversary of the effective date, or December 31, 2019. The compensation expense recognized related to these awards and remaining unrecognized compensation costs are included in the amounts disclosed above. F-43 17. EARNINGS PER SHARE AND UNIT AND SHAREHOLDERS’ EQUITY AND CAPITAL Earnings per common share and shareholders’ equity The following is a summary of the elements used in calculating basic and diluted earnings per common share: Net income Noncontrolling interests in the Operating Partnership Noncontrolling interest in subsidiaries $ Net income attributable to the Company’s common shareholders $ Weighted average basic shares outstanding Share options and restricted share units Weighted average diluted shares outstanding (1) For the year ended December 31, 2018 2017 2019 (dollars and shares in thousands, except per share amounts) 170,771 $ (1,708) 54 169,117 $ 165,488 $ (1,820) 221 163,889 $ 190,874 702 191,576 184,653 842 185,495 135,611 (1,593) 270 134,288 180,525 923 181,448 Basic earnings per share attributable to common shareholders Diluted earnings per share attributable to common shareholders $ $ 0.89 $ 0.88 $ 0.89 $ 0.88 $ 0.74 0.74 Earnings per common unit and capital The following is a summary of the elements used in calculating basic and diluted earnings per common unit: Net income Operating Partnership interests of third parties Noncontrolling interest in subsidiaries Net income attributable to common unitholders Weighted average basic units outstanding Unit options and restricted share units Weighted average diluted units outstanding (1) For the year ended December 31, 2018 2017 2019 (dollars and units in thousands, except per unit amounts) $ $ 170,771 $ (1,708) 54 169,117 $ 165,488 $ (1,820) 221 163,889 $ 190,874 702 191,576 184,653 842 185,495 135,611 (1,593) 270 134,288 180,525 923 181,448 Basic earnings per unit attributable to common unitholders Diluted earnings per unit attributable to common unitholders $ $ 0.89 $ 0.88 $ 0.89 $ 0.88 $ 0.74 0.74 (1) For the years ended December 31, 2019, 2018 and 2017, the Company declared cash dividends per common share/unit of $1.29, $1.22, and $1.11, respectively. The OP units and common units have essentially the same economic characteristics as they share equally in the total net income or loss and distributions of the Operating Partnership. An Operating Partnership unit may be redeemed for cash, or at the Company’s option, common units on a one-for-one basis. Outstanding noncontrolling interest units in the Operating Partnership were 1,972,308; 1,945,570 and 1,878,253 as of December 31, 2019, 2018 and 2017, respectively. There were 193,557,024; 187,145,103 and 182,215,735 common units outstanding as of December 31, 2019, 2018 and 2017, respectively. Common Shares The Company maintains an at-the-market equity program that enables it to offer and sell up to 50.0 million common shares through sales agents pursuant to equity distribution agreements (the “Equity Distribution Agreements”). The Company’s sales activity under the program for the years ended December 31, 2019, 2018 and 2017 is summarized below: F-44  For the year ended December 31, 2018 (dollars and shares in thousands, except per share amounts) 2019 2017 Number of shares sold Average sales price per share Net proceeds after deducting offering costs $ $ 5,899 33.64 $ 196,304 $ 4,291 31.09 $ 131,835 $ 1,036 29.13 29,642 The proceeds from the sales of common shares under the program during the years ended December 31, 2019, 2018 and 2017 were used to fund acquisitions of storage properties and for general corporate purposes. As of December 31, 2019, 2018 and 2017, 4.6 million common shares, 10.5 million common shares and 4.7 million common shares, respectively, remained available for issuance under the Equity Distribution Agreements. 18. INCOME TAXES Deferred income taxes are established for temporary differences between the financial reporting basis and tax basis of assets and liabilities at the enacted tax rates expected to be in effect when the temporary differences reverse. A valuation allowance for deferred tax assets is provided if the Company believes that it is more likely than not that all or some portion of the deferred tax asset will not be realized. No valuation allowance was recorded as of December 31, 2019 or 2018. As of December 31, 2019 and 2018, the Company had net deferred tax assets of $0.8 million and $1.4 million, respectively, which are included in Other assets, net on the Company’s consolidated balance sheets. The Company believes it is more likely than not the deferred tax assets will be realized. 19. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) The following is a summary of quarterly financial information for the years ended December 31, 2019 and 2018: Total revenues Total operating expenses Net income Net income attributable to the Company's common shareholders Basic earnings per share attributable to common shareholders Diluted earnings per share attributable to common shareholders March 31, 2019 June 30, 2019 September 30, December 31, 2019 2019 Three months ended $ (in thousands, except per share amounts) 152,845 $ 99,014 35,786 35,498 0.19 0.19 159,017 $ 100,583 49,878 49,420 0.26 0.26 166,547 $ 106,855 42,597 42,154 0.22 0.22 165,506 105,394 42,510 42,045 0.22 0.22 March 31, 2018 June 30, 2018 September 30, December 31, 2018 2018 Three months ended Total revenues Total operating expenses Net income Net income attributable to the Company's common shareholders Basic earnings per share attributable to common shareholders Diluted earnings per share attributable to common shareholders $ (in thousands, except per share amounts) 142,877 $ 92,464 34,799 34,423 0.19 0.19 147,815 $ 92,915 38,751 38,410 0.21 0.21 153,370 $ 93,774 43,302 42,900 0.23 0.23 153,882 98,775 48,636 48,156 0.26 0.26 The sum of quarterly earnings per share amounts do not necessarily equal the full year amounts. F-45 CUBESMART SCHEDULE III REAL ESTATE AND RELATED DEPRECIATION December 31, 2019 (dollars in thousands) Initial Cost Buildings & Costs Subsequent to Gross Carrying Amount at December 31, 2019 Buildings Accumulated Depreciation (A) Description Chandler I, AZ Chandler II, AZ Gilbert I, AZ Gilbert II, AZ Glendale, AZ Green Valley, AZ Mesa I, AZ Mesa II, AZ Mesa III, AZ Peoria, AZ Phoenix III, AZ Phoenix IV, AZ Queen Creek, AZ Scottsdale, AZ Surprise , AZ Tempe I, AZ Tempe II, AZ Tucson I, AZ Tucson II, AZ Tucson III, AZ Tucson IV, AZ Tucson V, AZ Tucson VI, AZ Tucson VII, AZ Tucson VIII, AZ Tucson IX, AZ Tucson X, AZ Tucson XI, AZ Tucson XII, AZ Tucson XIII, AZ Tucson XIV, AZ Benicia, CA Citrus Heights, CA Corona, CA Diamond Bar, CA Escondido, CA Fallbrook, CA Fremont, CA Lancaster, CA Long Beach I, CA Long Beach II, CA Los Angeles, CA Murrieta, CA North Highlands, CA Ontario, CA Orangevale, CA Pleasanton, CA Rancho Cordova, CA Rialto I, CA Rialto II, CA Riverside I, CA Riverside II, CA Roseville, CA Sacramento I, CA Sacramento II, CA San Bernardino I, CA San Bernardino II, CA San Bernardino III, CA San Bernardino IV, CA San Bernardino V, CA San Bernardino VII, CA San Bernardino VIII, CA San Diego, CA San Marcos, CA Santa Ana, CA South Sacramento, CA Spring Valley, CA Temecula I, CA Temecula II, CA Vista I, CA Vista II, CA Walnut, CA West Sacramento, CA Westminster, CA Aurora, CO Centennial, CO Colorado Springs I, CO Colorado Springs II, CO Denver I, CO Denver II, CO Denver III, CO Federal Heights, CO Golden, CO Littleton, CO Northglenn, CO Square Footage 47,880 82,915 57,100 115,430 56,807 25,050 52,575 45,511 59,209 110,810 121,880 69,710 94,462 67,575 72,475 77,330 68,409 59,800 43,950 49,820 48,040 45,184 40,766 52,663 46,650 67,496 46,350 42,700 42,275 45,800 48,995 74,770 75,620 95,124 103,528 143,645 45,926 51,189 60,475 124,541 70,630 76,818 49,775 57,094 93,540 50,542 83,600 53,978 57,391 99,783 67,320 85,101 59,944 50,764 111,565 31,070 41,426 35,416 83,352 56,803 78,695 111,833 87,412 37,425 63,831 52,390 55,085 81,340 84,520 74,238 147,723 50,664 39,765 68,393 75,717 62,400 47,975 62,400 59,200 74,420 76,025 54,770 87,800 53,490 43,102 Encumbrances Land 327 1,518 951 1,199 201 298 920 731 706 1,436 2,115 930 1,159 443 584 941 588 188 188 532 674 515 440 670 589 724 424 439 671 587 707 2,392 1,633 2,107 2,522 3,040 133 1,158 390 3,138 3,424 23,289 1,883 868 1,705 1,423 2,799 1,094 899 277 1,351 1,170 1,284 1,152 2,085 51 112 98 1,872 783 1,475 1,691 1,185 775 1,223 790 1,178 660 3,080 711 4,629 1,578 1,222 1,740 1,343 1,281 771 657 673 1,430 1,828 878 1,683 1,268 862 Improvements Acquisition 551 229 205 171 1,301 259 403 311 505 255 336 111 94 1,793 128 784 2,162 1,157 1,150 391 411 420 291 406 448 516 387 444 415 365 502 499 277 224 341 319 1,896 188 1,135 1,104 1 137 325 591 470 380 481 433 304 1,855 645 547 478 486 638 1,201 1,393 1,350 245 680 482 721 18 218 493 482 947 1,088 887 2,363 219 486 237 396 611 111 456 287 501 183 92 347 591 404 589 1,257 7,485 4,688 11,846 2,265 1,153 2,739 2,176 2,101 7,082 10,429 12,277 5,716 4,879 3,761 3,283 2,898 2,078 2,078 2,048 2,595 1,980 1,692 2,576 2,265 2,786 1,633 1,689 2,582 2,258 2,721 7,028 4,793 10,385 7,404 11,804 1,492 5,711 2,247 14,368 13,987 25,867 5,532 2,546 8,401 4,175 8,222 3,212 4,118 3,098 6,183 5,359 3,767 3,380 6,750 572 1,251 1,093 5,391 3,583 6,753 7,741 16,740 2,288 5,600 2,319 5,394 4,735 5,839 4,076 13,599 4,635 3,590 5,142 2,986 8,958 1,717 2,674 2,741 7,053 12,109 1,953 3,744 2,820 1,917 Land 327 1,518 951 1,199 418 298 921 731 706 1,436 2,115 930 1,159 883 584 941 588 384 391 533 675 515 430 670 589 725 425 439 672 587 708 2,392 1,634 2,107 2,524 3,040 432 1,158 556 3,138 3,424 23,289 1,903 868 1,705 1,423 2,799 1,095 899 672 1,351 1,170 1,284 1,152 2,086 182 306 242 1,872 783 1,290 1,692 1,186 776 1,223 791 1,178 899 3,080 1,118 4,629 1,595 1,222 1,743 1,343 1,281 771 656 646 1,430 1,828 879 1,684 1,268 662 F-46 & Improvements Total 1,958 1,631 9,231 7,713 5,844 4,893 13,216 12,017 3,420 3,002 1,499 1,201 3,617 2,696 2,889 2,158 2,928 2,222 8,773 7,337 12,880 10,765 13,318 12,388 6,969 5,810 6,438 5,555 4,473 3,889 4,698 3,757 5,648 5,060 3,115 2,731 3,134 2,743 2,611 2,078 3,261 2,586 2,558 2,043 2,115 1,685 3,237 2,567 2,950 2,361 3,505 2,780 2,135 1,710 2,279 1,840 3,239 2,567 2,840 2,253 3,378 2,670 8,825 6,433 5,926 4,292 12,715 10,608 9,158 6,634 12,803 9,763 3,277 2,845 7,057 5,899 3,202 2,646 16,674 13,536 17,412 13,988 49,293 26,004 6,894 4,991 3,544 2,676 10,575 8,870 5,300 3,877 10,259 7,460 4,196 3,101 4,748 3,849 4,828 4,156 7,347 5,996 6,272 5,102 4,931 3,647 4,452 3,300 8,807 6,721 1,623 1,441 2,407 2,101 2,187 1,945 6,293 4,421 4,514 3,731 7,777 6,487 8,202 6,510 17,943 16,757 2,911 2,135 6,538 5,315 3,172 2,381 6,775 5,597 5,876 4,977 8,870 5,790 6,223 5,105 16,384 11,755 5,977 4,382 4,481 3,259 6,394 4,651 4,390 3,047 10,350 9,069 2,598 1,827 3,109 2,453 3,409 2,763 8,665 7,235 14,029 12,201 2,780 1,901 5,347 3,663 3,982 2,714 2,952 2,290 Year Acquired/ Developed 2005 2013 2013 2016 1998 2005 2006 2006 2006 2015 2014 2016 2015 1998 2015 2005 / 2019 2013 1998 1998 2005 2005 2005 2005 2005 2005 2005 2005 2005 2005 2005 2005 2005 2005 2014 2005 2007 1997 2014 2001 2006 2019 2018 2005 2005 2014 2005 2005 2005 2006 1997 2006 2006 2005 2005 2005/2017 1997 1997 1997 2005 2006 2006 2006 2018 2005 2006 2005 2006 1998 2007 2001 2005 2005 2005 2005 2005 2016 2005 2006 2006 2012 2016 2005 2005 2005 2005 752 1,544 1,048 1,098 1,555 520 1,241 1,022 979 1,087 1,999 1,141 892 2,949 511 1,063 1,237 1,435 1,412 914 1,169 935 767 1,176 1,063 1,269 754 908 1,145 1,056 1,247 2,856 2,007 1,736 3,074 3,765 1,503 1,134 1,192 5,917 — 868 2,256 1,217 1,486 1,814 3,288 1,421 1,690 2,279 2,655 2,233 1,722 1,493 1,999 748 1,092 1,032 1,694 1,658 2,889 2,951 595 981 2,354 1,062 2,484 2,328 2,144 2,347 5,363 1,957 1,505 2,204 1,321 978 813 1,110 1,202 1,688 1,245 835 1,624 1,165 925 Initial Cost Buildings & Costs Subsequent to Gross Carrying Amount at December 31, 2019 Buildings & Accumulated Depreciation (A) Description Bloomfield, CT Branford, CT Bristol, CT East Windsor, CT Enfield, CT Gales Ferry, CT Manchester I, CT Manchester II, CT Manchester III, CT Milford, CT Monroe, CT Mystic, CT Newington I, CT Newington II, CT Norwalk I, CT Norwalk II, CT Old Saybrook I, CT Old Saybrook II, CT Shelton, CT South Windsor, CT Stamford, CT Wilton, CT Washington I, DC Washington II, DC Washington III, DC Washington IV, DC Washington V, DC Boca Raton, FL Boynton Beach I, FL Boynton Beach II, FL Boynton Beach III, FL Boynton Beach IV, FL Bradenton I, FL Bradenton II, FL Cape Coral I, FL Cape Coral II, FL Coconut Creek I, FL Coconut Creek II, FL Dania Beach, FL Dania, FL Davie, FL Deerfield Beach, FL Delray Beach I, FL Delray Beach II, FL Delray Beach III, FL Delray Beach IV, FL Ft. Lauderdale I, FL Ft. Lauderdale II, FL Ft. Myers I, FL Ft. Myers II, FL Ft. Myers III, FL Ft. Myers IV, FL Ft. Myers V, FL Jacksonville I, FL Jacksonville II, FL Jacksonville III, FL Jacksonville IV, FL Jacksonville V, FL Jacksonville VI, FL Kendall, FL Lake Worth I, FL Lake Worth II, FL Lake Worth III, FL Lakeland, FL Leisure City, FL Lutz I, FL Lutz II, FL Margate I, FL Margate II, FL Merritt Island, FL Miami I, FL Miami II, FL Miami III, FL Miami IV, FL Miramar, FL Naples I, FL Naples II, FL Naples III, FL Naples IV, FL New Smyrna Beach, FL North Palm Beach, FL Oakland Park, FL Ocoee, FL Orange City, FL Orlando II, FL Orlando III, FL Orlando IV, FL Orlando V, FL Orlando VI, FL Orlando VII, FL Oviedo, FL Palm Coast I, FL Palm Coast II, FL Square Footage 48,700 50,629 50,925 45,816 52,875 54,905 46,925 52,725 60,113 44,885 63,700 50,850 42,270 35,640 30,181 82,225 87,000 26,425 78,405 72,075 28,907 84,515 62,685 82,452 78,215 72,298 114,200 37,968 61,725 61,514 67,368 76,514 68,389 88,063 76,857 67,955 78,846 90,147 180,888 58,315 80,985 57,280 67,563 75,770 94,257 97,208 70,343 49,662 67,504 83,325 81,554 69,682 62,370 79,735 64,970 65,840 95,525 82,573 67,375 75,495 158,778 86,920 92,510 49,079 56,185 71,595 69,232 53,660 65,380 50,171 46,500 67,160 151,620 76,695 80,080 48,100 65,850 80,205 40,625 81,454 45,825 63,706 76,150 59,580 63,184 101,190 76,801 75,377 67,275 78,705 49,276 47,400 122,490 Improvements Acquisition 2,422 1,727 431 568 477 1,686 552 410 175 1,364 942 2,171 294 361 66 462 713 288 546 1,555 195 798 1,025 463 107 160 170 1,662 1,957 469 266 162 434 1,191 2,595 108 201 210 1,804 1,768 1,357 2,041 847 278 182 23 2,522 105 993 182 181 164 124 199 218 1,058 1,218 450 152 493 7,795 203 243 1,300 198 438 416 2,345 2,188 711 1,889 1,864 898 1,047 151 2,759 4,387 4,302 693 203 57 43 238 362 259 811 203 143 158 1 637 123 432 880 2,433 3,161 1,294 2,424 2,697 3,096 1,730 3,308 1,050 3,483 1,645 1,840 1,584 3,187 15,422 5,374 1,973 9,032 1,127 3,374 12,261 12,759 13,612 15,438 20,417 18,770 3,054 3,796 2,968 6,037 7,171 3,324 5,561 2,769 5,387 5,863 9,549 10,324 2,068 7,183 2,999 4,539 4,718 10,286 14,384 3,646 4,250 3,329 5,080 5,658 8,287 7,763 5,362 7,004 7,409 8,049 8,210 3,725 8,106 6,597 7,654 4,716 896 2,018 2,478 2,868 1,763 1,473 2,983 1,999 2,544 13,185 10,494 5,944 1,010 1,652 1,561 2,980 6,215 7,649 10,145 3,705 3,209 4,576 7,768 3,587 4,685 3,154 9,142 2,824 2,735 7,450 Land 360 504 1,819 744 473 489 563 996 671 274 2,004 410 1,059 911 646 1,171 3,092 1,135 1,613 272 1,941 2,421 894 3,154 4,469 6,359 13,917 813 958 1,030 1,225 1,455 1,180 1,931 830 1,093 1,189 1,937 3,584 481 1,373 1,311 883 957 2,086 2,208 1,384 862 328 1,030 1,148 992 950 1,862 950 1,670 1,651 1,220 755 2,350 354 1,552 957 256 409 901 992 399 383 796 484 561 4,577 1,963 1,206 270 558 598 407 1,261 1,374 3,007 1,286 1,191 1,589 1,209 633 950 640 896 440 555 1,511 Encumbrances Land 78 217 1,819 744 424 240 540 996 671 87 2,004 136 1,059 911 646 1,171 3,092 1,135 1,613 90 1,941 2,409 871 3,152 4,469 6,359 13,908 529 667 1,030 1,225 1,455 1,180 1,931 472 1,093 1,189 1,937 3,584 205 1,268 946 798 957 2,086 2,208 937 862 303 1,030 1,148 992 950 1,862 950 860 870 1,220 755 2,350 183 1,552 957 81 409 901 992 161 132 716 179 253 4,577 1,852 1,206 90 148 139 262 1,261 1,374 3,007 1,286 1,191 1,589 1,209 633 950 640 896 440 555 1,511 F-47 Improvements Total 2,691 3,447 3,127 1,591 2,120 3,661 2,651 1,832 3,483 1,920 3,741 3,048 1,838 1,672 3,253 15,884 5,233 1,934 8,494 2,284 3,029 13,121 11,059 12,299 15,545 20,577 18,931 3,607 4,420 3,000 6,304 7,333 2,929 5,125 4,031 5,494 6,061 9,760 9,650 3,137 6,266 4,528 4,098 4,996 10,469 14,407 5,482 4,356 3,318 5,262 5,839 8,451 7,887 4,878 5,674 6,055 7,184 6,916 3,876 6,826 11,148 7,857 4,959 1,604 2,213 2,299 2,524 3,427 3,031 2,781 2,889 3,569 12,257 9,980 6,096 3,225 5,342 4,224 3,076 6,417 7,706 10,188 3,425 2,788 4,195 7,191 3,286 4,828 3,312 9,143 2,784 2,859 7,883 3,051 3,951 4,946 2,335 2,593 4,150 3,214 2,828 4,154 2,194 5,745 3,458 2,897 2,583 3,899 17,055 8,325 3,069 10,107 2,556 4,970 15,542 11,953 15,453 20,014 26,936 32,848 4,420 5,378 4,030 7,529 8,788 4,109 7,056 4,861 6,587 7,250 11,697 13,234 3,618 7,639 5,839 4,981 5,953 12,555 16,615 6,866 5,218 3,646 6,292 6,987 9,443 8,837 6,740 6,624 7,725 8,835 8,136 4,631 9,176 11,502 9,409 5,916 1,860 2,622 3,200 3,516 3,826 3,414 3,577 3,373 4,130 16,834 11,943 7,302 3,495 5,900 4,822 3,483 7,678 9,080 13,195 4,711 3,979 5,784 8,400 3,919 5,778 3,952 10,039 3,224 3,414 9,394 Year Acquired/ Developed 1997 1995 2005 2005 2001 1995 2002 2005 2014 1996 2005 1996 2005 2005 2012 2016 2005 2005 2011 1996 2005 2012 2008 2011 2016 2017 2018 2001 2001 2005 2014 2015 2004 2004 2000 2014 2012 2014 2004 1996 2001 1998 2001 2013 2014 2017 1999 2013 1999 2014 2014 2019 2019 2005 2007 2007 2007 2007 2014 2007 1998 2014 2015 1994 2012 2004 2004 1996 1996 2002 1996 1996 2005 2011 2013 1996 1997 1997 1998 2014 2017 2017 2005 2004 2005 2006 2010 2012 2014 2019 2006 2014 2014 1,344 1,833 1,421 811 1,009 2,069 1,174 879 677 975 1,833 1,601 902 812 782 1,649 2,642 993 2,173 1,183 1,487 3,219 4,050 3,094 1,795 1,209 843 1,665 2,058 1,358 1,141 1,047 1,107 2,077 2,236 905 1,431 1,856 3,890 1,648 2,741 2,317 1,941 1,076 1,856 908 2,802 842 1,726 941 1,041 155 145 2,045 2,193 2,341 2,758 2,673 644 2,619 5,618 1,435 759 854 537 862 995 1,862 1,466 1,200 1,554 1,873 5,324 2,773 1,277 1,673 2,845 2,255 1,655 1,073 751 615 1,499 1,086 1,830 2,882 953 1,128 560 21 1,151 561 1,529 Initial Cost Buildings & Costs Subsequent to Gross Carrying Amount at December 31, 2019 Buildings & Accumulated Depreciation (A) Description Palm Harbor, FL Pembroke Pines, FL Royal Palm Beach II, FL Sanford I, FL Sanford II, FL Sarasota, FL St. Augustine, FL St. Petersburg, FL Stuart, FL SW Ranches, FL Tampa I, FL Tampa II, FL West Palm Beach I, FL West Palm Beach II, FL West Palm Beach III, FL West Palm Beach IV, FL Winter Park I, FL Winter Park II, FL Winter Springs, FL Alpharetta, GA Atlanta I, GA Atlanta II, GA Austell, GA Decatur, GA Duluth, GA Lawrenceville, GA Lithia Springs, GA Norcross I, GA Norcross II, GA Norcross III, GA Norcross IV, GA Norcross V, GA Peachtree City I, GA Peachtree City II, GA Smyrna, GA Snellville, GA Suwanee I, GA Suwanee II, GA Villa Rica, GA Addison, IL Aurora, IL Bartlett, IL Bellwood, IL Blue Island, IL Bolingbrook, IL Chicago I, IL Chicago II, IL Chicago III, IL Chicago IV, IL Chicago V, IL Chicago VI, IL Chicago VII, IL Countryside, IL Des Plaines, IL Downers Grove, IL Elk Grove Village, IL Evanston, IL Glenview I, IL Glenview II, IL Gurnee, IL Hanover, IL Harvey, IL Joliet, IL Kildeer, IL Lombard, IL Maywood, IL Mount Prospect, IL Mundelein, IL North Chicago, IL Plainfield I, IL Plainfield II, IL Riverwoods, IL Schaumburg, IL Streamwood, IL Warrenville, IL Waukegan, IL West Chicago, IL Westmont, IL Wheeling I, IL Wheeling II, IL Woodridge, IL Schererville, IN Boston I, MA Boston II, MA Boston III, MA Brockton I, MA Brockton II, MA East Bridgewater, MA Fall River, MA Franklin, MA Haverhill, MA Holbrook, MA Lawrence, MA Square Footage 82,685 67,321 81,178 61,810 69,875 71,142 59,725 66,025 87,486 65,060 83,938 74,790 66,831 94,113 77,410 102,722 54,416 71,363 61,965 90,501 66,600 81,665 83,655 145,320 70,885 73,890 73,200 85,320 52,595 46,955 57,475 50,030 49,875 59,950 57,015 80,000 85,125 79,590 65,281 31,574 73,985 51,395 86,500 55,125 82,575 95,792 78,835 84,890 60,420 51,775 71,748 90,947 97,658 69,450 71,625 64,104 57,715 100,085 30,844 80,300 41,190 60,090 72,865 74,438 58,728 60,225 65,000 44,700 53,500 53,900 51,900 73,883 31,160 64,305 48,796 79,500 48,175 53,400 54,210 67,825 50,257 67,600 33,286 60,470 108,205 59,993 69,375 35,905 75,950 63,405 60,589 56,100 34,672 Improvements Acquisition 71 2,905 340 241 251 1,516 3,497 436 3,272 305 307 140 1,864 555 138 333 127 1 — 1,032 137 4 447 457 258 472 425 1,082 241 94 134 38 811 157 334 392 365 152 177 605 264 356 1,186 92 209 1,044 98 834 153 121 76 332 265 871 60 321 290 599 73 440 406 502 325 4,603 1,055 80 672 493 629 373 345 93 270 601 544 686 547 341 558 626 373 78 291 884 765 1,225 3 2 33 3 227 2 275 16,178 3,772 8,607 2,911 4,944 3,656 1,515 10,173 3,625 7,598 6,249 10,262 3,420 8,671 3,962 7,392 4,268 9,286 7,259 4,720 4,053 11,579 4,711 6,776 2,044 2,903 5,552 2,930 2,025 4,625 2,839 3,083 2,532 1,963 4,271 4,781 5,010 6,942 5,616 3,531 3,652 2,493 5,768 3,120 8,254 13,118 4,035 11,962 6,385 5,144 9,535 11,191 12,684 4,327 13,153 3,535 5,440 10,367 3,144 5,440 2,197 3,635 4,704 2,187 3,938 3,689 3,114 2,782 3,006 1,715 2,000 7,826 645 1,662 3,072 4,363 2,249 3,873 3,213 3,816 3,397 5,589 3,048 8,628 15,829 4,394 3,520 4,748 11,684 5,704 6,610 8,033 4,737 Land 2,387 953 1,640 453 1,003 529 383 2,721 685 1,390 2,670 2,291 835 2,129 804 1,499 866 1,897 1,248 917 822 1,890 1,643 616 373 546 719 632 366 938 576 881 529 398 750 1,660 1,737 622 757 428 644 931 1,012 633 1,675 2,667 833 2,427 1,296 1,044 1,596 — 2,607 1,564 1,498 1,446 1,103 3,740 725 1,521 1,126 869 547 1,997 1,305 749 1,701 1,498 1,073 1,740 694 1,585 538 1,447 1,066 1,198 1,071 1,155 857 793 943 1,134 538 1,516 3,211 577 1,900 1,039 1,794 2,034 669 1,688 585 Encumbrances Land 2,457 337 1,640 453 1,003 333 135 2,721 324 1,390 2,670 2,291 719 2,129 804 1,499 866 1,897 1,248 806 822 1,890 1,635 616 373 546 748 514 366 938 576 881 435 398 750 1,660 1,737 800 757 428 644 931 1,012 633 1,675 2,667 833 2,427 1,296 1,044 1,596 — 2,607 1,564 1,498 1,446 1,103 3,740 725 1,521 1,126 869 547 2,102 1,305 749 1,701 1,498 1,073 1,770 694 1,585 538 1,447 1,066 1,198 1,071 1,155 857 793 943 1,134 538 1,516 3,211 577 1,900 1,039 1,794 2,034 669 1,688 585 F-48 Improvements Total 16,319 5,530 7,284 2,584 5,194 3,955 4,404 10,609 5,904 6,039 5,203 10,402 4,034 7,114 4,100 7,724 4,394 9,287 7,259 4,045 4,191 11,583 4,502 6,224 1,976 2,945 6,006 3,087 1,979 4,719 2,973 3,121 2,558 2,119 3,480 4,510 4,658 5,877 5,793 3,308 3,058 2,215 5,216 3,212 8,463 14,161 4,134 12,796 6,538 5,265 9,611 11,523 12,951 4,158 13,213 2,999 5,729 8,539 3,217 4,606 2,062 3,255 3,934 6,385 4,021 3,769 3,041 2,602 2,873 1,636 2,013 7,919 718 1,798 3,184 3,992 2,229 3,315 3,002 3,537 2,980 5,667 2,908 7,051 16,594 5,619 3,523 4,750 11,717 5,707 6,837 8,035 5,012 18,706 6,483 8,924 3,037 6,197 4,484 4,787 13,330 6,589 7,429 7,873 12,693 4,869 9,243 4,904 9,223 5,260 11,184 8,507 4,962 5,013 13,473 6,145 6,840 2,349 3,491 6,725 3,719 2,345 5,657 3,549 4,002 3,087 2,517 4,230 6,170 6,395 6,499 6,550 3,736 3,702 3,146 6,228 3,845 10,138 16,828 4,967 15,223 7,834 6,309 11,207 11,523 15,558 5,722 14,711 4,445 6,832 12,279 3,942 6,127 3,188 4,124 4,481 8,382 5,326 4,518 4,742 4,100 3,946 3,376 2,707 9,504 1,256 3,245 4,250 5,190 3,300 4,470 3,859 4,330 3,923 6,801 3,446 8,567 19,805 6,196 5,423 5,789 13,511 7,741 7,506 9,723 5,597 Year Acquired/ Developed 2016 1997 2007 2006 2014 1999 1996 2016 1997 2007 2007 2016 2001 2004 2012 2014 2014 2019 2019 2001 2012 2019 2006 1998 2011 2011 2015 2001 2011 2012 2012 2019 2001 2012 2001 2007 2007 2007 2015 2004 2004 2004 2001 2015 2014 2014 2014 2014 2015 2015 2016 2017 2014 2004 2016 2004 2013 2004 2018 2004 2004 2004 2004 2004 2004 2015 2004 2004 2004 2004 2005 2017 2004 2004 2005 2004 2004 2004 2004 2004 2004 2014 2010 2002 2014 2015 2019 2019 2019 2019 2015 2019 2015 1,686 2,966 2,834 1,010 877 1,979 2,393 1,113 3,169 2,333 2,003 1,067 1,835 2,843 921 1,402 738 22 17 1,843 980 145 1,788 3,499 533 807 759 1,355 552 1,181 703 55 1,152 499 1,602 1,773 1,821 2,267 768 1,283 1,189 874 2,315 493 1,415 2,430 685 2,206 989 794 1,067 753 2,147 1,624 1,497 1,233 1,234 3,349 113 1,818 813 1,229 1,538 1,254 1,622 568 1,197 989 1,119 630 835 747 287 694 1,335 1,566 876 1,287 1,182 1,418 1,146 1,010 846 3,002 2,788 718 65 76 186 100 887 137 672 Initial Cost Buildings & Costs Subsequent to Gross Carrying Amount at December 31, 2019 Buildings & Accumulated Depreciation (A) Description Leominster, MA Medford, MA Milford, MA New Bedford, MA Stoneham, MA Tewksbury, MA Walpole, MA Waltham, MA Annapolis I, MD Annapolis II, MD Baltimore, MD Beltsville, MD California, MD Capitol Heights, MD Clinton, MD District Heights, MD Elkridge, MD Gaithersburg I, MD Gaithersburg II, MD Hyattsville, MD Laurel, MD Temple Hills I, MD Temple Hills II, MD Timonium, MD Upper Marlboro, MD Bloomington, MN Belmont, NC Burlington I, NC Burlington II, NC Cary, NC Charlotte I, NC Charlotte II, NC Charlotte III, NC Charlotte IV, NC Cornelius, NC Pineville, NC Raleigh, NC Bayonne, NJ Bordentown, NJ Brick, NJ Cherry Hill I, NJ Cherry Hill II, NJ Clifton, NJ Cranford, NJ East Hanover, NJ Egg Harbor I, NJ Egg Harbor II, NJ Elizabeth, NJ Fairview, NJ Freehold, NJ Hamilton, NJ Hoboken, NJ Linden, NJ Lumberton, NJ Morris Township, NJ Parsippany, NJ Rahway, NJ Randolph, NJ Ridgefield, NJ Roseland, NJ Sewell, NJ Somerset, NJ Whippany, NJ Albuquerque I, NM Albuquerque II, NM Albuquerque III, NM Henderson, NV Las Vegas I, NV Las Vegas II, NV Las Vegas III, NV Las Vegas IV, NV Las Vegas V, NV Las Vegas VI, NV Las Vegas VII, NV Baldwin, NY Bronx I, NY Bronx II, NY Bronx III, NY Bronx IV, NY Bronx V, NY Bronx VI, NY Bronx VII, NY Bronx VIII, NY Bronx IX, NY Bronx X, NY Bronx XI, NY Bronx XII, NY Bronx XIII, NY Brooklyn I, NY Brooklyn II, NY Brooklyn III, NY Brooklyn IV, NY Brooklyn V, NY Square Footage 54,048 58,675 44,950 69,775 62,200 62,402 74,980 87,840 92,302 76,765 93,750 63,657 77,840 79,600 84,225 80,365 63,475 87,045 74,100 52,830 162,896 97,270 84,325 66,717 62,240 100,928 81,850 109,300 42,165 111,750 69,000 53,683 69,037 37,700 59,270 77,747 48,675 96,867 50,550 54,910 51,700 65,450 105,550 91,280 105,704 36,025 70,400 38,684 27,896 84,070 70,550 38,484 100,425 96,025 76,026 84,705 83,121 52,565 67,803 53,569 57,826 57,485 92,070 65,927 58,798 57,536 75,150 48,732 49,570 84,600 90,527 107,226 92,732 94,525 61,380 67,864 99,028 105,850 74,415 54,704 45,970 78,700 30,550 147,800 159,805 46,425 100,983 201,195 64,656 60,845 41,610 37,560 47,070 Improvements Acquisition 2,669 344 3 2 308 283 569 — 84 50 1,711 139 365 62 156 656 251 598 90 115 4,001 2,669 81 247 112 351 986 911 542 982 1,779 67 86 2 1,113 160 477 — 177 1,765 240 330 815 2,928 4,650 196 430 742 799 361 527 995 2,741 327 3,404 6,242 710 1,602 480 449 1,460 608 661 392 437 406 124 604 623 133 384 190 175 194 672 1,259 1,773 278 163 261 381 235 353 1,555 621 384 105 305 458 533 190 219 149 1,519 7,165 6,638 9,950 7,679 7,579 13,069 14,491 13,938 17,890 5,997 6,295 4,280 13,332 10,757 8,313 5,695 9,000 11,750 5,485 8,035 8,788 10,988 11,184 6,455 12,298 2,196 2,837 1,829 3,097 4,429 8,764 8,211 1,425 4,991 9,169 2,398 23,007 2,255 2,762 1,260 2,323 12,520 3,493 5,763 510 1,608 2,164 2,759 5,355 5,430 3,947 6,008 4,864 5,602 5,322 7,326 4,872 8,925 9,759 2,766 6,129 10,615 3,395 3,801 2,171 6,143 2,986 5,411 10,034 8,575 9,560 12,299 11,483 7,685 11,411 28,289 36,180 22,074 17,556 16,803 22,512 6,137 39,279 44,816 17,130 31,603 68,378 10,172 9,073 13,570 11,184 11,636 Land 338 1,330 1,222 1,653 1,558 1,537 634 2,683 2,643 2,425 1,173 1,268 1,486 2,704 2,182 1,527 1,120 3,124 2,383 1,113 1,928 1,800 2,229 2,269 1,309 1,598 451 498 340 543 1,068 821 1,974 721 2,424 2,490 296 — 457 485 222 471 4,340 779 1,315 104 284 751 246 1,086 1,893 1,370 1,043 987 1,072 844 1,486 1,108 1,810 1,844 706 1,243 2,153 1,039 1,163 664 1,246 1,851 3,355 1,171 1,116 1,460 1,386 1,575 1,559 2,014 — 6,460 — — — — 1,251 7,967 9,090 — — 19,684 1,795 1,601 2,772 2,284 2,374 Encumbrances Land 5,459 7,805 2,740 21,547 24,042 90 1,330 1,222 1,653 1,558 1,537 634 2,683 2,643 2,425 1,050 1,277 1,486 2,704 2,182 1,527 1,155 3,124 2,383 1,113 1,409 1,541 2,229 2,269 1,309 1,598 385 498 320 543 782 821 1,974 721 2,424 2,490 209 — 457 234 222 471 4,346 290 504 104 284 751 246 1,086 1,885 1,370 517 987 500 475 1,486 855 1,810 1,844 484 1,243 2,153 1,039 1,163 664 1,246 1,851 3,354 1,171 1,116 1,460 1,386 1,575 1,559 2,014 — 6,459 — — — — 1,245 7,967 9,090 — — 19,622 1,795 1,601 2,772 2,283 2,374 F-49 Improvements Total 3,546 6,016 6,641 9,952 7,987 7,861 13,638 14,491 14,022 17,940 5,543 6,442 3,634 13,394 10,913 7,844 5,982 7,503 11,840 5,600 9,163 8,908 11,069 11,430 6,565 12,649 2,364 2,930 1,829 3,378 4,753 8,831 8,297 1,427 6,104 9,329 2,399 23,007 2,431 3,677 1,279 2,653 11,654 5,226 8,431 696 1,817 2,583 2,948 5,711 5,188 4,309 7,201 5,191 7,358 10,219 8,036 4,784 9,405 10,208 3,148 6,737 11,276 3,203 3,614 2,187 6,266 3,177 5,452 10,167 8,959 9,750 12,474 11,677 8,357 11,076 29,527 32,111 19,582 15,706 15,152 22,856 6,520 40,829 45,419 17,516 31,708 68,621 9,212 8,286 13,842 11,465 11,838 3,884 7,346 7,863 11,605 9,545 9,398 14,272 17,174 16,665 20,365 6,716 7,710 5,120 16,098 13,095 9,371 7,102 10,627 14,223 6,713 11,091 10,708 13,298 13,699 7,874 14,247 2,815 3,428 2,169 3,921 5,821 9,652 10,271 2,148 8,528 11,819 2,695 23,007 2,888 4,162 1,501 3,124 15,994 6,005 9,746 800 2,101 3,334 3,194 6,797 7,081 5,679 8,244 6,178 8,430 11,063 9,522 5,892 11,215 12,052 3,854 7,980 13,429 4,242 4,777 2,851 7,512 5,028 8,807 11,338 10,075 11,210 13,860 13,252 9,916 13,090 29,527 38,571 19,582 15,706 15,152 22,856 7,771 48,796 54,509 17,516 31,708 88,305 11,007 9,887 16,614 13,749 14,212 Year Acquired/ Developed 1998 2007 2019 2019 2013 2014 2016 2019 2017 2019 2001 2013 2004 2015 2013 2011 2013 2005 2015 2013 2001 2001 2014 2014 2013 2016 2001 2001 2001 2001 2002 2016 2018 2019 2015 2015 1998 2019 2012 1996 2010 2012 2005 1996 1996 2010 2010 2005 1997 2012 2006 2005 1996 2012 1997 1997 2013 2002 2015 2015 2001 2012 2013 2005 2005 2005 2014 2006 2006 2016 2016 2016 2016 2018 2015 2010 2011 2011 2011 2011 2011 2012 2012 2012 2012 2014 2016 2018 2010 2010 2011 2011 2011 1,787 2,183 109 156 1,684 1,425 1,365 218 1,091 427 2,422 1,354 1,400 1,883 2,122 2,099 1,192 2,909 1,675 1,186 4,154 4,038 2,087 2,168 1,397 1,164 1,095 1,433 825 1,581 1,987 772 340 29 790 1,231 1,256 670 567 1,940 356 616 4,877 2,725 4,471 170 529 1,120 1,512 1,319 2,063 1,936 3,814 1,231 3,732 3,760 1,683 2,077 1,321 1,324 1,459 1,521 2,330 1,518 1,680 1,049 1,043 1,615 2,694 962 903 888 1,039 431 1,206 3,301 7,651 8,312 5,088 4,087 3,946 5,692 1,607 10,059 10,744 2,696 3,664 3,327 2,700 2,472 3,598 2,990 3,065 Description Brooklyn VI, NY Brooklyn VII, NY Brooklyn VIII, NY Brooklyn IX, NY Brooklyn X, NY Brooklyn XI, NY Brooklyn XII, NY Flushing, NY Holbrook, NY Jamaica I, NY Jamaica II, NY Long Island City, NY New Rochelle I, NY New Rochelle II, NY New York, NY North Babylon, NY Patchogue, NY Queens I, NY Queens II, NY Queens III, NY Riverhead, NY Southold, NY Staten Island, NY Tuckahoe, NY West Hempstead, NY White Plains, NY Woodhaven, NY Wyckoff, NY Yorktown, NY Cleveland I, OH Cleveland II, OH Columbus I, OH Columbus II, OH Columbus III, OH Columbus IV, OH Columbus V, OH Columbus VI, OH Grove City, OH Hilliard, OH Lakewood, OH Lewis Center, OH Middleburg Heights, OH North Olmsted I, OH North Olmsted II, OH North Randall, OH Reynoldsburg, OH Strongsville, OH Warrensville Heights, OH Westlake, OH Conshohocken, PA Exton, PA Langhorne, PA Levittown, PA Malvern, PA Montgomeryville, PA Norristown, PA Philadelphia I, PA Philadelphia II, PA Exeter, RI Johnston, RI Wakefield, RI Charleston I, SC Charleston II, SC Goose Creek I, SC Goose Creek II, SC Mount Pleasant, SC North Charleston I, SC North Charleston II, SC North Charleston III, SC Woonsocket, RI Antioch, TN Nashville I, TN Nashville II, TN Nashville III, TN Nashville IV, TN Nashville V, TN Nashville VI, TN Nashville VII, TN Nashville VIII, TN Allen, TX Austin I, TX Austin II, TX Austin III, TX Austin IV, TX Austin V, TX Austin VI, TX Austin VII, TX Austin VIII, TX Austin IX, TX Carrollton, TX Cedar Park, TX College Station, TX Cypress, TX Square Footage 74,180 72,725 61,525 46,980 55,913 110,050 131,813 64,995 60,372 89,735 92,780 88,800 44,076 63,385 94,944 78,350 47,759 82,875 90,578 80,566 38,490 59,945 96,573 51,358 83,395 85,924 50,455 60,440 78,879 46,000 58,325 71,905 36,659 51,200 60,950 73,325 63,525 89,290 89,290 39,332 76,224 93,200 48,672 47,850 80,297 67,245 43,683 90,281 62,750 81,285 57,750 64,838 77,730 18,820 84,145 61,521 96,639 68,279 41,275 77,275 47,895 58,840 40,950 52,475 41,419 72,671 54,755 56,885 54,424 79,100 75,985 108,490 83,174 101,525 102,450 74,560 72,416 65,681 71,234 62,170 59,645 64,310 70,585 65,258 67,850 63,150 71,023 61,038 78,498 77,380 86,725 26,550 58,161 Encumbrances Land Accumulated Depreciation (A) 30,588 Initial Cost Buildings & Costs Subsequent to Gross Carrying Amount at December 31, 2019 Buildings & 4,210 5,604 4,982 2,966 3,739 10,093 7,249 17,177 2,029 2,043 5,391 5,700 1,673 3,167 42,022 225 1,141 5,158 6,208 13,663 1,068 2,079 1,919 2,363 2,237 3,295 2,015 1,961 2,382 525 290 1,234 769 326 443 838 701 1,756 1,361 405 1,056 63 63 290 515 1,290 570 525 509 1,726 541 1,019 926 2,959 975 662 1,461 1,012 547 1,061 823 606 570 771 409 1,434 755 809 763 1,049 588 405 593 416 992 895 2,749 1,116 1,363 714 2,239 734 1,030 862 1,050 1,150 1,429 2,935 1,321 661 3,350 812 360 Improvements Acquisition 170 460 147 168 3,133 250 29 85 81 2,776 445 284 1,227 470 148 4,237 90 1,203 508 — 234 355 938 349 276 1,043 236 408 230 365 263 165 387 138 158 161 155 330 365 701 159 2,449 1,607 1,294 3,282 392 438 3,312 336 350 259 615 1,403 1,753 469 1,100 2,980 318 167 132 204 30 4 3 134 46 2 9 54 517 395 1,148 365 458 545 892 174 3 5 140 324 489 365 473 332 337 363 76 48 152 439 224 213 20,638 27,452 24,561 14,620 7,703 35,385 40,230 17,356 10,737 11,658 26,413 28,101 4,827 2,713 38,753 2,514 5,624 12,339 25,815 32,025 1,149 2,238 9,463 17,411 11,030 18,049 11,219 11,113 11,720 2,592 1,427 3,151 3,788 1,607 2,182 4,128 3,454 4,485 3,476 854 5,206 704 704 1,129 2,323 3,295 3,486 766 2,508 8,508 2,668 5,023 5,296 18,198 4,809 3,142 8,334 4,990 2,697 5,229 4,058 1,763 1,986 5,307 2,641 9,826 5,349 2,129 2,038 5,172 4,906 3,379 4,950 3,469 8,274 4,311 8,443 8,592 8,820 3,519 2,038 3,894 5,468 4,250 5,175 5,669 6,263 7,007 9,643 3,261 7,950 740 1,773 Land 4,211 5,604 4,982 2,966 4,885 10,093 7,250 17,177 2,029 2,043 5,391 5,700 1,673 3,762 42,022 568 1,141 5,160 6,208 13,663 1,068 2,079 1,919 2,363 2,237 3,295 2,015 1,961 2,382 524 289 1,239 769 326 443 838 701 1,761 1,366 405 1,056 332 214 469 898 1,295 570 935 508 1,726 519 1,019 926 2,959 975 638 1,461 1,012 547 1,061 823 606 570 771 409 1,434 755 809 763 1,049 588 405 593 416 992 895 2,749 1,116 1,363 714 2,239 738 1,035 862 1,050 1,150 1,429 2,935 1,321 661 3,350 813 360 Improvements Total 20,915 28,077 24,708 14,789 9,690 35,635 40,258 17,441 10,818 11,698 27,001 28,385 5,394 18,944 38,901 5,598 5,714 13,540 26,323 32,025 1,104 2,189 10,401 11,989 11,304 16,595 10,158 10,036 11,963 2,607 1,437 2,841 4,175 1,746 2,339 4,289 3,609 4,194 3,354 1,397 5,364 2,482 1,809 2,096 3,994 3,233 3,089 3,463 2,453 8,851 2,949 5,638 4,978 19,949 5,272 4,372 7,967 5,308 2,864 5,362 4,263 1,793 1,990 5,310 2,775 9,872 5,351 2,138 2,092 5,688 4,533 3,939 4,621 3,590 7,574 5,203 8,617 8,595 8,825 3,660 2,013 3,819 5,170 4,723 5,507 6,007 6,626 7,083 9,691 3,413 8,389 777 1,986 25,126 33,681 29,690 17,755 14,575 45,728 47,508 34,618 12,847 13,741 32,392 34,085 7,067 22,706 80,923 6,166 6,855 18,700 32,531 45,688 2,172 4,268 12,320 14,352 13,541 19,890 12,173 11,997 14,345 3,131 1,726 4,080 4,944 2,072 2,782 5,127 4,310 5,955 4,720 1,802 6,420 2,814 2,023 2,565 4,892 4,528 3,659 4,398 2,961 10,577 3,468 6,657 5,904 22,908 6,247 5,010 9,428 6,320 3,411 6,423 5,086 2,399 2,560 6,081 3,184 11,306 6,106 2,947 2,855 6,737 5,121 4,344 5,214 4,006 8,566 6,098 11,366 9,711 10,188 4,374 4,252 4,557 6,205 5,585 6,557 7,157 8,055 10,018 11,012 4,074 11,739 1,590 2,346 2,313 F-50 Year Acquired/ Developed 2011 2011 2014 2014 2015 2016 2017 2018 2015 2001 2011 2014 2005 2012 2017 1998 2014 2015 2016 2019 2005 2005 2013 2011 2012 2011 2011 2010 2011 2005 2005 2006 2014 2014 2014 2014 2014 2006 2006 1989 2014 1980 1979 1988 1998 2006 2007 1980 2005 2012 2012 2012 2001 2013 2012 2011 2001 2014 2014 2014 2014 2019 2019 2019 2019 2019 2019 2019 2019 2014 2005 2005 2005 2006 2006 2015 2015 2019 2019 2012 2005 2006 2006 2014 2014 2014 2015 2016 2018 2012 2016 2005 2012 5,410 7,242 4,462 2,672 1,336 4,163 2,697 527 1,414 5,133 7,007 4,554 2,288 4,696 2,661 2,938 941 1,916 3,538 1,002 569 1,120 2,153 3,103 2,625 4,594 2,610 2,875 3,115 1,191 672 1,291 693 301 394 713 601 1,846 1,469 1,098 898 1,245 945 1,815 1,933 1,450 1,234 1,732 1,152 2,054 676 1,276 2,250 3,289 1,223 1,168 3,290 990 486 890 684 34 34 84 27 159 85 39 37 900 2,043 1,654 2,068 1,596 3,357 901 1,128 139 144 877 877 1,570 2,130 884 946 1,014 857 944 646 775 1,068 332 478 Description Dallas I, TX Dallas II, TX Dallas III, TX Dallas IV, TX Dallas V, TX Denton, TX Fort Worth I, TX Fort Worth II, TX Fort Worth III, TX Fort Worth IV, TX Fort Worth V, TX Frisco I, TX Frisco II, TX Frisco III, TX Frisco IV, TX Frisco V, TX Frisco VI, TX Garland I, TX Garland II, TX Grapevine, TX Houston III, TX Houston IV, TX Houston V, TX Houston VI, TX Houston VII, TX Houston VIII, TX Houston IX, TX Houston X, TX Houston XI, TX Humble, TX Katy, TX Keller, TX Lewisville I, TX Lewisville II, TX Lewisville III, TX Little Elm I, TX Little Elm II, TX Mansfield I, TX Mansfield II, TX Mansfield III, TX McKinney I, TX McKinney II, TX McKinney III, TX North Richland Hills, TX Pearland, TX Richmond, TX Roanoke, TX San Antonio I, TX San Antonio II, TX San Antonio III, TX San Antonio IV, TX Spring, TX Murray I, UT Murray II, UT Salt Lake City I, UT Salt Lake City II, UT Alexandria, VA Arlington, VA Burke Lake, VA Fairfax, VA Fredericksburg I, VA Fredericksburg II, VA Leesburg, VA Manassas, VA McLearen, VA Vienna, VA Divisional Offices Square Footage 58,582 76,673 83,020 114,300 54,430 61,446 50,066 72,900 80,645 77,329 79,322 52,594 71,039 74,265 74,635 74,215 69,176 70,100 68,425 77,019 61,590 43,750 121,189 54,690 46,991 54,203 51,208 95,789 80,930 70,700 71,118 88,685 67,340 127,659 93,855 60,015 95,096 63,000 57,375 71,000 46,770 70,050 53,650 57,200 72,050 102,275 59,240 73,325 73,005 71,555 61,500 72,745 60,280 70,796 56,446 51,676 114,100 95,993 91,237 73,265 69,475 61,057 85,503 72,745 68,960 55,260 Initial Cost Buildings & Costs Subsequent to Gross Carrying Amount at December 31, 2019 Buildings Encumbrances Land Improvements Acquisition Land 2,475 940 2,608 2,369 — 553 1,253 868 1,000 1,274 1,271 1,093 1,564 1,147 719 1,159 1,064 751 862 1,211 575 960 1,153 575 681 1,294 296 5,267 5,616 706 1,329 1,330 476 1,464 1,307 892 1,219 837 662 947 1,632 855 652 2,252 450 1,437 1,337 2,895 1,047 996 829 580 3,847 2,147 2,695 2,074 2,812 6,836 2,093 2,276 1,680 1,757 1,746 860 1,482 2,300 2,253 4,635 12,857 11,850 11,604 2,936 1,141 4,607 4,928 7,693 5,485 3,148 4,507 6,088 4,072 5,714 5,247 3,984 4,578 8,559 524 875 6,122 524 3,355 6,377 1,459 12,667 15,330 5,727 6,552 7,960 2,525 7,217 15,025 5,529 9,864 4,443 3,261 4,703 1,486 5,076 3,213 2,049 2,216 7,083 1,217 2,635 5,558 5,286 3,891 3,081 1,017 567 712 548 13,865 9,843 10,940 11,220 4,840 5,062 9,894 4,872 8,400 11,340 & Improvements 2,284 4,894 13,198 11,947 11,706 2,978 1,280 4,355 5,133 7,732 5,558 2,911 4,168 5,967 3,821 5,871 5,425 4,077 4,309 8,693 906 1,414 7,197 5,064 3,548 6,772 1,668 12,681 15,435 5,861 6,648 7,696 2,630 7,736 15,270 5,671 10,011 4,203 3,430 4,909 1,534 4,800 3,289 1,935 2,838 7,348 1,279 2,499 5,191 4,908 4,069 2,919 1,376 1,106 1,113 822 14,138 9,946 10,570 11,544 4,601 4,819 8,813 4,571 7,511 11,522 956 3,619,594 (A) Year Accumulated Depreciation Acquired/ Developed 2005 2013 2014 2015 2015 2006 2005 2006 2015 2016 2019 2005 2005 2006 2010 2014 2014 2006 2006 2016 2005 2005 2006 2011 2012 2012 2012 2018 2018 2015 2013 2006/2017 2006 2013 2016 2016 2016 2006 2012 2016 2005 2006 2014 2005 2012 2013 2005 2005 2006 2007 2016 2006 2005 2005 2005 2005 2012 2015 2011 2012 2005 2005 2011 2010 2010 2012 1,006 980 2,148 1,838 1,665 1,121 546 1,829 799 934 27 1,269 1,799 2,453 1,115 1,099 920 1,683 1,727 1,042 400 572 2,707 1,380 905 1,630 401 605 528 772 1,290 2,079 1,052 1,580 1,662 647 1,120 1,752 841 494 659 1,990 532 852 630 1,413 524 1,095 2,058 1,935 392 1,223 663 469 535 408 3,397 1,706 2,995 2,707 1,884 2,012 2,274 1,315 2,149 2,696 182 853,935 Total 4,759 5,834 15,806 14,316 11,706 3,547 2,533 5,229 6,133 9,006 6,829 4,004 5,732 7,121 4,540 7,030 6,489 4,844 5,171 9,904 1,482 2,375 8,188 6,047 4,229 8,066 1,964 17,948 21,051 6,567 7,977 9,027 3,122 9,200 16,577 6,563 11,230 5,046 4,092 5,856 3,168 5,657 3,941 4,187 3,288 8,785 2,616 5,394 6,243 5,904 4,898 3,499 5,224 3,253 3,809 2,759 16,950 16,782 12,663 13,820 6,281 6,576 10,559 5,431 8,993 13,822 956 4,478,135 510 258 341 97 102 538 378 419 205 39 73 221 277 690 345 157 178 687 328 134 495 740 1,825 5,863 194 394 210 14 105 134 94 351 543 520 245 142 147 343 169 206 290 349 77 266 621 264 288 396 326 345 178 330 576 712 587 440 276 103 1,230 322 435 448 208 371 267 182 956 336,395 2,475 940 2,608 2,369 — 569 1,253 874 1,000 1,274 1,271 1,093 1,564 1,154 719 1,159 1,064 767 862 1,211 576 961 991 983 681 1,294 296 5,267 5,616 706 1,329 1,331 492 1,464 1,307 892 1,219 843 662 947 1,634 857 652 2,252 450 1,437 1,337 2,895 1,052 996 829 580 3,848 2,147 2,696 1,937 2,812 6,836 2,093 2,276 1,680 1,757 1,746 860 1,482 2,300 858,541 36,603,609 837,399 3,530,854 (A) Depreciation on the buildings and improvements is recorded on a straight-line basis over their estimated useful lives, which range from five to 39 years. F-51 Activity in storage properties during the period from January 1, 2017 through December 31, 2019 was as follows (in thousands): Storage properties* Balance at beginning of year Acquisitions & improvements Fully depreciated assets Dispositions and other Construction in progress, net Balance at end of year Accumulated depreciation* Balance at beginning of year Depreciation expense Fully depreciated assets Dispositions and other Balance at end of year Storage properties, net 2019 2018 2017 4,463,455 $ 364,324 (81,717) (3,033) (43,185) 4,699,844 $ 4,161,715 $ 381,182 (26,125) (8,735) (44,582) 4,463,455 $ 3,998,180 247,546 (53,903) (9,179) (20,929) 4,161,715 862,487 $ 145,233 (81,717) (644) 925,359 $ 3,774,485 $ 752,925 $ 138,510 (26,125) (2,823) 862,487 $ 3,600,968 $ 671,364 135,732 (53,903) (268) 752,925 3,408,790 $ $ $ $ $ * These amounts include equipment that is housed at the Company’s stores which is excluded from Schedule III above. As of December 31, 2019, the aggregate cost of Storage properties for federal income tax purposes was approximately $4,945.3 million. F-52 DESCRIPTION OF THE REGISTRANT’S SECURITIES REGISTERED PURSUANT TO SECTION 12 OF THE SECURITIES EXCHANGE ACT OF 1934 Exhibit 4.23 The following description summarizes certain terms of the shares of beneficial interest of CubeSmart. This description does not purport to be complete and is qualified in its entirety by reference to our declaration of trust, as amended, and our bylaws, as amended, each of which is incorporated by reference as an exhibit to the Annual Report on Form 10-K of which this Exhibit is a part. We encourage you to read our declaration of trust, as amended, and our bylaws, as amended, and the applicable provisions of Maryland law for additional information. Unless the context requires otherwise, all references to “we”, “us,” “our” and “CubeSmart” in this section refer solely to CubeSmart and not to its subsidiaries. Authorized Shares Our declaration of trust provides that we may issue up to 440,000,000 shares of beneficial interest, par value $0.01 per share, which we refer to as shares, of which 400,000,000 consist of common shares and 40,000,000 consist of preferred shares. There are no preferred shares currently outstanding. Our board of trustees has authority, without shareholder approval, to reclassify any authorized but unissued common shares in one or more classes or series of common shares, and to classify any authorized but unissued preferred shares and to reclassify any previously classified but unissued preferred shares of any series from time to time into one or more series or common shares or preferred shares. Our declaration of trust provides that none of our shareholders will be personally liable, by reason of status as a shareholder, for any of our debts, claims or other obligations. Common Shares Each common share generally entitles the holder thereof to one vote per share on all matters upon which shareholders are entitled to vote and, except as provided with respect to any class or series of preferred shares that we may issue, the holders of common shares will possess exclusive voting power on all matters as to which shareholders have voting rights. There is no cumulative voting in the election of trustees. Our bylaws provide that a plurality of the votes cast at a meeting of shareholders duly called at which a quorum is present is sufficient to elect a trustee and that a majority of the votes cast at a meeting of shareholders duly called at which a quorum is present is sufficient to approve any other matter which may properly come before the meeting, unless a higher vote is required under our declaration of trust or bylaws or applicable statute. Generally, shareholders have the right to vote on: (i) the election of trustees; (ii) mergers or consolidations of CubeSmart and the sale by CubeSmart of all or substantially all of its assets; and (iii) certain amendments to our declaration of trust. Shareholders also have the right to propose amendments or modifications to our bylaws and to vote on such amendments and modifications. Approval of such matters would require the affirmative vote of the majority of the shares entitled to vote on such matters. Our board of trustees may amend the declaration of trust without shareholder approval to maintain our qualification as a real estate investment trust, or REIT, under the Internal Revenue Code of 1986, as amended (the “Code”), or in any manner in which the charter of a Maryland corporation may be amended without shareholder approval. Subject to the preferences of any future class or series of preferred shares, holders of common shares are entitled to receive dividends and distributions, if any, when authorized by our board of trustees, and payable out of assets legally available for the payment of dividends or distributions. Holders of common shares are entitled to share ratably in our assets legally available for distribution to shareholders in the event of our liquidation, dissolution or winding up, after payment of or adequate provision for all of our known debts and liabilities, and subject to the preferential rights, if any, of the holders of any class or series of preferred shares that we may issue. Holders of common shares have no preference, conversion, exchange, sinking fund, redemption or appraisal rights and have no preemptive rights to subscribe for any of our securities. Subject to the restrictions on transfer of shares contained in the declaration of trust and to the power of our board of trustees to create common shares with differing voting rights, all common shares have equal dividend, liquidation and other rights. The common shares are listed on the New York Stock Exchange under the symbol “CUBE.” The transfer agent and registrar for the common shares is American Stock Transfer & Trust Co., LLC. Preferred Shares Our board of trustees is authorized, without shareholder approval, to classify and designate the rights, preferences, privileges and restrictions of one or more classes or series of our authorized preferred shares. Prior to the issuance of a new class or series of preferred shares, we would file with State Department of Assessments and Taxation of Maryland articles supplementary to set the preferences, conversion or other rights, voting powers, restrictions and limitations as to dividends and other distributions, qualifications and terms and conditions of redemption for such class or series. Any class or series of preferred shares that we may issue that ranks senior to common shares as to dividends and distributions would limit our ability to pay dividends and distributions on common shares until full distributions have been paid with respect to such preferred shares. Our board of trustees could authorize, without shareholder approval, the issuance of preferred shares with terms and conditions that could have the effect of discouraging, delaying or preventing a takeover, change of control or other transaction in which holders of some or a majority of our outstanding common shares might have received a premium for their shares over the then-prevailing market price of such shares. Restrictions on Ownership and Transfer of Shares In order for us to maintain our qualification as a REIT under the Code, our shares must be beneficially owned by 100 or more persons during at least 335 days of a taxable year of 12 months or during a proportionate part of a shorter taxable year. Also, no more than 50% of the value of our outstanding shares may be owned, directly, indirectly or through attribution, by five or fewer individuals (as defined in the Code to include certain entities). Because our board of trustees believes that it is important for us to continue to qualify as a REIT, the declaration of trust, subject to certain exceptions, contains restrictions on the percentage of shares that a person may own. Under the declaration of trust:    no person may own directly or indirectly, or be deemed to own through attribution, more than 9.8% (in value or number of shares, whichever is more restrictive) of the issued and outstanding (a) common shares or (b) shares of any class or series of preferred shares; no person may beneficially or constructively own shares that would result in our being “closely held” under Section 856(h) of the Code or otherwise cause us to fail to qualify as a REIT; and no person may transfer shares if such transfer would result in shares being owned by fewer than 100 persons. Our board of trustees may exempt a person that is not an individual from the 9.8% ownership limit if such person provides information and makes representations to the board of trustees that are satisfactory to the board of trustees, in its reasonable discretion, to establish that such person’s ownership in excess of the 9.8% limit would not jeopardize our qualification as a REIT. Any person who acquires or attempts or intends to acquire beneficial or constructive ownership of shares that will or may violate any of the foregoing restrictions on transferability and ownership will be required to give us immediate notice and provide such other information to us as we may request in order to determine the effect of such transfer on our status as a REIT. If any transfer of shares or any other event would otherwise result in any person violating the ownership limits described above, then the declaration of trust provides that (a) the transfer will be void and of no force or effect with respect to the prohibited transferee with respect to that number of shares that exceeds the ownership limits or that such number of shares will be automatically transferred to a charitable trust for the benefit of a charitable beneficiary and (b) the prohibited transferee would not acquire any right or interest in the shares. The foregoing restrictions on transferability and ownership would not apply if our board of trustees were to determine that it is no longer in our best interests to attempt to qualify, or to continue to qualify, as a REIT. All certificates evidencing shares bear a legend referring to the restrictions described above. The declaration of trust expressly provides that the ownership limit and ownership restrictions on our shares shall not preclude the settlement of any transaction entered into through the facilities of the New York Stock Exchange or any other national securities exchange or quotation system over which shares may be traded from time to time. The fact that the settlement of any transaction occurs shall not negate the effect of any other provision in the declaration of trust providing for ownership limit or ownership restrictions and any transferee in such a transaction shall be subject to all of such other provisions. Every owner of more than 5% (or such lower percentage as required by the Code or the regulations promulgated thereunder) of all classes or series of shares, including common shares, is required to give written notice to us within 30 days after the end of each taxable year stating the name and address of such owner, the number of shares of each class and series of shares that the owner beneficially owns and a description of the manner in which such shares are held. Each such owner shall provide to us such additional information as we may request in order to determine the effect, if any, of such beneficial ownership on our status as a REIT and to ensure compliance with the ownership limitations. In addition, each shareholder is required, upon demand, to provide to us such information as we may request, in good faith, in order to determine our status as a REIT and to comply with the requirements of any taxing authority or governmental authority or to determine such compliance. The ownership limitations in the declaration of trust could discourage, delay or prevent a takeover, change of control or other transaction in which holders of some or a majority of our outstanding common shares might have received a premium for their shares over the then- prevailing market price of such shares. Subsidiary 101 OLD WINDSOR ROAD, LLC 1053 CROMWELL AVENUE, LLC 12250 El Dorado Parkway, LLC 12902 South 301 Highway, LLC 1575 NORTH BLAIRS BRIDGE ROAD, LLC 186 Jamaica Ave TRS, LLC 186 JAMAICA AVE, LLC 191 III CUBE 2 LLC 191 III CUBE BORDEAUX SUB, LLC 191 III CUBE CHATTANOOGA SUB, LLC 191 III CUBE GA SUB LLC 191 III CUBE GOODLETTSVILLE I SUB, G.P. 191 III CUBE GOODLETTSVILLE II SUB, G.P. 191 III CUBE GRANDVILLE SUB, LLC 191 III CUBE KNOXVILLE I SUB, G.P. 191 III CUBE KNOXVILLE II SUB, G.P. 191 III CUBE KNOXVILLE III SUB, G.P. 191 III Cube LLC 191 III CUBE MA SUB LLC 191 III CUBE MURFREESBORO SUB, LLC 191 III CUBE NC SUB LLC 191 III CUBE NEW BEDFORD SUB, LLC 191 III CUBE OLD HICKORY SUB, LLC 191 III CUBE SC SUB LLC 191 III CUBE SUB HOLDINGS 1 LLC 191 III CUBE SUB HOLDINGS 2 LLC 191 III CUBE SUB HOLDINGS 3 LLC 191 III CUBE SUB HOLDINGS 4 LLC 191 III CUBE SUB HOLDINGS 5 LLC 191 III CUBE SUB HOLDINGS 6 LLC 191 III CUBE SUB HOLDINGS 7 LLC 191 III CUBE SUB HOLDINGS 8 LLC 191 III CUBE TN SUB LLC 191 III CUBE TRINITY SUB, LLC 191 IV CUBE LLC 2225 46TH ST TRS, LLC 2225 46TH ST, LLC 2301 TILLOTSON AVE, LLC 251 JAMAICA AVE, LLC 2701 S. CONGRESS AVENUE, LLC 2880 Exterior St, LLC 2880 EXTERIOR STREET TRS, LLC 295 E. Ocotillo Road, LLC 3068 CROPSEY AVENUE, LLC 3103 N. Decatur Road, LLC 38300 North Gantzel Road, LLC 4211 BELLAIRE BLVD., LLC 430 1ST AVENUE SOUTH, LLC 4370 Fountain Hills Drive NE, LLC 444 55TH STREET HOLDINGS TRS, LLC 444 55TH STREET HOLDINGS, LLC 444 55TH STREET VENTURE, LLC Exhibit 21.1 Jurisdiction of Organization Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Subsidiary 444 55TH STREET, LLC 4441 Alma Road, LLC 5 Old Lancaster Associates, LLC 500 MILDRED AVENUE PRIMOS, LLC 5505 Maple Ave, LLC 5700 WASHINGTON AVENUE, LLC 5715 BURNET ROAD, LLC 610 SAWDUST ROAD, LLC 7205 Vanderbilt Way, LLC 8552 BAYMEADOWS ROAD, LLC 9641 Annapolis Road, LLC CONSHOHOCKEN GP II, LLC CS 1158 MCDONALD AVE, LLC CS 160 EAST 22ND ST, LLC CS 2087 HEMPSTEAD TPK, LLC CS ANNAPOLIS HOLDINGS, LLC CS ANNAPOLIS, LLC CS CAPITAL INVESTORS, LLC CS FLORIDA AVENUE, LLC CS SDP EVERETT BORROWER, LLC CS SDP Everett, LLC CS SDP Newtonville, LLC CS SDP WALTHAM BORROWER, LLC CS SDP WALTHAM, LLC CS SHIRLINGTON, LLC CS SJM E 92ND STREET OWNER, LLC CS SJM E 92ND STREET, LLC CS SNL NEW YORK AVE, LLC CS SNL OPERATING COMPANY, LLC CS VALLEY FORGE VILLAGE STORAGE, LLC CS VENTURE I, LLC CUBE HHF Limited Partnership CUBE HHF NORTHEAST CT, LLC CUBE HHF NORTHEAST MA, LLC CUBE HHF NORTHEAST RI, LLC CUBE HHF NORTHEAST SUB HOLDINGS LLC CUBE HHF NORTHEAST TRS, LLC CUBE HHF NORTHEAST VENTURE LLC CUBE HHF NORTHEAST VT, LLC CUBE HHF TRS, LLC CUBE III TN ASSET MANAGEMENT, LLC CUBE III TRS 2 LLC CUBE III TRS LLC CUBE IV TRS LLC CUBE VENTURE GP, LLC CubeSmart CubeSmart Asset Management, LLC CUBESMART BARTOW, LLC CUBESMART BOSTON ROAD, LLC CUBESMART CLINTON, LLC CUBESMART CYPRESS, LLC CUBESMART EAST 135TH, LLC CubeSmart Management, LLC CUBESMART SOUTHERN BLVD, LLC Jurisdiction of Organization Delaware Delaware Pennsylvania Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Maryland Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Subsidiary CUBESMART SWISS AVE, LLC CUBESMART TEMPLE HILLS, LLC CUBESMART TIMONIUM BORROWER, LLC CubeSmart Timonium, LLC CubeSmart TRS, Inc. CubeSmart, L.P. EAST COAST GP, LLC EAST COAST STORAGE PARTNERS, L.P. FREEHOLD MT, LLC LANGHORNE GP II, LLC Lantana Property Owner's Association, Inc. MONTGOMERYVILLE GP II, LLC Old Lancaster Venture, L.P. PSI Atlantic Austin TX, LLC PSI Atlantic Brockton MA, LLC PSI Atlantic Cornelius NC, LLC PSI Atlantic Haverhill MA, LLC PSI Atlantic Holbrook NY, LLC PSI Atlantic Humble TX, LLC PSI Atlantic Lawrence MA, LLC PSI Atlantic Lithia Springs GA, LLC PSI Atlantic Nashville TN, LLC PSI Atlantic NPB FL, LLC PSI Atlantic Pineville NC, LLC PSI Atlantic Surprise AZ, LLC PSI Atlantic TRS, LLC PSI Atlantic Villa Rica GA, LLC PSI Atlantic Villa Rica Parcel Owner, LLC PSI Atlantic, LLC R STREET STORAGE ASSOCIATES, LLC SHIRLINGTON RD II, LLC SHIRLINGTON RD TRS, LLC SHIRLINGTON RD, LLC SOMERSET MT, LLC STORAGE PARTNERS OF CONSHOHOCKEN, L.P. Storage Partners of Freehold II, LLC Storage Partners of Langhorne II, LP STORAGE PARTNERS OF MONTGOMERYVILLE, L.P. STORAGE PARTNERS OF SOMERSET, LLC UNITED-HSRE I, L.P. U-Store-It Development LLC U-Store-It Trust Luxembourg S.ar.l. Valley Forge Storage Venture, LLC Wider Reach, LLC YSI HART TRS, INC YSI I LLC YSI II LLC YSI X GP LLC YSI X LP YSI X LP LLC YSI XV LLC YSI XX GP LLC YSI XX LP YSI XX LP LLC Jurisdiction of Organization Delaware Delaware Delaware Delaware Ohio Delaware Delaware Delaware Delaware Delaware Florida Delaware Pennsylvania Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Maryland Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Luxembourg Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Subsidiary YSI XXX LLC YSI XXXI, LLC YSI XXXIII, LLC YSI XXXIIIA, LLC YSI XXXVII, LLC Jurisdiction of Organization Delaware Delaware Delaware Delaware Delaware Consent of Independent Registered Public Accounting Firm Exhibit 23.1 The Board of Trustees CubeSmart: We consent to the incorporation by reference in the registration statement (No. 333-216768) on Form S-3 of CubeSmart and CubeSmart, L.P. and (Nos. 333-211787, 333-167623, 333-143126, 333-143125, 333-143124 and 333-119987) on Form S-8 of CubeSmart of our reports dated February 21, 2020, with respect to the consolidated balance sheets of CubeSmart as of December 31, 2019 and 2018, the related consolidated statements of operations, comprehensive income (loss), equity, and cash flows for each of the years in the three-year period ended December 31, 2019, and the related notes and financial statement schedule III (collectively, the Consolidated Financial Statements), and the effectiveness of internal control over financial reporting as of December 31, 2019, which reports appear in the December 31, 2019 annual report on Form 10-K of CubeSmart and CubeSmart, L.P. Our report on the Consolidated Financial Statements refers to a change in the method of accounting for leases. /s/ KPMG LLP Philadelphia, Pennsylvania February 21, 2020 Exhibit 23.2 The Partners of CubeSmart, L.P. and the Board of Trustees of CubeSmart: Consent of Independent Registered Public Accounting Firm We consent to the incorporation by reference in the registration statement (No. 333-216768) on Form S-3 of CubeSmart and CubeSmart, L.P. and (Nos. 333-211787, 333-167623, 333-143126, 333-143125, 333-143124 and 333-119987) on Form S-8 of CubeSmart of our reports dated February 21, 2020, with respect to the consolidated balance sheets of CubeSmart, L.P. as of December 31, 2019 and 2018, the related consolidated statements of operations, comprehensive income (loss), capital, and cash flows for each of the years in the three- year period ended December 31, 2019, and the related notes and financial statement schedule III (collectively, the Consolidated Financial Statements), and the effectiveness of internal control over financial reporting as of December 31, 2019, which reports appear in the December 31, 2019 annual report on Form 10-K of CubeSmart and CubeSmart, L.P. Our report on the Consolidated Financial Statements refers to a change in the method of accounting for leases. /s/ KPMG LLP Philadelphia, Pennsylvania February 21, 2020 CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 Exhibit 31.1 I, Christopher P. Marr, certify that: 1. I have reviewed this Annual Report on Form 10-K of CubeSmart; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and 5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Trustees (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. Date: February 21, 2020 /s/ Christopher P. Marr Christopher P. Marr Chief Executive Officer CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 Exhibit 31.2 I, Timothy M. Martin, certify that: 1. I have reviewed this Annual Report on Form 10-K of CubeSmart; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and 5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Trustees (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. 6 Date: February 21, 2020 /s/ Timothy M. Martin Timothy M. Martin Chief Financial Officer CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 Exhibit 31.3 I, Christopher P. Marr, certify that: 1. I have reviewed this Annual Report on Form 10-K of CubeSmart L.P.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and 5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Trustees (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. Date: February 21, 2020 /s/ Christopher P. Marr Christopher P. Marr Chief Executive Officer CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 Exhibit 31.4 I, Timothy M. Martin, certify that: 1. I have reviewed this Annual Report on Form 10-K of CubeSmart L.P.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and 5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Trustees (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. Date: February 21, 2020 /s/ Timothy M. Martin Timothy M. Martin Chief Financial Officer Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Exhibit 32.1 The undersigned, the Chief Executive Officer and Chief Financial Officer of CubeSmart (the “Company”), each hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (a) The Annual Report on Form 10-K of the Company for the year ended December 31, 2019 (the “Report”) filed on the date hereof with the Securities and Exchange Commission fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and (b) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. 6 Date: February 21, 2020 Date: February 21, 2020 /s/ Christopher P. Marr Christopher P. Marr Chief Executive Officer /s/ Timothy M. Martin Timothy M. Martin Chief Financial Officer A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request. Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Exhibit 32.2 The undersigned, the Chief Executive Officer and Chief Financial Officer of CubeSmart L.P. (the “Company”), each hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (a) The Annual Report on Form 10-K of the Company for the year ended December 31, 2019 (the “Report”) filed on the date hereof with the Securities and Exchange Commission fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and (b) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. 6 Date: February 21, 2020 Date: February 21, 2020 /s/ Christopher P. Marr Christopher P. Marr Chief Executive Officer /s/ Timothy M. Martin Timothy M. Martin Chief Financial Officer A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request. Exhibit 99.1 MATERIAL UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS The following discussion describes the material U.S. federal income tax considerations relating to the purchase, ownership and disposition of common shares and preferred shares of CubeSmart and debt securities of CubeSmart, L.P. (the “Operating Partnership”), and the qualification and taxation of CubeSmart as a REIT under the Internal Revenue Code of 1986, as amended (the “Code”). This discussion reflects changes to the U.S. federal income tax laws made by legislation commonly referred to as the Tax Cuts and Jobs Act (the “TCJA”), which was signed into law on December 22, 2017. The TCJA is a far-reaching and complex revision to the U.S. federal income tax laws with disparate and, in some cases, countervailing impacts on different categories of taxpayers and industries, and it is anticipated that it will require subsequent rulemaking and the finalization of proposed guidance in a number of areas. This discussion is not exhaustive of all possible tax considerations and does not provide a detailed discussion of any state, local or foreign tax considerations. The discussion does not address all aspects of taxation that may be relevant to particular investors in light of their personal investment or tax circumstances, or to certain types of investors that are subject to special treatment under the U.S. federal income tax laws, such as insurance companies, regulated investment companies, REITs, tax-exempt organizations (except to the limited extent discussed below under “Taxation of Tax-Exempt Shareholders”), financial institutions or broker-dealers, non-U.S. individuals and foreign corporations (except to the limited extent discussed below under “Taxation of Non-U.S. Shareholders”), an entity treated as a U.S. corporation on account of the inversion rules, and other persons subject to special tax rules. This summary deals only with investors who hold common shares or preferred shares of CubeSmart or debt securities of the Operating Partnership as “capital assets” within the meaning of Section 1221 of the Code. This discussion is not intended to be, and should not be construed as, tax advice. The information in this summary is based on the Code, current, temporary and proposed Treasury regulations, the legislative history of the Code, current administrative interpretations and practices of the Internal Revenue Service (the “IRS”), including its practices and policies as endorsed in private letter rulings, which are not binding on the IRS, and existing court decisions. Future legislation, regulations, administrative interpretations and court decisions could change current law or adversely affect existing interpretations of current law. Any change could apply retroactively. We have not obtained any rulings from the IRS concerning the tax treatment of the matters discussed in this summary. Therefore, it is possible that the IRS could challenge the statements in this summary, which do not bind the IRS or the courts, and that a court could agree with the IRS. We urge you to consult your own tax advisor regarding the specific tax consequences to you of ownership of common shares or preferred shares of CubeSmart and debt securities of the Operating Partnership, and of CubeSmart’s election to be taxed as a REIT. Specifically, you should consult your own tax advisor regarding the federal, state, local, foreign, and other tax consequences of such ownership and election, and regarding potential changes in applicable tax laws. Taxation of CubeSmart Qualification of CubeSmart as a REIT CubeSmart elected to be taxed as a REIT under the U.S. federal income tax laws beginning with its short taxable year ended December 31, 2004. CubeSmart believes that, beginning with such short taxable year, it has been organized and has operated in such a manner as to qualify for taxation as a REIT under the Code and intends to continue to operate in such a manner. However, there can be no assurance that CubeSmart has qualified or will remain qualified as a REIT. CubeSmart’s continued qualification and taxation as a REIT depends upon its ability to meet on a continuing basis, through actual annual operating results, certain qualification tests set forth in the U.S. federal income tax laws. Those qualification tests involve the percentage of income that CubeSmart earns from specified sources, the percentage of its assets that falls within specified categories, the diversity of its share ownership, and the percentage of its earnings that CubeSmart distributes. Accordingly, no assurance can be given that the actual results of CubeSmart’s operations for any particular taxable year will satisfy such requirements. For a discussion of the tax consequences of its failure to qualify as a REIT, see “Requirements for Qualification — Failure to Qualify” below. Pursuant to CubeSmart’s declaration of trust, CubeSmart’s board of trustees has the authority to make any tax elections on its behalf that, in its sole judgment, are in CubeSmart’s best interest. This authority includes the ability to revoke or otherwise terminate CubeSmart’s status as a REIT. CubeSmart’s board of trustees has the authority under its declaration of trust to make these elections without the necessity of obtaining the approval of CubeSmart’s shareholders. In addition, CubeSmart’s board of trustees has the authority to waive any restrictions and limitations contained in its declaration of trust that are intended to preserve CubeSmart’s status as a REIT during any period in which its board of trustees has determined not to pursue or preserve CubeSmart’s status as a REIT. Taxation of CubeSmart as a REIT The sections of the Code relating to qualification and operation as a REIT, and the U.S. federal income taxation of a REIT, are highly technical and complex. The following discussion sets forth only the material aspects of those sections. This summary is qualified in its entirety by the applicable Code provisions and the related rules and regulations. If CubeSmart qualifies as a REIT, it generally will not be subject to federal income tax on the taxable income that it distributes to its shareholders. The benefit of that tax treatment is that it avoids the “double taxation,” or taxation at both the corporate and shareholder levels, that generally results from owning shares in a corporation. However, CubeSmart will be subject to federal tax in the following circumstances:  CubeSmart is subject to the corporate federal income tax on any taxable income, including net capital gain that it does not distribute to shareholders during, or within a specified time period after, the calendar year in which the income is earned.  For tax years beginning before January 1, 2018, CubeSmart may be subject to the corporate “alternative minimum tax” on any items of tax preference, including any deductions of net operating losses.  CubeSmart is subject to tax, at the highest corporate rate (35% for tax years beginning on or before December 31, 2017 and 21% for tax years beginning after that date), on net income from the sale or other disposition of property acquired through foreclosure (“foreclosure property”) that it holds primarily for sale to customers in the ordinary course of business, and other non-qualifying income from foreclosure property.  CubeSmart is subject to a 100% tax on net income from sales or other dispositions of property, other than foreclosure property, that it holds primarily for sale to customers in the ordinary course of business.    If CubeSmart fails to satisfy one or both of the 75% gross income test or the 95% gross income test, as described below under “Requirements for Qualification — Gross Income Tests,” but nonetheless continues to qualify as a REIT because it meets other requirements, CubeSmart will be subject to a 100% tax on: the greater of the amount by which it fails the 75% gross income test or the 95% gross income test multiplied, in either case, by a fraction intended to reflect its profitability. If CubeSmart fails to distribute during a calendar year at least the sum of: (1) 85% of its REIT ordinary income for the year, (2) 95% of its REIT capital gain net income for the year, and (3) any undistributed taxable income required to be distributed from earlier periods, then CubeSmart will be subject to a 4% nondeductible excise tax on the excess of the required distribution over the amount it actually distributed. If CubeSmart fails any of the asset tests, as described below under “Requirements for Qualification — Asset Tests,” other than certain de minimis failures, but its failure was due to reasonable cause and not to willful neglect, and it nonetheless maintains its REIT qualification because of specified cure provisions, CubeSmart will pay a tax equal to the greater of $50,000 or 21% (for tax years beginning after December 31, 2017 and 35% for tax years beginning on or before that date) of the net income from the nonqualifying assets during the period in which it failed to satisfy the asset tests. The amount of gain on which CubeSmart will pay tax generally is the lesser of the amount of gain that it recognizes at the time of the sale or disposition, and the amount of gain that it would have recognized if it had sold the asset at the time CubeSmart acquired it.  If CubeSmart fails to satisfy one or more requirements for REIT qualification, other than the gross income tests and the asset tests, and such failure is due to reasonable cause and not to willful neglect, it will be required to pay a penalty of $50,000 for each such failure.  CubeSmart may elect to retain its net long-term capital gain and pay income tax on such gain.  CubeSmart will be subject to a 100% excise tax on transactions with a taxable REIT subsidiary that are not conducted on an arm’s-length basis.  If CubeSmart acquires any asset from a C corporation (a corporation that generally is subject to full corporate-level tax) in a transaction in which the adjusted basis of the assets in CubeSmart’s hands is determined by reference to the adjusted tax basis of the asset in the hands of the C corporation, CubeSmart will pay tax at the highest regular corporate rate then applicable (35% for tax years beginning on or before December 31, 2017 and 21% for tax years beginning after that date) if it recognizes gain on the sale or disposition of the asset during the 5-year period after it acquires the asset, unless the C corporation elects to treat the assets as if they were sold for their fair market value at the time of CubeSmart’s acquisition.  CubeSmart may be required to pay monetary penalties to the IRS in certain circumstances, including if it fails to meet record-keeping requirements intended to monitor its compliance with rules relating to the composition of a REIT’s shareholders, as described below in “Requirements for Qualification – Organizational Requirements - Recordkeeping Requirements.”  The earnings of CubeSmart’s lower-tier entities, if any, that are subchapter C corporations, including taxable REIT subsidiaries, are subject to federal corporate income tax. In addition, we may be subject to a variety of taxes, including payroll taxes and state, local and foreign income, property and other taxes on our assets and operations. We could also be subject to tax in situations and on transactions not presently contemplated. Requirements for Qualification (a) organizational requirements, (b) gross income tests, (c) asset tests and (d) annual distribution requirements. To qualify as a REIT, CubeSmart must elect to be treated as a REIT, and CubeSmart must meet various Organizational Requirements. A REIT is a corporation, trust or association that meets each of the following requirements: tax laws; 1) It is managed by one or more trustees or directors; 2) Its beneficial ownership is evidenced by transferable shares, or by transferable certificates of beneficial interest; 3) It would be taxable as a domestic corporation, but for Sections 856 through 860 of the Code; 4) It is neither a financial institution nor an insurance company subject to special provisions of the U.S. federal income rules of attribution); 5) At least 100 persons are beneficial owners of its shares or ownership certificates (determined without reference to any or fewer individuals, which the U.S. federal income tax laws define to include certain entities, during the last half of any taxable year; 6) Not more than 50% in value of its outstanding shares or ownership certificates is owned, directly or indirectly, by five 7) It elects to be a REIT, or has made such election for a previous taxable year which has not been revoked or terminated, and satisfies all relevant filing and other administrative requirements established by the IRS that must be met to elect and maintain REIT status; U.S. federal income tax laws; and 8) It uses a calendar year for U.S. federal income tax purposes and complies with the recordkeeping requirements of the income. 9) It meets certain other tests, described below, regarding the nature of its income and assets and the distribution of its CubeSmart must meet requirements 1 through 4, 8 and 9 during its entire taxable year and must meet requirement 5 during at least 335 days of a taxable year of 12 months, or during a proportionate part of a taxable year of less than 12 months. CubeSmart’s declaration of trust provides for restrictions regarding the ownership and transfer of its shares of beneficial interest that are intended to assist CubeSmart in continuing to satisfy requirements 5 and 6. However, these restrictions may not ensure that CubeSmart will, in all cases, be able to satisfy these requirements. For purposes of determining share ownership under requirement 6, an “individual” generally includes a supplemental unemployment compensation benefits plan, a private foundation, or a portion of a trust permanently set aside or used exclusively for charitable purposes. An “individual,” however, generally does not include a trust that is a qualified employee pension or profit sharing trust under the U.S. federal income tax laws, and beneficiaries of such a trust will be treated as holding CubeSmart’s shares in proportion to their actuarial interests in the trust for purposes of requirement 6. CubeSmart believes it has issued sufficient shares of beneficial interest with enough diversity of ownership to satisfy requirements 5 and 6 set forth above. Recordkeeping Requirements. To monitor compliance with the share ownership requirements, CubeSmart is required to maintain records regarding the actual ownership of its shares. To do so, CubeSmart must demand written statements each year from the record holders of certain percentages of its shares in which the record holders are to disclose the actual owners of the shares (the persons required to include in gross income the dividends paid by us). A list of those persons failing or refusing to comply with this demand must be maintained as part of CubeSmart’s records. Failure by CubeSmart to comply with these recordkeeping requirements could subject CubeSmart to monetary penalties. If CubeSmart satisfies these requirements and has no reason to know that requirement 6 is not satisfied, CubeSmart will be deemed to have satisfied such requirement. A shareholder that fails or refuses to comply with the demand is required by Treasury Regulations to submit a statement with its tax return disclosing the actual ownership of the shares and other information. Qualified REIT Subsidiaries. A corporation that is a “qualified REIT subsidiary” is not treated as a corporation separate from its parent REIT. A “qualified REIT subsidiary” is a corporation, all of the capital stock of which is owned by the REIT and that has not elected to be a taxable REIT subsidiary. All assets, liabilities, and items of income, deduction, and credit of a “qualified REIT subsidiary” are treated as assets, liabilities, and items of income, deduction, and credit of the REIT. Thus, in applying the requirements described herein, any “qualified REIT subsidiary” that CubeSmart owns will be ignored, and all assets, liabilities, and items of income, deduction, and credit of such subsidiary will be treated as its assets, liabilities, and items of income, deduction, and credit. Partnership Subsidiaries. An unincorporated domestic entity, such as a partnership or limited liability company that has a single owner, generally is not treated as an entity separate from its parent for U.S. federal income tax purposes. An unincorporated domestic entity with two or more owners is generally treated as a partnership for U.S. federal income tax purposes. In the case of a REIT that is a partner in a partnership, the REIT is treated as owning its proportionate share of the assets of the partnership and as earning its allocable share of the gross income of the partnership for purposes of the applicable REIT qualification tests. Thus, CubeSmart’s proportionate share of the assets, liabilities and items of income of the Operating Partnership and any other partnership, joint venture, or limited liability company that is treated as a partnership for U.S. federal income tax purposes in which CubeSmart acquires an interest, directly or indirectly (“Partnership Subsidiary”), is treated as CubeSmart’s assets and gross income for purposes of applying the various REIT qualification requirements. Taxable REIT Subsidiaries. A REIT is permitted to own up to 100% of the stock of one or more “taxable REIT subsidiaries.” A taxable REIT subsidiary is a corporation subject to U.S. federal income tax, and state and local income tax where applicable, as a regular “C” corporation. The subsidiary and the REIT must jointly elect to treat the subsidiary as a taxable REIT subsidiary. In addition, if a taxable REIT subsidiary owns, directly or indirectly, securities representing 35% or more of the vote or value of a subsidiary corporation, that subsidiary will also be treated as a taxable REIT subsidiary. Several provisions regarding the arrangements between a REIT and its taxable REIT subsidiaries ensure that a taxable REIT subsidiary will be subject to an appropriate level of U.S. federal income taxation. For example, the taxable REIT subsidiary rules limit the deductibility of interest paid or accrued by a taxable REIT subsidiary to its parent REIT. Further, the rules impose a 100% excise tax on transactions between a taxable REIT subsidiary and its parent REIT or the REIT’s tenants that are not conducted on an arm’s-length basis, and, effective for taxable years beginning after December 31, 2015, on income imputed to a taxable REIT subsidiary, for services rendered to or on behalf of CubeSmart, the Operating Partnership, any qualified REIT subsidiary, or a Partnership Subsidiary. CubeSmart may engage in activities indirectly through a taxable REIT subsidiary that would jeopardize its REIT status if CubeSmart engaged in the activities directly. For example, a taxable REIT subsidiary of CubeSmart may provide services to unrelated parties which might produce income that does not qualify under the gross income tests described below. A taxable REIT subsidiary may also engage in other activities that, if conducted by CubeSmart directly, could result in the receipt of non-qualified income or the ownership of non-qualified assets or the imposition of the 100% tax on income from prohibited transactions. See description below under “Requirements for Qualification – Gross Income Tests - Prohibited Transactions.” Overall, no more than 20% (25% for taxable years beginning before January 1, 2018) of the value of a REIT’s assets may constitute stock or securities of one or more taxable REIT subsidiaries. For taxable years beginning after December 31, 2017, taxpayers are subject to a limitation on their ability to deduct net business interest generally equal to 30% of adjusted taxable income, subject to certain exceptions. This provision may limit the ability of our taxable REIT subsidiaries to deduct interest, which could increase their taxable income. Gross Income Tests. CubeSmart must satisfy two gross income tests annually to maintain its qualification as a REIT. First, at least 75% of its gross income for each taxable year must consist of defined types of income that CubeSmart derives, directly or indirectly, from investments relating to real property or mortgages on real property or qualified temporary investment income. Qualifying income for purposes of that 75% gross income test generally includes:        rents from real property; interest on debt secured by mortgages on real property or on interests in real property (including certain types of mortgage-backed securities); for taxable years beginning after December 31, 2015, interest on mortgage loans secured by both real and personal property if the fair market value of such personal property does not exceed 15% of the total fair market value of all property securing the loans; dividends or other distributions on, and gain from the sale of, shares in other REITs (excluding dividends from its taxable REIT subsidiaries); gain from the sale of real estate assets (other than gain from property held primarily for sale to customers), except, effective for taxable years beginning after December 31, 2015, for gain from a nonqualified publicly offered REIT debt instrument (as defined below); income and gain derived from foreclosure property; and income derived from the temporary investment of new capital that is attributable to the issuance of CubeSmart’s shares of beneficial interest or a public offering of its debt with a maturity date of at least five years and that CubeSmart receives during the one-year period beginning on the date on which it receives such new capital. Second, in general, at least 95% of CubeSmart’s gross income for each taxable year must consist of income that is qualifying income for purposes of the 75% gross income test, other types of interest and dividends (including dividends from its taxable REIT subsidiaries), gain from the sale or disposition of stock or securities, or any combination of these. Gross income from the sale of property that CubeSmart holds primarily for sale to customers in the ordinary course of business is excluded from both the numerator and the denominator in both income tests. See “Prohibited Transactions.” In addition, certain gains from hedging transactions and certain foreign currency gains will be excluded from both the numerator and the denominator for purposes of one or both of the income tests. See “Hedging Transactions” and “Foreign Currency Gain.” which is qualifying income for purposes of the 75% and 95% gross income tests, only if the following conditions are met: Rents from Real Property. Rent that CubeSmart receives from its real property will qualify as “rents from real property,” First, the rent must not be based in whole or in part on the income or profits of any person. Such rent, however, will qualify as “rents from real property” if it is based on percentages of receipts or sales and the percentages are fixed at the time the leases are entered into, are not renegotiated during the term of the leases in a manner that has the effect of basing percentage rent on income or profits, and conform with normal business practice. Second, CubeSmart must not own, actually or constructively, 10% or more of the stock of any corporate tenant or the assets or net profits of any tenant, referred to as a related party tenant, other than a taxable REIT subsidiary. The constructive ownership rules generally provide that, if 10% or more in value of its shares is owned, directly or indirectly, by or for any person, CubeSmart is considered as owning the stock owned, directly or indirectly, by or for such person. CubeSmart does not own any stock or any assets or net profits of any tenant directly. However, because the constructive ownership rules are broad and it is not possible to monitor continually direct and indirect transfers of its shares, no absolute assurance can be given that such transfers or other events of which CubeSmart has no knowledge will not cause CubeSmart to own constructively 10% or more of a tenant (or a subtenant, in which case only rent attributable to the subtenant is disqualified) other than a taxable REIT subsidiary at some future date. Under an exception to the related-party tenant rule described in the preceding paragraph, rent that CubeSmart receives from a taxable REIT subsidiary will qualify as “rents from real property” as long as (1) at least 90% of the leased space in the property is leased to persons other than taxable REIT subsidiaries and related-party tenants, and (2) the amount paid by the taxable REIT subsidiary to rent space at the property is substantially comparable to rents paid by other tenants of the property for comparable space. The “substantially comparable” requirement must be satisfied when the lease is entered into, when it is extended, and when the lease is modified, if the modification increases the rent paid by the taxable REIT subsidiary. If the requirement that at least 90% of the leased space in the related property is rented to unrelated tenants is met when a lease is entered into, extended, or modified, such requirement will continue to be met as long as there is no increase in the space leased to any taxable REIT subsidiary or related party tenant. Any increased rent attributable to a modification of a lease with a taxable REIT subsidiary in which CubeSmart owns directly or indirectly more than 50% of the voting power or value of the stock (a “controlled taxable REIT subsidiary”) will not be treated as “rents from real property.” Third, the rent attributable to the personal property leased in connection with a lease of real property must not be greater than 15% of the total rent received under the lease. The rent attributable to personal property under a lease is the amount that bears the same ratio to total rent under the lease for the taxable year as the average of the fair market values of the leased personal property at the beginning and at the end of the taxable year bears to the average of the aggregate fair market values of both the real and personal property covered by the lease at the beginning and at the end of such taxable year (the “personal property ratio”). With respect to each of its leases, CubeSmart believes that the personal property ratio generally is less than 15%. Where that is not, or may in the future not be, the case, CubeSmart believes that any income attributable to personal property will not jeopardize its ability to qualify as a REIT. There can be no assurance, however, that the IRS would not challenge CubeSmart’s calculation of a personal property ratio, or that a court would not uphold such assertion. If such a challenge were successfully asserted, CubeSmart could fail to satisfy the 75% or 95% gross income test and thus lose its REIT status. Fourth, CubeSmart cannot furnish or render non-customary services to the tenants of its properties, or manage or operate its properties, other than through an independent contractor who is adequately compensated and from whom CubeSmart does not derive or receive any income. However, CubeSmart need not provide services through an “independent contractor,” but instead may provide services directly to its tenants, if the services are “usually or customarily rendered” in connection with the rental of space for occupancy only and are not considered to be provided for the tenants’ convenience. In addition, CubeSmart may provide a minimal amount of “non- customary” services to the tenants of a property, other than through an independent contractor, as long as its income from the services does not exceed 1% of its income from the related property. Finally, CubeSmart may own up to 100% of the stock of one or more taxable REIT subsidiaries, which may provide non-customary services to CubeSmart’s tenants without tainting CubeSmart’s rents from the related properties. CubeSmart has not performed, and does not intend to perform, any services other than customary ones for its tenants, other than services provided through independent contractors or taxable REIT subsidiaries. Tenants may be required to pay, in addition to base rent, reimbursements for certain amounts CubeSmart is obligated to pay to third parties (such as a lessee’s proportionate share of a property’s operational or capital expenses), penalties for nonpayment or late payment of rent or additions to rent. These and other similar payments should qualify as “rents from real property.” To the extent they do not, they should be treated as interest that qualifies for the 95% gross income test. If a portion of the rent CubeSmart receives from a property does not qualify as “rents from real property” because the rent attributable to personal property exceeds 15% of the total rent for a taxable year, the portion of the rent attributable to personal property will not be qualifying income for purposes of either the 75% or 95% gross income test. Thus, if rent attributable to personal property, plus any other income that is nonqualifying income for purposes of the 95% gross income test, during a taxable year exceeds 5% of its gross income during the year, CubeSmart would lose its REIT status, unless CubeSmart qualified for certain statutory relief provisions. By contrast, in the following circumstances, none of the rent from a lease of property would qualify as “rents from real property”: (1) the rent is considered based on the income or profits of the tenant; (2) the lessee is a related party tenant or fails to qualify for the exception to the related-party tenant rule for qualifying taxable REIT subsidiaries; or (3) CubeSmart furnishes non-customary services to the tenants of the property, or manages or operates the property, other than through a qualifying independent contractor or a taxable REIT subsidiary. In any of these circumstances, CubeSmart could lose its REIT status, unless CubeSmart qualified for certain statutory relief provisions, because it would be unable to satisfy either the 75% or 95% gross income test. Interest. The term “interest” generally does not include any amount received or accrued, directly or indirectly, if the determination of the amount depends in whole or in part on the income or profits of any person. However, an amount received or accrued generally will not be excluded from the term “interest” solely because it is based on a fixed percentage or percentages of receipts or sales. Furthermore, to the extent that interest from a loan that is based on the profit or net cash proceeds from the sale of the property securing the loan constitutes a “shared appreciation provision,” income attributable to such participation feature will be treated as gain from the sale of the secured property. Prohibited Transactions. A REIT will incur a 100% tax on the net income derived from any sale or other disposition of property, other than foreclosure property, that the REIT holds primarily for sale to customers in the ordinary course of a trade or business. Whether a REIT holds an asset “primarily for sale to customers in the ordinary course of a trade or business” depends, however, on the facts and circumstances in effect from time to time, including those related to a particular asset. A safe harbor to the characterization of the sale of property by a REIT as a prohibited transaction and the 100% prohibited transaction tax is available if the following requirements are met:      the REIT has held the property for not less than two years; the aggregate expenditures made by the REIT, or any partner of the REIT, during the four-year period preceding the date of the sale that are includable in the basis of the property do not exceed 30% of the selling price of the property; either (1) during the year in question, the REIT did not make more than seven sales of property other than foreclosure property or sales to which Section 1033 of the Code applied, (2) the aggregate adjusted bases of all such properties sold by the REIT during the year did not exceed 10% of the aggregate bases of all of the assets of the REIT at the beginning of the year, (3) the aggregate fair market value of all such properties sold by the REIT during the year did not exceed 10% of the aggregate fair market value of all of the assets of the REIT at the beginning of the year, (4) (i) for taxable years beginning after December 31, 2015, the aggregate adjusted bases of all such properties sold by the REIT during the year did not exceed 20% of the aggregate bases of all of the assets of the REIT at the beginning of the year and (ii) the average annual percentage of such properties sold by the REIT compared to all the REIT’s assets (measured by adjusted tax bases) in the current and two prior years did not exceed 10%, or (5) (i) the aggregate fair market value of all such properties sold by the REIT during the year did not exceed 20% of the aggregate fair market value of all assets of the REIT at the beginning of the year and (ii) the average annual percentage of such properties sold by the REIT compared to all the REIT’s assets (measured by fair market value) in the current and two prior years did not exceed 10%; in the case of property not acquired through foreclosure or lease termination, the REIT has held the property for at least two years for the production of rental income; and if the REIT has made more than seven sales of non-foreclosure property during the taxable year, substantially all of the marketing and development expenditures with respect to the property were made through an independent contractor (or, for taxable years beginning after December 31, 2015, a taxable REIT subsidiary) from whom the REIT derives no income. CubeSmart intends to hold properties for investment with a view to long-term appreciation, to engage in the business of acquiring, developing, owning and operating properties, and to make occasional sales of properties as are consistent with its investment objective. CubeSmart cannot assure you, however, that it can comply with the safe-harbor provisions that would prevent the imposition of the 100% tax or that it will avoid owning property that may be characterized as property held “primarily for sale to customers in the ordinary course of a trade or business.” The 100% tax does not apply to gains from the sale of property that is held through a taxable REIT subsidiary or other taxable corporation, although such income will be subject to tax in the hands of that corporation at regular corporate tax rates. CubeSmart may, therefore, form or acquire a taxable REIT subsidiary to hold and dispose of those properties it concludes may not fall within the safe-harbor provisions. Foreclosure Property. CubeSmart will be subject to tax at the maximum corporate rate (35% for tax years beginning on or before December 31, 2017 and 21% for tax years beginning after that date) on any net income from foreclosure property, other than income that otherwise would be qualifying income for purposes of the 75% gross income test. “Foreclosure property” is any real property, including interests in real property, and any personal property incident to such real property:   that is acquired by a REIT as the result of the REIT having bid on such property at foreclosure, or having otherwise reduced such property to ownership or possession by agreement or process of law, after there was a default or default was imminent on a lease of such property or on indebtedness that such property secured; for which the related loan or leased property was acquired by the REIT at a time when the default was not imminent or anticipated; and  for which the REIT makes a proper election to treat the property as foreclosure property. A REIT will not be considered to have foreclosed on a property where the REIT takes control of the property as a mortgagee-in-possession and cannot receive any profit or sustain any loss except as a creditor of the mortgagor. Property generally ceases to be foreclosure property at the end of the third taxable year following the taxable year in which the REIT acquired the property (or longer if an extension is granted by the Secretary of the Treasury). This period (as extended, if applicable) terminates, and foreclosure property ceases to be foreclosure property, on the first day:  on which a lease is entered into for the property that, by its terms, will give rise to income that does not qualify for purposes of the 75% gross income test, or any amount is received or accrued, directly or indirectly, pursuant to a lease entered into on or after such day that will give rise to income that does not qualify for purposes of the 75% gross income test;  on which any construction takes place on the property, other than completion of a building or, any other improvement, where more than 10% of the construction was completed before default became imminent; or  which is more than 90 days after the day on which the REIT acquired the property and the property is used in a trade or business which is conducted by the REIT, other than through an independent contractor from whom the REIT itself does not derive or receive any income. Any gain from the sale of property for which a foreclosure property election has been made will not be subject to the 100% tax on gains from prohibited transactions described above, even if the property is held primarily for sale to customers in the ordinary course of a trade or business. Income and gain from foreclosure property are qualifying income for the 75% and 95% gross income tests. Hedging Transactions. From time to time, CubeSmart enters into hedging transactions with respect to its assets or liabilities. CubeSmart’s hedging activities may include entering into interest rate swaps, caps, and floors, options to purchase such items, and futures and forward contracts. Income and gain from “hedging transactions” will be excluded from gross income for purposes of both the 75% and 95% gross income tests. A “hedging transaction” means either (1) any transaction entered into in the normal course of its trade or business primarily to manage the risk of interest rate, price changes, or currency fluctuations with respect to borrowings made or to be made, or ordinary obligations incurred or to be incurred, to acquire or carry real estate assets or (2) any transaction entered into primarily to manage the risk of currency fluctuations with respect to any item of income or gain that would be qualifying income under the 75% or 95% gross income test (or any property which generates such income or gain). CubeSmart will be required to clearly identify any such hedging transaction before the close of the day on which it was acquired, originated, or entered into and to satisfy other identification requirements. No assurance can be given that its hedging activities will not give rise to income that does not qualify for purposes of either or both of the gross income tests, and will not adversely affect CubeSmart’s ability to satisfy the REIT qualification requirements. Effective for taxable years beginning after December 31, 2015, if CubeSmart has entered into a hedging transaction described in (1) or (2), and a portion of the hedged indebtedness or property is extinguished or disposed of and, in connection with such extinguishment or disposition, CubeSmart enters into a new clearly identified hedging transaction (a “New Hedge”), income from the applicable hedge and income from the New Hedge (including gain from the disposition of such New Hedge) will not be treated as gross income for purposes of the 95% and 75% gross income tests. Foreign Currency Gain. Certain foreign currency gains will be excluded from gross income for purposes of one or both of the gross income tests. “Real estate foreign exchange gain” will be excluded from gross income for purposes of the 75% gross income test. Real estate foreign exchange gain generally includes foreign currency gain attributable to any item of income or gain that is qualifying income for purposes of the 75% gross income test, foreign currency gain attributable to the acquisition or ownership of (or becoming or being the obligor under) obligations secured by mortgages on real property or on interests in real property and certain foreign currency gain attributable to certain “qualified business units” of a REIT. “Passive foreign exchange gain” will be excluded from gross income for purposes of the 95% gross income test. Passive foreign exchange gain generally includes real estate foreign exchange gain as described above, and also includes foreign currency gain attributable to any item of income or gain that is qualifying income for purposes of the 95% gross income test and foreign currency gain attributable to the acquisition or ownership of (or becoming or being the obligor under) debt obligations. Because passive foreign exchange gain includes real estate foreign exchange gain, real estate foreign exchange gain is excluded from gross income for purposes of both the 75% and 95% gross income test. These exclusions for real estate foreign exchange gain and passive foreign exchange gain do not apply to foreign currency gain derived from dealing, or engaging in substantial and regular trading, in securities. Such gain is treated as nonqualifying income for purposes of both the 75% and 95% gross income tests. Failure to Satisfy Gross Income Tests. If CubeSmart fails to satisfy one or both of the gross income tests for any taxable year, CubeSmart nevertheless may qualify as a REIT for that year if it qualifies for relief under certain provisions of the U.S. federal income tax laws. Those relief provisions will be available if:  CubeSmart’s failure to meet those tests is due to reasonable cause and not to willful neglect; and  following such failure for any taxable year, a schedule of the sources of its income is filed with the IRS in accordance with regulations prescribed by the Secretary of the Treasury. CubeSmart cannot predict, however, whether any failure to meet these tests will qualify for the relief provisions. As discussed above in “Taxation of CubeSmart as a REIT,” even if the relief provisions apply, CubeSmart would incur a 100% tax on the gross income attributable to the greater of (1) the amount by which it fails the 75% gross income test, or (2) the excess of 95% of its gross income over the amount of gross income qualifying under the 95% gross income test, multiplied, in either case, by a fraction intended to reflect its profitability. each quarter of each taxable year. Asset Tests. To maintain its qualification as a REIT, CubeSmart also must satisfy the following asset tests at the end of First, at least 75% of the value of CubeSmart’s total assets must consist of: cash or cash items, including certain receivables; government securities; interests in real property, including leaseholds and options to acquire real property and leaseholds; effective for taxable years beginning after December 31, 2015: (i) personal property leased in connection with real property to the extent that the rents from personal property are treated as “rent from real property” for purposes of the 75% income test, and (ii) debt instruments issued by publicly offered REITs; interests in mortgages on real property (including certain mortgage-backed securities) and, for taxable years beginning after December 31, 2015, interests in mortgage loans secured by both real and personal property if the fair market value of such personal property does not exceed 15% of the total fair market value of all property securing the loans; stock in other REITs; and investments in stock or debt instruments during the one-year period following its receipt of new capital that CubeSmart raises through equity offerings or public offerings of debt with at least a five-year term.        securities may not exceed 5% of the value of its total assets, or the “5% asset test.” Second, of CubeSmart’s investments not included in the 75% asset class, the value of its interest in any one issuer’s voting power or value of any one issuer’s outstanding securities, or the “10% vote test” and “10% value test,” respectively. Third, of CubeSmart’s investments not included in the 75% asset class, CubeSmart may not own more than 10% of the may be represented by securities of one or more taxable REIT subsidiaries. Fourth, not more than 20% (25% for taxable years beginning before January 1, 2018) of the value of CubeSmart’s assets Fifth, effective for taxable years beginning after December 31, 2015, not more than 25% of the value of CubeSmart’s total assets may be represented by “nonqualified publicly offered REIT debt instruments.” “Nonqualified publicly offered REIT debt instruments” are debt instruments issued by publicly offered REITs that are not secured by a mortgage on real property. For purposes of the 5% asset test, the 10% vote test and 10% value test, the term “securities” does not include stock in another REIT, equity or debt securities of a qualified REIT subsidiary or taxable REIT subsidiary, mortgage loans that constitute real estate assets, or equity interests in a partnership. The term “securities,” however, generally includes debt securities issued by a partnership or another REIT, except that for purposes of the 10% value test, the term “securities” does not include:  Any “straight debt” security, which is defined as a written unconditional promise to pay on demand or on a specified date a sum certain in money if (i) the debt is not convertible, directly or indirectly, into stock, and (ii) the interest rate and interest payment dates are not contingent on profits, the borrower’s discretion, or similar factors. “Straight debt” securities do not include any securities issued by a partnership or a corporation in which CubeSmart or any controlled taxable REIT subsidiary hold non-”straight debt” securities that have an aggregate value of more than 1% of the issuer’s outstanding securities. However, “straight debt” securities include debt subject to the following contingencies: (1) a contingency relating to the time of payment of interest or principal, as long as either (i) there is no change to the effective yield of the debt obligation, other than a change to the annual yield that does not exceed the greater of 0.25% or 5% of the annual yield, or (ii) neither the aggregate issue price nor the aggregate face amount of the issuer’s debt obligations held by CubeSmart exceeds $1 million and no more than 12 months of unaccrued interest on the debt obligations can be required to be prepaid; and (2) a contingency relating to the time or amount of payment upon a default or prepayment of a debt obligation, as long as the contingency is consistent with customary commercial practice.  Any loan to an individual or an estate.  Any “section 467 rental agreement,” other than an agreement with a related party tenant.  Any obligation to pay “rents from real property.”  Certain securities issued by governmental entities.  Any security issued by a REIT.  Any debt instrument issued by an entity treated as a partnership for U.S. federal income tax purposes in which CubeSmart is a partner to the extent of CubeSmart’s proportionate interest in the debt and equity securities of the partnership.  Any debt instrument issued by an entity treated as a partnership for U.S. federal income tax purposes not described in the preceding bullet points if at least 75% of the partnership’s gross income, excluding income from prohibited transactions, is qualifying income for purposes of the 75% gross income test described above in “Requirements for Qualification — Gross Income Tests.” any securities issued by the partnership, without regard to the securities described in the last two bullet points above. For purposes of the 10% value test, its proportionate share of the assets of a partnership is its proportionate interest in Failure to Satisfy Asset Tests. CubeSmart will monitor the status of its assets for purposes of the various asset tests and will manage its portfolio in order to comply at all times with such tests. If CubeSmart fails to satisfy the asset tests at the end of a calendar quarter, it would not lose its REIT status if:  CubeSmart satisfied the asset tests at the end of the preceding calendar quarter; and  the discrepancy between the value of its assets and the asset test requirements arose from changes in the market values of its assets and was not wholly or partly caused by the acquisition of one or more non-qualifying assets. If the failure to satisfy the asset tests results from an acquisition of securities or other property during a quarter, the failure can be cured by disposition of sufficient nonqualifying assets within 30 days after the close of that quarter. CubeSmart intends to maintain adequate records of the value of its assets to ensure compliance with the asset tests, and to take such other action within 30 days after the close of any quarter as may be required to cure any noncompliance. However, there can be no assurance that such other action will always be successful. If CubeSmart fails to cure any noncompliance with the asset tests within such time period, its status as a REIT would be lost. In the event that, at the end of any calendar quarter, CubeSmart violates the 5% asset test, the 10% vote test or the 10% value test described above, CubeSmart will not lose its REIT status if (i) the failure is de minimis (up to the lesser of 1% of its assets or $10 million) and (ii) CubeSmart disposes of assets or otherwise complies with the asset tests within six months after the last day of the quarter in which it identifies such failure. In the event the failure to meet the asset test is more than de minimis, CubeSmart will not lose its REIT status if (i) the failure was due to reasonable cause and not to willful neglect, (ii) CubeSmart files a description of each asset causing the failure with the IRS, (iii) CubeSmart disposes of assets or otherwise complies with the asset tests within six months after the last day of the quarter in which CubeSmart identifies the failure, and (iv) CubeSmart pays a tax equal to the greater of $50,000 or 35% (for tax years beginning on or before December 31, 2017 and 21% for tax years beginning after that date) of the net income from the nonqualifying assets during the period in which it failed to satisfy the asset tests. dividends and deemed distributions of retained capital gain, to its shareholders in an aggregate amount not less than the sum of Annual Distribution Requirements. Each taxable year, CubeSmart must distribute dividends, other than capital gain    90% of its “REIT taxable income,” computed without regard to the dividends paid deduction and its net capital gain or loss, and 90% of its after-tax net income, if any, from foreclosure property, minus the sum of certain items of non-cash income. For taxable years beginning after December 31, 2017, CubeSmart’s deduction for net business interest expense will generally be limited to 30% of its taxable income, as adjusted for certain items of income, gain, deduction or loss. Any business interest deduction that is disallowed due to this limitation may be carried forward to future taxable years. If CubeSmart is subject to this interest expense limitation, its REIT taxable income for a taxable year may be increased. Taxpayers that conduct certain real estate businesses may elect not to have this interest expense limitation apply to them, provided that they use an alternative depreciation system to depreciate certain property. CubeSmart may be eligible to make this election. If CubeSmart makes this election, although it would not be subject to the interest expense limitation described above, its depreciation deductions may be reduced and, as a result, its REIT taxable income for a taxable year may be increased. Generally, CubeSmart must pay such distributions in the taxable year to which they relate, or in the following taxable year if either (a) CubeSmart declares the distribution before it timely files its U.S. federal income tax return for the year and pays the distribution on or before the first regular dividend payment date after such declaration or (b) CubeSmart declares the distribution in October, November, or December of the taxable year, payable to shareholders of record on a specified day in any such month, and CubeSmart actually pays the dividend before the end of January of the following year. In both instances, these distributions relate to its prior taxable year for purposes of the 90% distribution requirement. In order for distributions to be counted towards CubeSmart’s distribution requirement, and to provide a tax deduction to CubeSmart, for taxable years ending on or before December 31, 2014, they must not be “preferential dividends.” A dividend is not a preferential dividend if it is pro rata among all outstanding shares within a particular class, and is in accordance with the preferences among the different classes of shares as set forth in CubeSmart’s organizational documents. For all subsequent taxable years, so long as CubeSmart continues to be a “publicly offered REIT,” the preferential dividend rule will not apply. To the extent that CubeSmart distributes at least 90%, but less than 100%, of its net taxable income, CubeSmart will be subject to tax at ordinary corporate tax rates on the retained portion. In addition, CubeSmart may elect to retain, rather than distribute, its net long-term capital gains and pay tax on such gains. In this case, CubeSmart would elect to have its shareholders include their proportionate share of such undistributed long-term capital gains in their income and receive a corresponding credit for their proportionate share of the tax paid by us. CubeSmart’s shareholders would then increase their adjusted basis in their CubeSmart shares by the difference between the amount included in their long-term capital gains and the tax deemed paid with respect to their shares. case of distributions with declaration and record dates falling in the last three months of the calendar year, at least the sum of: If CubeSmart fails to distribute during a calendar year, or by the end of January of the following calendar year in the    85% of its REIT ordinary income for the year, 95% of its REIT capital gain income for the year, and any undistributed taxable income from prior periods, CubeSmart will incur a 4% nondeductible excise tax on the excess of such required distribution over the amounts CubeSmart actually distributed. In calculating the required distribution for taxable years beginning after December 31, 2015, the amount that CubeSmart is treated as having distributed is not reduced by any amounts not allowable in computing its taxable income for the taxable year and which were not allowable in computing its taxable income for any prior years. If CubeSmart so elects, it will be treated as having distributed any such retained amount for purposes of the 4% nondeductible excise tax described above. It is possible that, from time to time, CubeSmart may experience timing differences between the actual receipt of income and actual payment of deductible expenses and the inclusion of that income and deduction of such expenses in arriving at its REIT taxable income. For example, because CubeSmart may deduct capital losses only to the extent of its capital gains, its REIT taxable income may exceed its economic income. Further, it is possible that, from time to time, CubeSmart may be allocated a share of net capital gain from a partnership in which CubeSmart owns an interest attributable to the sale of depreciated property that exceeds its allocable share of cash attributable to that sale. Although several types of non-cash income are excluded in determining the annual distribution requirement, CubeSmart will incur corporate income tax and the 4% nondeductible excise tax with respect to those non-cash income items if CubeSmart does not distribute those items on a current basis. As a result of the foregoing, CubeSmart may have less cash than is necessary to distribute all of its taxable income and thereby avoid corporate income tax and the 4% nondeductible excise tax imposed on certain undistributed income. In such a situation, CubeSmart may issue additional common or preferred shares, CubeSmart may borrow or may cause the Operating Partnership to arrange for short-term or possibly long-term borrowing to permit the payment of required distributions, or CubeSmart may pay dividends in the form of taxable in-kind distributions of property, including potentially, its shares. Under certain circumstances, CubeSmart may be able to correct a failure to meet the distribution requirement for a year by paying “deficiency dividends” to its shareholders in a later year. CubeSmart may include such deficiency dividends in its deduction for dividends paid for the earlier year. Although CubeSmart may be able to avoid income tax on amounts distributed as deficiency dividends, CubeSmart will be required to pay interest to the IRS based upon the amount of any deduction it takes for deficiency dividends. Failure to Qualify If CubeSmart were to fail to qualify as a REIT in any taxable year and no relief provision applied, CubeSmart would have the following consequences: CubeSmart would be subject to U.S. federal income tax and, for tax years beginning before January 1, 2018, any applicable alternative minimum tax at regular corporate rates applicable to regular C corporations on its taxable income, determined without reduction for amounts distributed to shareholders. This REIT-level tax liability would reduce cash available for distributions. All distributions to shareholders (to the extent of our current and accumulated earnings and profits) would be taxable as dividends. This “double taxation” results from our failure to qualify as a REIT. In addition, if we fail to qualify as a REIT, we will not be required to distribute any amounts to our shareholders and all distributions to shareholders will be taxable as regular corporate dividends to the extent of our current and accumulated earnings and profits. In such event, corporate distributees may be eligible for the dividends- received deduction. In addition, non-corporate shareholders, including individuals, may be eligible for the preferential tax rates on qualified dividend income. Non-corporate shareholders, including individuals, generally may deduct up to 20% of dividends from a REIT, other than capital gain dividends and dividends treated as qualified dividend income, for taxable years beginning after December 31, 2017 and before January 1, 2026 for purposes of determining their U.S. federal income tax (but not for purposes of the 3.8% Medicare tax), subject to certain limitations. If we fail to qualify as a REIT, such shareholders may not claim this deduction with respect to dividends paid by us. Unless CubeSmart qualified for relief under specific statutory provisions, it would not be permitted to elect taxation as a REIT for the four taxable years following the year during which CubeSmart ceased to qualify as a REIT. If CubeSmart fails to satisfy one or more requirements for REIT qualification, other than the gross income tests and the asset tests, CubeSmart could avoid disqualification if its failure is due to reasonable cause and not to willful neglect and CubeSmart pays a penalty of $50,000 for each such failure. In addition, there are relief provisions for a failure of the gross income tests and asset tests, as described in “Requirements for Qualification — Gross Income Tests” and “Requirements for Qualification — Asset Tests.” It is not possible to state whether in all circumstances CubeSmart would be entitled to such statutory relief. State and Local Taxes We may be subject to taxation by various states and localities, including those in which we transact business or own property. The state and local tax treatment in such jurisdictions may differ from the U.S. federal income tax treatment described above. Tax Aspects of Investments in the Operating Partnership and Subsidiary Partnerships The following discussion summarizes certain U.S. federal income tax considerations applicable to CubeSmart’s direct or indirect investment in its Operating Partnership and any subsidiary partnerships or limited liability companies we form or acquire that are treated as partnerships for U.S. federal income tax purposes, each individually referred to as a “Partnership” and, collectively, as “Partnerships” below. The following discussion does not address state or local tax laws or any federal tax laws other than income tax laws. Classification as Partnerships. CubeSmart is required to include in its income its distributive share of each Partnership’s income and to deduct its distributive share of each Partnership’s losses but only if such Partnership is classified for U.S. federal income tax purposes as a partnership (or an entity that is disregarded for U.S. federal income tax purposes if the entity has only one owner or member), rather than as a corporation or an association taxable as a corporation. U.S. federal income tax purposes if it: An organization with at least two owners or members will be classified as a partnership, rather than as a corporation, for  is treated as a partnership under the Treasury regulations relating to entity classification (the “check-the-box regulations”); and  is not a “publicly traded partnership.” Under the check-the-box regulations, an unincorporated domestic entity with at least two owners or members may elect to be classified either as an association taxable as a corporation or as a partnership. If such an entity does not make an election, it generally will be treated as a partnership for U.S. federal income tax purposes. We intend that each Partnership will be classified as a partnership for U.S. federal income tax purposes (or else a disregarded entity where there are not at least two separate beneficial owners). A publicly traded partnership is a partnership whose interests are traded on an established securities market or are readily tradable on a secondary market (or a substantial equivalent). A publicly traded partnership is generally treated as a corporation for U.S. federal income tax purposes, but will not be so treated if, for each taxable year beginning after December 31, 1987 in which it was classified as a publicly traded partnership, at least 90% of the partnership’s gross income consisted of specified passive income, including real property rents (which includes rents that would be qualifying income for purposes of the 75% gross income test, with certain modifications that make it easier for the rents to qualify for the 90% passive income exception), gains from the sale or other disposition of real property, interest, and dividends (the “90% passive income exception”). Treasury regulations provide limited safe harbors from treatment as a publicly traded partnership. Pursuant to one of those safe harbors (the “private placement exclusion”), interests in a partnership will not be treated as readily tradable on a secondary market or the substantial equivalent thereof if (1) all interests in the partnership were issued in a transaction or transactions that were not required to be registered under the Securities Act of 1933, as amended, and (2) the partnership does not have more than 100 partners at any time during the partnership’s taxable year. For the determination of the number of partners in a partnership, a person owning an interest in a partnership, grantor trust, or S corporation that owns an interest in the partnership is treated as a partner in the partnership only if (1) substantially all of the value of the owner’s interest in the entity is attributable to the entity’s direct or indirect interest in the partnership and (2) a principal purpose of the use of the entity is to permit the partnership to satisfy the 100-partner limitation. CubeSmart believes that each Partnership should qualify for the private placement exclusion. We have not requested, and do not intend to request, a ruling from the IRS that the Partnerships will be classified as partnerships (or disregarded entities, if the entity has only one owner or member) for U.S. federal income tax purposes. If for any reason a Partnership were taxable as a corporation, rather than as a partnership, for U.S. federal income tax purposes, CubeSmart may not be able to qualify as a REIT, unless it qualifies for certain relief provisions. See “Requirements for Qualification — Gross Income Tests” and “Requirements for Qualification — Asset Tests.” In addition, any change in a Partnership’s status for tax purposes might be treated as a taxable event, in which case CubeSmart might incur tax liability without any related cash distribution. See “Requirements for Qualification — Annual Distribution Requirements.” Further, items of income and deduction of such Partnership would not pass through to its partners, and its partners would be treated as shareholders for tax purposes. Consequently, such Partnership would be required to pay income tax at corporate rates on its net income, and distributions to its partners would constitute dividends that would not be deductible in computing such Partnership’s taxable income. Partners, Not the Partnerships, Subject to Tax. A partnership is not a taxable entity for U.S. federal income tax purposes, except that, for tax years beginning after December 31, 2017, a partnership is liable for paying tax assessed pursuant to an audit adjustment unless the partnership elects to “push out” such audit adjustments to its partners. CubeSmart will therefore take into account its allocable share of each Partnership’s income, gains, losses, deductions, and credits for each taxable year of the Partnerships ending with or within CubeSmart’s taxable year, even if CubeSmart receives no distribution from the Partnerships for that year or a distribution less than CubeSmart’s share of taxable income. Similarly, even if CubeSmart receives a distribution, CubeSmart may not be taxed on such distribution if the distribution does not exceed its adjusted tax basis in its interest in the distributing Partnership. Among the deductions that would flow to CubeSmart are the interest deductions of the Operating Partnership and its subsidiary Partnerships. The TCJA limits a taxpayer’s interest expense deduction to the sum of 30% of adjusted taxable income, business interest, and certain other amounts. Adjusted taxable income does not include items of income or expense not allocable to a trade or business, business interest or expense, the new deduction for qualified business income, NOLs, and for years prior to 2022, deductions for depreciation, amortization, or depletion. For partnerships, the interest deduction limitation is applied at the partnership level, subject to certain adjustments to the partners for unused deduction limitation at the partnership level. The TCJA allows a real property trade or business to elect out of this interest limitation so long as it uses a 40-year recovery period for nonresidential real property, a 30-year recovery period for residential rental property, and a 20-year recovery period for related improvements. Disallowed interest expense is carried forward indefinitely (subject to special rules for partnerships). The interest deduction limitation applies to taxable years beginning after December 31, 2017. For taxpayers that do not use the TCJA’s real property trade or business exception to the business interest deduction limitations, the TCJA maintains the current 39-year and 27.5-year straight line recovery periods for nonresidential real property and residential rental property, respectively, and provides that tenant improvements for such taxpayers are subject to a general 15-year recovery period. Also, the TCJA temporarily allows 100% expensing of certain new or used tangible property through 2022, phasing out at 20% for each following year (with an election available for 50% expensing of such property if placed in service during the first taxable year ending after September 27, 2017). The changes apply, generally, to property acquired after September 27, 2017 and placed in service after September 27, 2017. Partnership Allocations. Although a partnership agreement generally will determine the allocation of income and losses among partners, allocations will be disregarded for tax purposes if they do not comply with the provisions of the U.S. federal income tax laws governing partnership allocations. If an allocation is not recognized for U.S. federal income tax purposes, the item subject to the allocation will be reallocated in accordance with the partners’ interests in the partnership, which will be determined by taking into account all of the facts and circumstances relating to the economic arrangement of the partners with respect to such item. Tax Allocations With Respect to Contributed Properties. Income, gain, loss, and deduction attributable to (a) appreciated or depreciated property that is contributed to a partnership in exchange for an interest in the partnership or (b) property revalued on the books of a partnership must be allocated in a manner such that each of a contributing partner or the partners at the time of a book revaluation, as applicable, are charged with, or benefit from, respectively, the unrealized gain or unrealized loss associated with the property at the time of the contribution. The amount of such unrealized gain or unrealized loss, referred to as “built-in gain” or “built-in loss,” is generally equal to the difference between the fair market value of the contributed or revalued property at the time of contribution or revaluation and the adjusted tax basis of such property at that time, referred to as a book-tax difference. Such allocations are solely for U.S. federal income tax purposes and do not affect the book capital accounts or other economic or legal arrangements among the partners. The U.S. Treasury Department has issued regulations requiring partnerships to use a “reasonable method” for allocating items with respect to which there is a book-tax difference and outlining several reasonable allocation methods. Unless we, as general partner, select a different method, the Operating Partnership will use the traditional method for allocating items with respect to which there is a book-tax difference. Depending upon the method chosen, (1) CubeSmart’s tax depreciation deductions attributable to those properties may be lower than they would have been if the partnership had acquired those properties for cash and (2) in the event of a sale of such properties, CubeSmart could be allocated gain in excess of its corresponding economic or book gain. These allocations may cause CubeSmart to recognize taxable income in excess of cash proceeds received by us, which might adversely affect CubeSmart’s ability to comply with the REIT distribution requirements or result in CubeSmart’s shareholders recognizing additional dividend income without an increase in distributions. Depreciation. Some assets in our Partnerships include appreciated property contributed by its partners. Assets contributed to a Partnership in a tax-free transaction generally retain the same depreciation method and recovery period as they had in the hands of the partner who contributed them to the partnership. Accordingly, the Partnership’s depreciation deductions for such contributed real property are based on the historic tax depreciation schedules for the properties prior to their contribution to the Operating Partnership.    Basis in Partnership Interest. CubeSmart’s adjusted tax basis in any partnership interest it owns generally will be: the amount of cash and the basis of any other property it contributes to the partnership; increased by its allocable share of the partnership’s income (including tax-exempt income) and its allocable share of indebtedness of the partnership; and reduced, but not below zero, by its allocable share of the partnership’s loss (excluding any non-deductible items), the amount of cash and the basis of property distributed to CubeSmart, and constructive distributions resulting from a reduction in its share of indebtedness of the partnership. Loss allocated to CubeSmart in excess of its basis in a partnership interest will not be taken into account until CubeSmart again has basis sufficient to absorb the loss. A reduction of CubeSmart’s share of partnership indebtedness will be treated as a constructive cash distribution to CubeSmart, and will reduce its adjusted tax basis in the partnership. Distributions, including constructive distributions, in excess of the basis of CubeSmart’s partnership interest will constitute taxable income to CubeSmart. Such distributions and constructive distributions normally will be characterized as long-term capital gain. Sale of a Partnership’s Property. Generally, any gain realized by a Partnership on the sale of property that is a capital asset held for more than one year will be long-term capital gain, except for any portion of the gain treated as depreciation or cost recovery recapture. Any gain or loss recognized by a Partnership on the disposition of contributed or revalued properties will be allocated first to the partners who contributed the properties or who were partners at the time of revaluation, to the extent of their built-in gain or loss on those properties for U.S. federal income tax purposes. The partners’ built-in gain or loss on contributed or revalued properties is the difference between the partners’ proportionate share of the book value of those properties and the partners’ tax basis allocable to those properties at the time of the contribution or revaluation. Any remaining gain or loss recognized by the Partnership on the disposition of contributed or revalued properties, and any gain or loss recognized by the Partnership on the disposition of other properties, will be allocated among the partners in accordance with their percentage interests in the Partnership. CubeSmart’s share of any Partnership gain from the sale of inventory or other property held primarily for sale to customers in the ordinary course of the Partnership’s trade or business will be treated as income from a prohibited transaction subject to a 100% tax. Income from a prohibited transaction may have an adverse effect on CubeSmart’s ability to satisfy the gross income tests for REIT status. See “Requirements for Qualification — Gross Income Tests.” CubeSmart does not presently intend to acquire or hold, or to allow any Partnership to acquire or hold, any property that is likely to be treated as inventory or property held primarily for sale to customers in the ordinary course of CubeSmart’s, or the Partnership’s, trade or business. Partnership Audit Rules. Congress recently revised the rules applicable to federal income tax audits of partnerships (such as the Operating Partnership) and the collection of any tax resulting from any such audits or other tax proceedings, generally for taxable years beginning after December 31, 2017. Under the new rules, a partnership itself may be liable for a tax computed by reference to the hypothetical increase in partner-level taxes (including interest and penalties) resulting from an adjustment of partnership tax items on audit, regardless of changes in the composition of the partners (or their relative ownership) between the year under audit and the year of the adjustment. The new rules also include an elective alternative method under which the additional taxes resulting from the adjustment are assessed against the affected partners, subject to a higher rate of interest than otherwise would apply. Although it is uncertain how these new rules will be implemented, it is possible that they could result in partnerships in which we directly or indirectly invest being required to pay additional taxes, interest and penalties as a result of an audit adjustment, and we, as a direct or indirect partner of those partnerships could be required to bear the economic burden of those taxes, interest and penalties even though we, as a REIT, may not otherwise have been required to pay additional corporate-level taxes as a result of the related audit adjustment. The changes created by these new rules are sweeping and, in many respects, dependent on the promulgation of future regulations or other guidance by the U.S. Treasury. Investors are urged to consult with their tax advisors with respect to those changes and their potential impact on their investment in our shares. Taxation of Shareholders Taxation of Taxable U.S. Shareholders income tax purposes, is: The term “U.S. shareholder” means a holder of CubeSmart common shares or preferred shares that, for U.S. federal     a citizen or individual resident of the United States; a corporation (including an entity treated as a corporation for U.S. federal income tax purposes) created or organized under the laws of the United States, any of its states or the District of Columbia; an estate the income of which is subject to U.S. federal income taxation regardless of its source; or any trust if (1) a U.S. court is able to exercise primary supervision over the administration of such trust and one or more U.S. persons have the authority to control all substantial decisions of the trust or (2) it has a valid election in place to be treated as a U.S. person. If a partnership, entity or arrangement treated as a partnership for U.S. federal income tax purposes holds CubeSmart common shares or preferred shares, the U.S. federal income tax treatment of a partner in the partnership will generally depend on the status of the partner and the activities of the partnership. If you are a partner in a partnership holding CubeSmart common shares or preferred shares, you should consult your tax advisor regarding the consequences of the ownership and disposition of CubeSmart common shares or preferred shares by the partnership. Taxation of U.S. Shareholders on Distributions. As long as CubeSmart qualifies as a REIT, a taxable U.S. shareholder will be required to take into account as ordinary income distributions made out of CubeSmart’s current or accumulated earnings and profits that CubeSmart does not designate as capital gain dividends or retained long-term capital gain. However, for taxable years beginning after December 31, 2017 and before January 1, 2026, generally individual shareholders are allowed to deduct 20% of the aggregate amount of ordinary dividends distributed by us, subject to certain limitations. A U.S. shareholder will not qualify for the dividends-received deduction generally available to corporations. Dividends paid to a U.S. shareholder generally will not qualify for the preferential tax rate for “qualified dividend income” (currently, a 20% maximum rate, also see the discussion below, “Taxation of Shareholders— Tax Rates Applicable to Individual Shareholders under the TCJA”). Qualified dividend income generally includes dividends paid by domestic C corporations and certain qualified foreign corporations to most noncorporate U.S. shareholders. Because a REIT is not generally subject to U.S. federal income tax on the portion of its REIT taxable income distributed to its shareholders, CubeSmart’s dividends generally will not be eligible for the preferential tax rate on qualified dividend income. As a result, CubeSmart’s ordinary REIT dividends will be taxed at the higher rate applicable to ordinary income. The highest marginal individual income tax rate on ordinary income is 39.6% for tax years beginning on or before December 31, 2017 and 37% for tax years beginning after that date (but see the discussion below “Taxation of Shareholders — Tax Rates Applicable to Individual Shareholders under the TCJA” regarding the sunset of the 37% rate). However, the preferential tax rate for qualified dividend income will apply to CubeSmart’s ordinary REIT dividends, if any, that are (i) attributable to dividends received by CubeSmart from non-REIT corporations, such as our taxable REIT subsidiaries, and (ii) attributable to income upon which CubeSmart has paid corporate income tax (e.g., to the extent that CubeSmart distributes less than 100% of CubeSmart’s taxable income). In general, to qualify for the preferential tax rate on qualified dividend income, a U.S. shareholder must hold CubeSmart common shares or preferred shares for more than 60 days during the 121-day period beginning on the date that is 60 days before the date on which the common shares or preferred shares become ex-dividend. With respect to common shares, CubeSmart may distribute taxable dividends that are payable partly in cash and partly in CubeSmart common shares. Taxable U.S. shareholders receiving such dividends will be required to include the full amount of the dividends as ordinary income to the extent of CubeSmart’s current and accumulated earnings and profits. However, for taxable years beginning after December 31, 2017 and before January 1, 2026, generally individual shareholders are allowed to deduct 20% of the aggregate amount of ordinary dividends distributed by us that are “qualified REIT dividends”, subject to certain limitations. Pursuant to the Treasury regulations, in order for a dividend paid by a REIT to be eligible to be treated as a “qualified REIT dividend,” the shareholder must meet two holding period-related requirements. First, the shareholder must hold the REIT shares for a minimum of 46 days during the 91-day period that begins 45 days before the date on which the REIT share becomes ex-dividend with respect to the dividend. Second, the qualifying portion of the REIT dividend is reduced to the extent that the shareholder is under an obligation (whether pursuant to a short sale or otherwise) to make related payments with respect to positions in substantially similar or related property. The 20% deduction does not apply to REIT capital gain dividends or to REIT dividends that we designate as “qualified dividend income.” Like most of the other changes made by the TCJA applicable to non-corporate taxpayers, the 20% deduction will expire on December 31, 2025 unless Congress acts to extend it. Prospective investors should consult their tax advisors concerning these limitations on the ability to deduct all or a portion of dividends received on shares of our common shares or preferred shares. Any distribution CubeSmart declares in October, November, or December of any year that is payable to a U.S. shareholder of record on a specified date in any of those months will be treated as paid by CubeSmart and received by the U.S. shareholder on December 31 of the year, provided CubeSmart actually pays the distribution during January of the following calendar year. Distributions to a U.S. shareholder which CubeSmart designates as capital gain dividends will generally be treated as long-term capital gain, without regard to the period for which the U.S. shareholder has held its common shares or preferred shares. In general, U.S. shareholders will be taxable on long-term capital gains at a current maximum rate of 20% (see the discussion below “Taxation of Shareholders—Tax Rates Applicable to Individual Shareholders under the TCJA”), except that the portion of such gain that is attributable to depreciation recapture will be taxable at the maximum rate of 25%. A corporate U.S. shareholder, however, may be required to treat up to 20% of certain capital gain dividends as ordinary income. Effective for distributions paid or treated as being paid in taxable years beginning after December 31, 2015, the aggregate amount of dividends that CubeSmart may designate as “capital gain dividends” or “qualified dividend income” with respect to any taxable year may not exceed the dividends paid by CubeSmart with respect to such taxable year, including dividends that are paid in the following taxable year and treated as having been paid with respect to such taxable year by being (1) declared before CubeSmart timely files its tax return for such taxable year and (2) paid with or before the first regular dividend payment after such declaration. CubeSmart may elect to retain and pay income tax on the net long-term capital gain that CubeSmart receives in a taxable year. In that case, a U.S. shareholder would be taxed on its proportionate share of CubeSmart’s undistributed long-term capital gain. The U.S. shareholder would receive a credit or refund for its proportionate share of the tax CubeSmart paid. The U.S. shareholder would increase the basis in its common shares or preferred shares by the amount of its proportionate share of CubeSmart’s undistributed long- term capital gain, minus its share of the tax CubeSmart paid. A U.S. shareholder will not incur tax on a distribution in excess of CubeSmart’s current and accumulated earnings and profits if the distribution does not exceed the adjusted basis of the U.S. shareholder’s common shares or preferred shares. Instead, the distribution will reduce the adjusted basis of the shares, and any amount in excess of both CubeSmart’s current and accumulated earnings and profits and the adjusted basis will be treated as capital gain, long-term capital gain if the shares have been held for more than one year, provided the shares are a capital asset in the hands of the U.S. shareholder. Shareholders may not include in their individual income tax returns any of CubeSmart’s net operating losses or capital losses. Instead, these losses are generally carried over by CubeSmart for potential offset against CubeSmart’s future income (subject to certain limitation for net operating losses arising in tax years beginning after December 31, 2017). Taxable distributions from CubeSmart and gain from the disposition of common shares or preferred shares will not be treated as passive activity income; and, therefore, shareholders generally will not be able to apply any “passive activity losses,” such as losses from certain types of limited partnerships in which the shareholder is a limited partner, against such income. In addition, taxable distributions from CubeSmart and gain from the disposition of common shares or preferred shares generally will be treated as investment income for purposes of the investment interest limitations. Net capital gain from the disposition of our stock or capital gain dividends generally will be excluded from investment income unless the shareholder elects to have the gain taxed at ordinary income rates. CubeSmart will notify shareholders after the close of its taxable year as to the portions of the distributions attributable to that year that constitute ordinary income, return of capital, and capital gain. Taxation of U.S. Shareholders on the Disposition of Common and Preferred Shares In general, a U.S. shareholder who is not a dealer in securities must treat any gain or loss realized upon a taxable disposition of CubeSmart’s common or preferred shares as long-term capital gain or loss if the U.S. shareholder has held the shares for more than one year, and otherwise as short-term capital gain or loss. In general, a U.S. shareholder will realize gain or loss in an amount equal to the difference between the sum of the fair market value of any property and the amount of cash received in such disposition and the U.S. shareholder’s adjusted tax basis. A U.S. shareholder’s adjusted tax basis generally will equal the U.S. shareholder’s acquisition cost, increased by the excess of the U.S. shareholder’s allocable share of any retained capital gains, less the U.S. shareholder’s allocable share of the tax paid by us on such retained capital gains and reduced by any returns of capital. However, a U.S. shareholder must treat any loss upon a sale or exchange of common or preferred shares held by such shareholder for six months or less as a long-term capital loss to the extent of capital gain dividends and any actual or deemed distributions from CubeSmart that such U.S. shareholder treats as long-term capital gain. All or a portion of any loss that a U.S. shareholder realizes upon a taxable disposition of common or preferred shares may be disallowed if the U.S. shareholder purchases other common shares or preferred shares within 30 days before or after the disposition. If a U.S. shareholder recognizes a loss upon a subsequent disposition of CubeSmart shares in an amount that exceeds a prescribed threshold, it is possible that the provisions of Treasury regulations involving “reportable transactions” could apply, with a resulting requirement to separately disclose the loss generating transactions to the IRS. While these regulations are directed towards “tax shelters,” they are written broadly, and apply to transactions that would not typically be considered tax shelters. Significant penalties apply for failure to comply with these requirements. You should consult your tax advisor concerning any possible disclosure obligation with respect to the receipt or disposition of CubeSmart shares, or transactions that might be undertaken directly or indirectly by us. Moreover, you should be aware that CubeSmart and other participants in transactions involving CubeSmart (including our advisors) might be subject to disclosure or other requirements pursuant to these regulations. The tax-rate differential between capital gain and ordinary income for non-corporate taxpayers may be significant. A taxpayer generally must hold a capital asset for more than one year for gain or loss derived from its sale or exchange to be treated as long- term capital gain or loss. The highest marginal individual income tax rate is currently 39.6% for tax years beginning on or before December 31, 2017 and 37% for tax years beginning after that date (but see the discussion below “Taxation of Shareholders—Tax Rates Applicable to Individual Shareholders under the TCJA” regarding the sunset of the 37% rate). The maximum tax rate on long-term capital gain applicable to U.S. shareholders taxed at individual rates is currently 20%. For additional information, see the discussion below “Taxation of Shareholders—Tax Rates Applicable to Individual Shareholders under the TCJA.” The maximum tax rate on long-term capital gain from the sale or exchange of “section 1250 property” (i.e., generally, depreciable real property) is 25% to the extent the gain would have been treated as ordinary income if the property were “section 1245 property” (i.e., generally, depreciable personal property). CubeSmart generally may designate whether a distribution CubeSmart designates as capital gain dividends (and any retained capital gain that CubeSmart is deemed to distribute) is taxable to non-corporate shareholders at the current20% or 25% rate. The characterization of income as capital gain or ordinary income may affect the deductibility of capital losses. A non-corporate taxpayer may deduct capital losses not offset by capital gains against its ordinary income only up to a maximum of $3,000 annually. A non-corporate taxpayer may carry unused capital losses forward indefinitely. A corporate taxpayer must pay tax on its net capital gain at corporate ordinary-income rates. A corporate taxpayer may deduct capital losses only to the extent of capital gains, with unused losses carried back three years and forward five years. Redemption of Preferred Shares Whenever we redeem any preferred shares, the treatment accorded to any redemption by us for cash (as distinguished from a sale, exchange or other disposition) of our preferred shares to a U.S. shareholder of such preferred shares can only be determined on the basis of the particular facts as to each holder at the time of redemption. In general, a U.S. shareholder of our preferred shares will recognize capital gain or loss measured by the difference between the amount received by the holder of such shares upon the redemption and such holder’s adjusted tax basis in the preferred shares redeemed (provided the preferred shares are held as a capital asset) if such redemption (i) results in a “complete termination” of the holder’s interest in all classes of our shares under Section 302(b)(3) of the Code, or (ii) is “not essentially equivalent to a dividend” with respect to the holder of the preferred shares under Section 302(b)(1) of the Code. In applying these tests, there must be taken into account not only the preferred shares being redeemed, but also such holder’s ownership of other classes and series of our shares and any options (including stock purchase rights) to acquire any of the foregoing. The U.S. shareholder of our preferred shares also must take into account any such securities (including options) which are considered to be owned by such holder by reason of the constructive ownership rules set forth in Sections 318 and 302(c) of the Code. If the U.S. shareholder of preferred shares owns (actually or constructively) none of our voting shares, or owns an insubstantial amount of our voting shares, based upon current law, it is probable that the redemption of preferred shares from such a holder would be considered to be “not essentially equivalent to a dividend.” However, whether a distribution is “not essentially equivalent to a dividend” depends on all of the facts and circumstances, and a U.S. shareholder of our preferred shares intending to rely on any of the tests in this or the preceding paragraph at the time of redemption should consult its tax advisor to determine their application to its particular situation. If the redemption does not meet any of the tests under Section 302 of the Code, then the redemption proceeds received from our preferred shares will be treated as a distribution on our shares as described under “Taxation of U.S. Shareholders — Taxation of Taxable U.S. Shareholders — Taxation of U.S. Shareholders on Distributions.” If the redemption of a holder’s preferred shares is taxed as a dividend, the adjusted basis of such holder’s redeemed preferred shares will be transferred to any other shares held by the holder. If the holder owns no other shares, under certain circumstances, such basis may be transferred to a related person, or it may be lost entirely. With respect to a redemption of our preferred shares that is treated as a distribution with respect to our shares, which is not otherwise taxable as a dividend, the IRS has proposed Treasury regulations that would require any basis reduction associated with such a redemption to be applied on a share-by-share basis which could result in taxable gain with respect to some shares, even though the holder’s aggregate basis for the shares would be sufficient to absorb the entire amount of the redemption distribution (in excess of any amount of such distribution treated as a dividend). Additionally, these proposed Treasury regulations would not permit the transfer of basis in the redeemed shares of the preferred shares to the remaining shares held (directly or indirectly) by the redeemed holder. Instead, the unrecovered basis in our preferred shares would be treated as a deferred loss to be recognized when certain conditions are satisfied. These proposed Treasury regulations would be effective for transactions that occur after the date the regulations are published as final Treasury regulations. There can, however, be no assurance as to whether, when, and in what particular form such proposed Treasury regulations will ultimately be finalized. Conversion of Our Preferred Shares into Common Shares. Except as provided below, a U.S. shareholder generally will not recognize gain or loss upon the conversion of our preferred shares into our common shares. Except as provided below, a U.S. shareholder’s basis and holding period in the common shares received upon conversion generally will be the same as those of the converted preferred shares (but the basis will be reduced by the portion of adjusted tax basis allocated to any fractional common share exchanged for cash). Any common shares received in a conversion that is attributable to accumulated and unpaid dividends on the converted preferred shares will be treated as a distribution on our shares as described above in “Taxation of U.S. Shareholders — Taxation of Taxable U.S. Shareholders — Taxation of U.S. Shareholders on Distributions.” Cash received upon conversion in lieu of a fractional common share generally will be treated as a payment in a taxable exchange for such fractional common share, and gain or loss will be recognized on the receipt of cash in an amount equal to the difference between the amount of cash received and the adjusted tax basis allocable to the fractional common share deemed exchanged. This gain or loss will be long-term capital gain or loss if the U.S. shareholder has held the preferred shares for more than one year. See “— Taxation of U.S. Shareholders — Taxation of Taxable U.S. Shareholders — Taxation of U.S. Shareholders on the Disposition of Common and Preferred Shares.” U.S. shareholders should consult with their tax advisors regarding the U.S. federal income tax consequences of any transaction by which such holder exchanges common shares received on a conversion of preferred shares for cash or other property. Tax Rates Applicable to Individual Shareholders under the TCJA Long-term capital gains (i.e., capital gains with respect to assets held for more than one year) and “qualified dividends” received by an individual generally are subject to federal income tax at a maximum rate of 20%. Short-term capital gains (i.e., capital gains with respect to assets held for one year or less) generally are subject to federal income tax at ordinary income rates. Because we are not generally subject to federal income tax on the portion of our REIT taxable income or capital gains distributed to our shareholders, our dividends generally are not eligible for the 20% maximum tax rate on qualified dividends. Instead, our ordinary dividends generally are taxed at the higher tax rates applicable to ordinary income, the maximum rate of which is 37% for tax years beginning after December 31, 2017 (the rate was 39.6% for tax years beginning before that date) and before January 1, 2026. However, for taxable years prior to 2026, individual shareholders are generally allowed to deduct 20% of the aggregate amount of ordinary dividends distributed by us, subject to certain limitations, which would reduce the maximum marginal effective tax rate for individuals on the receipt of such ordinary dividends to 29.6%. The 20% maximum tax rate for long-term capital gains and qualified dividends generally applies to:     your long-term capital gains, if any, recognized on the disposition of our shares; our distributions designated as long-term capital gain dividends (except to the extent attributable to real estate depreciation, in which case such distributions are subject to a 25% tax rate to such extent); our dividends attributable to dividends received by us from non-REIT corporations, such as taxable REIT subsidiaries; and our dividends to the extent attributable to income upon which we have paid corporate income tax (e.g., to the extent that we distribute less than 100% of our taxable income). Medicare Tax on Investment Income Certain U.S. shareholders and U.S. Holders (as defined below) who are individuals, estates or trusts and whose income exceeds certain thresholds may be required to pay a 3.8% Medicare tax on “net investment income” which includes, among other things, dividends on shares, interest on debt securities and capital gains from the sale or other disposition of shares or debt securities, subject to certain exceptions. The current 20% deduction allowed by Section 199A of the Code, as added by the TCJA, with respect to ordinary REIT dividends received by non-corporate taxpayers is allowed only for purposes of Chapter 1 of the Code and thus is apparently not allowed as a deduction allocable to such dividends for purposes of determining the amount of net investment income subject to the 3.8% Medicare tax, which is imposed under Chapter 2A of the Code. Prospective investors should consult their tax advisors regarding the effect, if any, of this legislation on their ownership and disposition of our common shares, preferred shares or debt securities. Information Reporting Requirements and Backup Withholding. CubeSmart will report to its shareholders and to the IRS the amount of distributions CubeSmart pays during each calendar year and the amount of tax it withholds, if any. A shareholder may be subject to backup withholding at a rate of up to 28% (for tax years beginning on or before December 31, 2017 and 24% for tax years beginning after that date) with respect to distributions unless the holder:   is a corporation or comes within certain other exempt categories and, when required, demonstrates this fact; or provides a taxpayer identification number, certifies as to no loss of exemption from backup withholding, and otherwise complies with the applicable requirements of the backup withholding rules. A shareholder who does not provide CubeSmart with its correct taxpayer identification number also may be subject to penalties imposed by the IRS. In addition, CubeSmart may be required to withhold a portion of capital gain distributions to any shareholders who fail to certify their non-foreign status to CubeSmart. Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules may be allowed as a refund or a credit against the shareholder’s income tax liability, provided the required information is timely furnished to the IRS. Taxation of Tax-Exempt Shareholders Tax-exempt entities, including qualified employee pension and profit sharing trusts and individual retirement accounts and annuities, generally are exempt from U.S. federal income taxation. However, they are subject to taxation on their “unrelated business taxable income.” While many investments in real estate generate unrelated business taxable income, the IRS has issued a ruling that dividend distributions from a REIT to an exempt employee pension trust do not constitute unrelated business taxable income so long as the exempt employee pension trust does not otherwise use the shares of the REIT in an unrelated trade or business of the pension trust. Based on that ruling, amounts CubeSmart distributes to tax-exempt shareholders generally should not constitute unrelated business taxable income. However, if a tax-exempt shareholder were to finance its acquisition of common shares or preferred shares with debt, a portion of the income it received from CubeSmart would constitute unrelated business taxable income pursuant to the “debt-financed property” rules. Furthermore, social clubs, voluntary employee benefit associations, supplemental unemployment benefit trusts, and qualified group legal services plans that are exempt from taxation under special provisions of the U.S. federal income tax laws are subject to different unrelated business taxable income rules, which generally will require them to characterize distributions they receive from CubeSmart as unrelated business taxable income. In certain circumstances, a qualified employee pension or profit-sharing trust that owns more than 10% of CubeSmart’s shares of beneficial interest (by value) must treat a percentage of the dividends it receives from CubeSmart as unrelated business taxable income. Such percentage is equal to the gross income CubeSmart derives from an unrelated trade or business, determined as if CubeSmart were a pension trust, divided by its total gross income for the year in which it pays the dividends. This rule applies to a pension trust holding more than 10% of CubeSmart shares only if:  the percentage of CubeSmart’s dividends which the tax-exempt trust must treat as unrelated business taxable income is at least 5%;  CubeSmart is a “pension-held REIT,” that is, CubeSmart qualifies as a REIT by reason of the modification of the rule requiring that no more than 50% of CubeSmart’s shares of beneficial interest be owned by five or fewer individuals that allows the beneficiaries of the pension trust to be treated as holding CubeSmart’s shares in proportion to their actuarial interests in the pension trust; and  either: (i) one pension trust owns more than 25% of the value of CubeSmart’s shares of beneficial interest; or (ii) one or more pension trusts each individually holding more than 10% of the value of CubeSmart’s shares of beneficial interest collectively owns more than 50% of the value of CubeSmart’s shares of beneficial interest. owning more than 10% of the value of its shares, or CubeSmart from becoming a pension-held REIT. Certain restrictions on ownership and transfer of CubeSmart’s shares should generally prevent a tax-exempt entity from tax consequences of the acquisition, ownership and disposition of CubeSmart shares. Tax-exempt U.S. shareholders are urged to consult their tax advisor regarding the U.S. federal, state, local and foreign Taxation of Non-U.S. Shareholders The term “non-U.S. shareholder” means a holder of CubeSmart common shares or preferred shares that is not a U.S. shareholder or a partnership (or an entity treated as a partnership for U.S. federal income tax purposes). The rules governing U.S. federal income taxation of non-U.S. shareholders are complex. This section is only a summary of such rules. We urge non-U.S. shareholders to consult their own tax advisors to determine the impact of federal, state, local and foreign income tax laws on ownership of common shares or preferred shares, including any reporting requirements. Taxation of Distributions. A non-U.S. shareholder that receives a distribution which is not attributable to gain from CubeSmart’s sale or exchange of a “United States real property interest” (“USRPI”) (discussed below) and that CubeSmart does not designate a capital gain dividend or retained capital gain will be treated as receiving dividends to the extent that CubeSmart pays such distribution out of CubeSmart’s current or accumulated earnings and profits. A withholding tax equal to 30% of the gross amount of the distribution ordinarily will apply unless an applicable tax treaty reduces or eliminates the tax. However, a non-U.S. shareholder generally will be subject to U.S. federal income tax at graduated rates on any distribution treated as effectively connected with the non-U.S. shareholder’s conduct of a U.S. trade or business, in the same manner as U.S. shareholders are taxed on distributions. A corporate non-U.S. shareholder may, in addition, be subject to the 30% branch profits tax with respect to that distribution. CubeSmart plans to withhold U.S. income tax at the rate of 30% on the gross amount of any distribution paid to a non-U.S. shareholder unless either:   a lower treaty rate applies and the non-U.S. shareholder files a properly completed IRS Form W-8BEN or W-8BEN-E (or other applicable form) evidencing eligibility for that reduced rate with us; or the non-U.S. shareholder files an IRS Form W-8ECI (or other applicable form) with CubeSmart claiming that the distribution is effectively connected income. A non-U.S. shareholder will not incur tax on a distribution in excess of CubeSmart’s current and accumulated earnings and profits if the excess portion of such distribution does not exceed the adjusted basis of its common shares or preferred shares. Instead, the excess portion of the distribution will reduce the adjusted basis of such shares. A non-U.S. shareholder will be subject to tax on a distribution that exceeds both CubeSmart’s current and accumulated earnings and profits and the adjusted basis of its shares, if the non- U.S. shareholder otherwise would be subject to tax on gain from the sale or disposition of common shares or preferred shares, as described below. Because CubeSmart generally cannot determine at the time CubeSmart makes a distribution whether the distribution will exceed CubeSmart’s current and accumulated earnings and profits, CubeSmart normally will withhold tax on the entire amount of any distribution at the same rate as CubeSmart would withhold on a dividend. However, a non-U.S. shareholder may obtain a refund of amounts CubeSmart withholds if CubeSmart later determines that a distribution in fact exceeded CubeSmart’s current and accumulated earnings and profits. CubeSmart may be required to withhold 15% (increased from 10% effective February 17, 2016) of any distribution that exceeds CubeSmart’s current and accumulated earnings and profits. Consequently, although CubeSmart intends to withhold at a rate of 30% on the entire amount of any distribution, to the extent CubeSmart does not do so, CubeSmart may withhold at a rate of 15% on any portion of a distribution not subject to withholding at a rate of 30%. For any year in which CubeSmart qualifies as a REIT, except as discussed below (in “Taxation of Non-U.S. Shareholders—Taxation of Disposition of Shares”) with respect to certain holders owning 10% or less of regularly traded classes of shares, a non-U.S. shareholder will incur tax on distributions attributable to gain from CubeSmart’s sale or exchange of a United States real property interest (a “USRPI”) under the Foreign Investment in Real Property Tax Act of 1980, or “FIRPTA.” A USRPI includes certain interests in real property and shares in United States corporations at least 50% of whose assets consist of interests in real property. Under FIRPTA, a non-U.S. shareholder is taxed on distributions attributable to gain from sales of USRPIs as if the gain were effectively connected with the conduct of a U.S. business of the non-U.S. shareholder. A non-U.S. shareholder would be taxed on such a distribution at the normal capital gain rates applicable to U.S. shareholders, subject to applicable alternative minimum tax and a special alternative minimum tax in the case of a nonresident alien individual. A non-U.S. corporate shareholder not entitled to treaty relief or exemption also may be subject to the 30% branch profits tax on such a distribution. CubeSmart must withhold 21% of any distribution that CubeSmart could designate as a capital gain dividend. A non-U.S. shareholder may receive a credit against its tax liability for the amount CubeSmart withholds. Effective December 18, 2015, our shares will not be treated as a USRPI when held, directly or indirectly, by a qualified shareholder and, therefore, FIRPTA will not apply to such shares. However, certain investors in a qualified shareholder that owns more than 10% of our shares (directly or indirectly) that are not themselves qualified shareholders may be subject to FIRPTA withholding. A “qualified shareholder” is a foreign entity that (1)(i) is eligible for the benefits of a comprehensive income tax treaty with the United States that includes an exchange of information program and the principal class of interests of which is listed and regularly traded on one or more recognized stock exchanges (as defined in such comprehensive income tax treaty), or (ii) is a foreign partnership that is created or organized under foreign law as a limited partnership in a jurisdiction that has an agreement for the exchange of information with respect to taxes with the United States and has a class of limited partnership units which is regularly traded on the New York Stock Exchange or Nasdaq Stock Market and the value of such class of limited partnership units is greater than 50% of the value of all of the partnership units of the foreign partnership, (2) is a qualified collective investment vehicle, and (3) maintains records on the identity of each person who, at any time during the foreign person’s taxable year, holds directly 5% or more of the class of interests described in (1)(i) or (ii). A “qualified collective investment vehicle” is a foreign person that (x) under the comprehensive income tax treaty described in (1)(i) or (ii) would be eligible for a reduced rate of withholding with respect to dividends paid by a REIT even if such person owned more than 10% of the REIT, (y) is a publicly traded partnership that is a withholding foreign partnership, and would be treated as a United States real property holding corporation if it were a United States corporation, or (z) which is designated as a qualified collective investment vehicle by the Secretary of the Treasury and is either (1) fiscally transparent or (2) required to include dividends in its gross income, but is entitled to a deduction for distributions to its equity investors. Additionally, effective December 18, 2015, qualified foreign pension funds will not be subject to FIRPTA withholding. The rules concerning qualified shareholders and qualified foreign pension funds are complex and investors who believe they may be qualified shareholders or qualified foreign pension funds should consult with their own tax advisors to find out if these rules are applicable to them. Distributions attributable to gain from sales or exchanges by CubeSmart of USRPIs are treated as ordinary dividends (not subject to the 21% withholding tax under FIRPTA) if the distribution is made to a non-U.S. shareholder with respect to any class of shares which is “regularly traded” on an established securities market located in the United States and if the non-U.S. shareholder did not own more than 5% of such class of shares at any time during the taxable year. Such distributions will generally be subject to a 30% U.S. withholding tax (subject to reduction under applicable treaty) but a non-U.S. shareholder will not be required to report the distribution on a U.S. tax return. In addition, the branch profits tax will not apply to such distributions. Taxation of Disposition of Shares. A non-U.S. shareholder generally will not incur tax under FIRPTA with respect to gain on a sale of common shares or preferred shares as long as CubeSmart is a “domestically-controlled REIT,” which means that at all times non-U.S. persons hold, directly or indirectly, less than 50% in value of all outstanding CubeSmart shares. CubeSmart cannot assure you that this test will be met. Further, even if CubeSmart is a domestically controlled REIT, pursuant to “wash sale” rules under FIRPTA, a non-U.S. shareholder may incur tax under FIRPTA. The “wash sale” rule applies to the extent such non-U.S. shareholder disposes of CubeSmart shares during the 30-day period preceding a dividend payment, and such non- U.S. shareholder (or a person related to such non-U.S. shareholder) acquires or enters into a contract or option to acquire CubeSmart common shares or preferred shares within 61 days of the 1st day of the 30 day period described above, and any portion of such dividend payment would, but for the disposition, be treated as a USRPI capital gain to such non-U.S. shareholder, then such non-U.S. shareholder shall be treated as having USRPI capital gain in an amount that, but for the disposition, would have been treated as USRPI capital gain. In addition, a non-U.S. shareholder that owns, actually or constructively, 10% or less of the outstanding common shares or preferred shares at all times during a specified testing period will not incur tax under FIRPTA on gain from a sale of such common shares or preferred shares if such shares are “regularly traded” on an established securities market. Because CubeSmart’s common shares and preferred shares are “regularly traded” on an established securities market, CubeSmart expects that a non-U.S. shareholder generally will not incur tax under FIRPTA on gain from a sale of common shares or preferred shares unless it owns or has owned more than 10% of such common shares or preferred shares at any time during the five year period to such sale. Any gain subject to tax under FIRPTA will be treated in the same manner as it would be in the hands of U.S. shareholders, subject to alternative minimum tax, but under a special alternative minimum tax in the case of nonresident alien individuals, and the purchaser of the shares could be required to withhold 10% of the purchase price and remit such amount to the IRS. A non-U.S. shareholder generally will incur tax on gain not subject to FIRPTA if:   the gain is effectively connected with the conduct of the non-U.S. shareholder’s U.S. trade or business, in which case the non-U.S. shareholder will be subject to the same treatment as U.S. shareholders with respect to the gain; or the non-U.S. shareholder is a nonresident alien individual who was present in the U.S. for 183 days or more during the taxable year and has a “tax home” in the United States, in which case the non-U.S. shareholder will incur a 30% tax on capital gains. Redemptions of Our Preferred Shares. Whenever we redeem any preferred shares, the treatment accorded to any redemption by us for cash (as distinguished from a sale, exchange or other disposition) of our preferred shares to a non-U.S. shareholder of such preferred shares can only be determined on the basis of the particular facts as to each holder at the time of redemption. In general, a non-U.S. shareholder of our preferred shares will recognize capital gain or loss measured by the difference between the amount received by the holder of such shares upon the redemption and such holder’s adjusted tax basis in the preferred shares redeemed (provided the preferred shares are held as a capital asset) if such redemption (i) results in a “complete termination” of the holder’s interest in all classes of our shares under Section 302(b)(3) of the Code, or (ii) is “not essentially equivalent to a dividend” with respect to the holder of the preferred shares under Section 302(b)(1) of the Code. In applying these tests, there must be taken into account not only the preferred shares being redeemed, but also such holder’s ownership of other classes and series of our shares and any options (including stock purchase rights) to acquire any of the foregoing. The non-U.S. shareholder of our preferred shares also must take into account any such securities (including options) which are considered to be owned by such holder by reason of the constructive ownership rules set forth in Sections 318 and 302(c) of the Code. If the non-U.S. shareholder of preferred shares owns (actually or constructively) none of our voting shares, or owns an insubstantial amount of our voting shares, based upon current law, it is probable that the redemption of preferred shares from such a holder would be considered to be “not essentially equivalent to a dividend.” However, whether a distribution is “not essentially equivalent to a dividend” depends on all of the facts and circumstances, and a non-U.S. shareholder of our preferred shares intending to rely on any of the tests in this or the preceding paragraph at the time of redemption should consult its tax advisor to determine their application to its particular situation. If the redemption does not meet any of the tests under Section 302 of the Code, then the redemption proceeds received from our preferred shares will be treated as a distribution on our shares as described under “Taxation of Shareholders — Taxation of Non- U.S. Shareholders — Taxation of Distributions.” If the redemption of a holder’s preferred shares is taxed as a dividend, the adjusted basis of such holder’s redeemed preferred shares will be transferred to any other shares held by the holder. If the holder owns no other shares, under certain circumstances, such basis may be transferred to a related person, or it may be lost entirely. With respect to a redemption of our preferred shares that is treated as a distribution with respect to our shares, which is not otherwise taxable as a dividend, the IRS has proposed Treasury regulations that would require any basis reduction associated with such a redemption to be applied on a share-by-share basis which could result in taxable gain with respect to some shares, even though the holder’s aggregate basis for the shares would be sufficient to absorb the entire amount of the redemption distribution (in excess of any amount of such distribution treated as a dividend). Additionally, these proposed Treasury regulations would not permit the transfer of basis in the redeemed shares of the preferred shares to the remaining shares held (directly or indirectly) by the redeemed holder. Instead, the unrecovered basis in our preferred shares would be treated as a deferred loss to be recognized when certain conditions are satisfied. These proposed Treasury regulations would be effective for transactions that occur after the date the regulations are published as final Treasury regulations. There can, however, be no assurance as to whether, when, and in what particular form such proposed Treasury regulations will ultimately be finalized. Conversion of Our Preferred Shares into Common Shares. Except as provided below, a non-U.S. shareholder generally will not recognize gain or loss upon the conversion of our preferred shares into our common shares, provided our preferred shares do not constitute a USRPI. Even if our preferred shares do constitute a USRPI, provided our common shares also constitute a USRPI, a non-U.S. shareholder generally will not recognize gain or loss upon a conversion of our preferred shares into our common shares provided certain reporting requirements are satisfied. Except as provided below, a non-U.S. shareholder’s basis and holding period in the common shares received upon conversion will be the same as those of the converted preferred shares (but the basis will be reduced by the portion of adjusted tax basis allocated to any fractional common share exchanged for cash). Any common shares received in a conversion that are attributable to accumulated and unpaid dividends on the converted preferred shares will be treated as a distribution on our shares as described under “— Taxation of Shareholders — Taxation of Non-U.S. Shareholders — Taxation of Distributions.” Cash received upon conversion in lieu of a fractional common share generally will be treated as a payment in a taxable exchange for such fractional common share as described under “— Taxation of Shareholders — Taxation of Non-U.S. Shareholders — Taxation of Disposition of Shares.” Non- U.S. shareholders should consult with their tax advisor regarding the U.S. federal income tax consequences of any transaction by which such holder exchanges common shares received on a conversion of preferred shares for cash or other property. Information Reporting and Backup Withholding Applicable to non-U.S. Shareholders CubeSmart must report annually to the IRS and to each non-U.S. shareholder the amount of dividends paid to such holder and the tax withheld with respect to such dividends, regardless of whether withholding was required. Copies of the information returns reporting such dividends and withholding may also be made available to the tax authorities in the country in which the non-U.S. shareholder resides under the provisions of an applicable income tax treaty. Payments of dividends or of proceeds from the disposition of shares made to a non-U.S. shareholder may be subject to information reporting and backup withholding unless such holder establishes an exemption, for example, by properly certifying its non- United States status on a properly completed IRS Form W-8 BEN or W-8BEN-E or another appropriate version of IRS Form W-8. Notwithstanding the foregoing, backup withholding may apply if either CubeSmart or its paying agent has actual knowledge, or reason to know, that a non-U.S. shareholder is a United States person. as a refund or a credit against the shareholder’s income tax liability, provided the required information is timely furnished to the IRS. Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules may be allowed Additional Withholding Requirements under “FATCA” Under Sections 1471 through 1474 of the Code (such Sections commonly referred to as “FATCA”), payments of dividends to a non-U.S. shareholder will be subject to 30% withholding tax if the non-U.S. shareholder fails to provide the withholding agent with documentation sufficient to show that it is compliant with the FATCA or otherwise exempt from withholding under FATCA. Generally, such documentation is provided on an executed IRS Form W-8BEN or IRS Form W-8BEN-E, as applicable. If a dividend payment is both subject to withholding under FATCA and subject to withholding tax discussed above, the withholding under FATCA may be credited against, and therefore reduce, such other withholding tax. Based upon proposed Treasury regulations, which may be relied upon by taxpayers until the final Treasury regulations are issued, the FATCA withholding that was to be effective on January 1, 2019 with respect to payments of the gross proceeds no longer applies. Non-U.S. shareholders should consult their tax advisors to determine the applicability of this legislation in light of their individual circumstances. Legislative or Other Actions Affecting REITs The rules dealing with U.S. federal income taxation are constantly under review by persons involved in the legislative process and by the IRS and the U.S. Treasury Department. No assurance can be given as to whether, when, or in what form, the U.S. federal income tax laws applicable to CubeSmart and its shareholders may be enacted. Changes to the federal tax laws and interpretations of U.S. federal tax laws could adversely affect an investment in CubeSmart shares. Taxation of Holders of Debt Securities Offered by the Operating Partnership This section describes the material U.S. federal income tax consequences of owning the debt securities that the Operating Partnership may offer. This summary is for general information only and is not tax advice. The tax consequences of owning any particular issue of debt securities will be discussed in the applicable prospectus. U.S. federal income tax purposes: As used herein, a “U.S. Holder” means a beneficial owner of debt securities of the Operating Partnership, who is, for   a citizen or individual resident of the United States, a corporation (or other entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States, or any of its states, or the District of Columbia,   an estate the income of which is subject to U.S. federal income taxation regardless of its source, or any trust if (1) a U.S. court is able to exercise primary supervision over the administration of such trust and one or more U.S. persons have the authority to control all substantial decisions of the trust or (2) it has a valid election in place to be treated as a U.S. person. If a partnership holds debt securities, the tax treatment of a partner will generally depend upon the status of the partner and the activities of the partnership. If you are a partner of a partnership holding debt securities of the Operating Partnership, you should consult your tax advisor regarding the consequences of the ownership and disposition of debt securities by the partnership. Pursuant to the TCJA, for taxable years beginning after December 31, 2017 (and for taxable years beginning after December 31, 2018 for instruments issued with original issue discount (“OID”)), an accrual method taxpayer that reports revenues on an applicable financial statement generally must recognize income for U.S. federal income tax purposes no later than the taxable year in which such income is taken into account as revenue in an applicable financial statement of the taxpayer. To the extent this rule is inconsistent with the rules described in the subsequent discussion, this rule supersedes such discussion. Thus, this rule could potentially require such a taxpayer to recognize income for U.S. federal income tax purposes with respect to the debt securities prior to the time such income would be recognized pursuant to the rules described in the subsequent discussion. The Treasury Department released proposed Treasury regulations that would exclude from this rule any item of gross income for which a taxpayer uses a special method of accounting required by certain sections of the Internal Revenue Code, including income subject to the timing rules for OID and de minimis OID, income under the contingent payment debt instrument rules, income under the variable rate debt instrument rules, and market discount (including de minimis market discount). The proposed Treasury regulations will be effective for taxable years beginning after the date the final Treasury regulations are published. In the interim, taxpayers may rely on the proposed Treasury regulations in certain cases. You should consult your tax advisors regarding the potential applicability of these rules to your investment in the debt securities. Taxation of Taxable U.S. Holders that it is paid or accrued, in accordance with the U.S. Holder’s method of accounting for U.S. federal income tax purposes. Interest. The stated interest on debt securities generally will be taxable to a U.S. Holder as ordinary income at the time Original Issue Discount. If you own debt securities issued with OID, you will be subject to special tax accounting rules, as described in greater detail below. In that case, you should be aware that you generally must include OID in gross income in advance of the receipt of cash attributable to that income. However, you generally will not be required to include separately in income cash payments received on the debt securities, even if denominated as interest, to the extent those payments do not constitute “qualified stated interest,” as defined below. If we determine that a particular debt security will be an OID debt security, we will disclose that determination in the prospectus relating to those debt securities. A debt security with an “issue price” that is less than the “stated redemption price at maturity” (the sum of all payments to be made on the debt security other than “qualified stated interest”) generally will be issued with OID if that difference is at least 0.25% of the stated redemption price at maturity multiplied by the number of complete years to maturity. The “issue price” of each debt security in a particular offering will be the first price at which a substantial amount of that particular offering is sold to the public. The term “qualified stated interest” means stated interest that is unconditionally payable in cash or in property, other than debt instruments of the issuer, and the interest to be paid meets all of the following conditions:    it is payable at least once per year; it is payable over the entire term of the debt security; and it is payable at a single fixed rate or, subject to certain conditions, based on one or more interest indices. disclose that determination in the prospectus relating to those debt securities. If we determine that particular debt securities of a series will bear interest that is not qualified stated interest, we will If you own a debt security issued with “de minimis” OID, which is discount that is not OID because it is less than 0.25% of the stated redemption price at maturity multiplied by the number of complete years to maturity, you generally must include the de minimis OID in income at the time principal payments on the debt securities are made in proportion to the amount paid. Any amount of de minimis OID that you have included in income will be treated as capital gain. Certain of the debt securities may contain provisions permitting them to be redeemed prior to their stated maturity at our option and/or at your option. OID debt securities containing those features may be subject to rules that differ from the general rules discussed herein. If you are considering the purchase of OID debt securities with those features, you should carefully examine the applicable prospectus and should consult your own tax advisor with respect to those features since the tax consequences to you with respect to OID will depend, in part, on the particular terms and features of the debt securities. If you own OID debt securities with a maturity upon issuance of more than one year you generally must include OID in income in advance of the receipt of some or all of the related cash payments using the “constant yield method” described in the following paragraphs. This method takes into account the compounding of interest. The amount of OID that you must include in income if you are the initial United States holder of an OID debt security is the sum of the “daily portions” of OID with respect to the debt security for each day during the taxable year or portion of the taxable year in which you held that debt security (“accrued OID”). The daily portion is determined by allocating to each day in any “accrual period” a pro rata portion of the OID allocable to that accrual period. The “accrual period” for an OID debt security may be of any length and may vary in length over the term of the debt security, provided that each accrual period is no longer than one year and each scheduled payment of principal or interest occurs on the first day or the final day of an accrual period. The amount of OID allocable to any accrual period is an amount equal to the excess, if any, of:  the debt security’s “adjusted issue price” at the beginning of the accrual period multiplied by its yield to maturity, determined on the basis of compounding at the close of each accrual period and properly adjusted for the length of the accrual period, over  the aggregate of all qualified stated interest allocable to the accrual period. OID allocable to a final accrual period is the difference between the amount payable at maturity, other than a payment of qualified stated interest, and the adjusted issue price at the beginning of the final accrual period. Special rules will apply for calculating OID for an initial short accrual period. The “adjusted issue price” of a debt security at the beginning of any accrual period is equal to its issue price increased by the accrued OID for each prior accrual period, determined without regard to the amortization of any acquisition or bond premium, as described below, and reduced by any payments made on the debt security (other than qualified stated interest) on or before the first day of the accrual period. Under these rules, you will generally have to include in income increasingly greater amounts of OID in successive accrual periods. We are required to provide information returns stating the amount of OID accrued on debt securities held of record by persons other than corporations and other exempt holders. Floating rate debt securities are subject to special OID rules. In the case of an OID debt security that is a floating rate debt security, both the “yield to maturity” and “qualified stated interest” will be determined solely for purposes of calculating the accrual of OID as though the debt security will bear interest in all periods at a fixed rate generally equal to the rate that would be applicable to interest payments on the debt security on its date of issue or, in the case of certain floating rate debt securities, the rate that reflects the yield to maturity that is reasonably expected for the debt security. Additional rules may apply if either:   the interest on a floating rate debt security is based on more than one interest index; or the principal amount of the debt security is indexed in any manner. This discussion does not address the tax rules applicable to debt securities with an indexed principal amount. If you are considering the purchase of floating rate OID debt securities or securities with indexed principal amounts, you should carefully examine the prospectus relating to those debt securities, and should consult your own tax advisor regarding the U.S. federal income tax consequences to you of holding and disposing of those debt securities. You may elect to treat all interest on any debt securities as OID and calculate the amount includible in gross income under the constant yield method described above. For purposes of this election, interest includes stated interest, acquisition discount, OID, de minimis OID, market discount, de minimis market discount and unstated interest, as adjusted by any amortizable bond premium or acquisition premium. You must make this election for the taxable year in which you acquired the debt security, and you may not revoke the election without the consent of the IRS. You should consult with your own tax advisor about this election. Market Discount. If you purchase debt securities, other than OID debt securities, after original issuance for an amount that is less than their stated redemption price at maturity, or, in the case of OID debt securities, their adjusted issue price, the amount of the difference will be treated as “market discount” for U.S. federal income tax purposes, unless that difference is less than a specified de minimis amount. Under the market discount rules, you will be required to treat any principal payment on, or any gain on the sale, exchange, retirement or other disposition of, the debt securities as ordinary income to the extent of the market discount that you have not previously included in income and are treated as having accrued on the debt securities at the time of their payment or disposition. In addition, you may be required to defer, until the maturity of the debt securities or their earlier disposition in a taxable transaction, the deduction of all or a portion of the interest expense on any indebtedness attributable to the debt securities. You may elect, on a debt security-by-debt security basis, to deduct the deferred interest expense in a tax year prior to the year of disposition. You should consult your own tax advisor before making this election. Any market discount will be considered to accrue ratably during the period from the date of acquisition to the maturity date of the debt securities, unless you elect to accrue on a constant interest method. You may elect to include market discount in income currently as it accrues, on either a ratable or constant interest method, in which case the rule described above regarding deferral of interest deductions will not apply. Your election to include market discount in income currently, once made, applies to all market discount obligations acquired by you on or after the first taxable year to which your election applies and may not be revoked without the consent of the IRS. You should consult your own tax advisor before making this election. Acquisition Premium and Amortizable Bond Premium. If you purchase OID debt securities for an amount that is greater than their adjusted issue price but equal to or less than the sum of all amounts payable on the debt securities after the purchase date other than payments of qualified stated interest, you will be considered to have purchased those debt securities at an “acquisition premium.” Under the acquisition premium rules, the amount of OID that you must include in gross income with respect to those debt securities for any taxable year will be reduced by the portion of the acquisition premium properly allocable to that year. If you purchase debt securities (including OID debt securities) for an amount in excess of the sum of all amounts payable on those debt securities after the purchase date other than qualified stated interest, you will be considered to have purchased those debt securities at a “premium” and, if they are OID debt securities, you will not be required to include any OID in income. You generally may elect to amortize the premium over the remaining term of those debt securities on a constant yield method as an offset to interest when includible in income under your regular accounting method. In the case of debt securities that provide for alternative payment schedules, bond premium is calculated by generally assuming that (a) you will exercise or not exercise options in a manner that maximizes your yield, and (b) we will exercise or not exercise options in a manner that minimizes your yield (except that we will be assumed to exercise call options in a manner that maximizes your yield). If you do not elect to amortize bond premium, that premium will decrease the gain or increase the loss you would otherwise recognize on disposition of the debt security. Your election to amortize premium on a constant yield method will also apply to all debt obligations held or subsequently acquired by you on or after the first day of the first taxable year to which the election applies. You may not revoke the election without the consent of the IRS. You should consult your own tax advisor before making this election. Sale, Exchange and Retirement of Debt Securities. A U.S. Holder of debt securities will recognize gain or loss upon the sale, exchange, retirement, redemption or other taxable disposition of such debt securities in an amount equal to the difference between:  the amount of cash and the fair market value of other property received in exchange for such debt securities, other than amounts attributable to accrued but unpaid qualified stated interest, which will be subject to tax as ordinary income to the extent not previously included in income; and  the U.S. Holder’s adjusted tax basis in such debt securities. A U.S. Holder’s adjusted tax basis in a debt security generally will equal the cost of the debt security to such holder (A) increased by the amount of OID or accrued market discount (if any) previously included in income by such holder and (B) decreased by the amount of (1) any payments other than qualified stated interest payments and (2) any amortizable bond premium taken by the holder. Any gain or loss recognized will generally be capital gain or loss, and such capital gain or loss will generally be long- term capital gain or loss if the debt security has been held by the U.S. Holder for more than one year. Long-term capital gain for non- corporate taxpayers is subject to reduced rates of U.S. federal income taxation (currently, a 20% maximum federal rate, also see the discussion above in “Taxation of Shareholders—Tax Rates Applicable to Individual Shareholders under the TCJA” for a more detailed discussion on tax rates for individuals)). The deductibility of capital losses is subject to certain limitations. If a U.S. Holder recognizes a loss upon a subsequent disposition of debt securities in an amount that exceeds a prescribed threshold, it is possible that the provisions of Treasury regulations involving “reportable transactions” could apply, with a resulting requirement to separately disclose the loss generating transactions to the IRS. While these regulations are directed towards “tax shelters,” they are written broadly, and apply to transactions that would not typically be considered tax shelters. Significant penalties apply for failure to comply with these requirements. You should consult your tax advisor concerning any possible disclosure obligation with respect to the receipt or disposition of debt securities, or transactions that might be undertaken directly or indirectly by us. Moreover, you should be aware that we and other participants in transactions involving us (including our advisors) might be subject to disclosure or other requirements pursuant to these regulations. Medicare Tax on Investment Income Certain U.S. Shareholders and U.S. Holders who are individuals, estates or trusts and whose income exceeds certain thresholds may be required to pay a 3.8% Medicare tax on “net investment income” which includes, among other things, dividends on shares, interest on debt securities and capital gains from the sale or other disposition of shares or debt securities, subject to certain exceptions. Prospective investors should consult their tax advisors regarding the effect, if any, of this legislation on their ownership and disposition of our common shares, preferred shares or debt securities. Taxation of Tax-Exempt Holders of Debt Securities Assuming the debt security is debt for tax purposes, interest income accrued on the debt security should not constitute unrelated business taxable income to a tax-exempt holder. As a result, a tax-exempt holder generally should not be subject to U.S. federal income tax on the interest income accruing on debt securities of the Operating Partnership. Similarly, any gain recognized by the tax- exempt holder in connection with a sale of the debt security generally should not be unrelated business taxable income. However, if a tax- exempt holder were to finance its acquisition of the debt security with debt, a portion of the interest income and gain attributable to the debt security would constitute unrelated business taxable income pursuant to the “debt-financed property” rules. Tax-exempt holders should consult their own tax advisors to determine the potential tax consequences of an investment in debt securities of the Operating Partnership. Taxation of Non-U.S. Holders of Debt Securities The term “non-U.S. Holder” means a holder of debt securities of the Operating Partnership that is not a U.S. Holder or a partnership (or an entity treated as a partnership for U.S. federal income tax purposes). The rules governing U.S. federal income taxation of non-U.S. Holders are complex. This section is only a summary of such rules. We urge non-U.S. Holders to consult their own tax advisors to determine the impact of federal, state, local and foreign income tax laws on ownership of debt securities, including any reporting requirements. Interest. Subject to the discussions of backup withholding and “FATCA” below, interest (including OID) paid to a non- U.S. Holder of debt securities will not be subject to U.S. federal income or withholding tax under the “portfolio interest exemption,” provided that:   interest paid on debt securities is not effectively connected with a non-U.S. Holder’s conduct of a trade or business in the United States; the non-U.S. Holder does not actually or constructively own 10% or more of the capital or profits interest in the Operating Partnership;  the non-U.S. Holder is not   a controlled foreign corporation with respect to which the Operating Partnership is a “related person” within the meaning of Section 864(d) of the Code; or a bank that receives such interest on an extension of credit made pursuant to a loan agreement entered into in the ordinary course of its trade or business; and  the beneficial owner of debt securities provides a certification, which is generally made on an IRS Form W-8BEN of W- 8BEN-E or other applicable form or a suitable substitute form and signed under penalties of perjury, that it is not a United States person. A payment of interest (including OID) to a non-U.S. Holder that does not qualify for the portfolio interest exemption and that is not effectively connected to a United States trade or business will be subject to United States federal withholding tax at a rate of 30%, unless a United States income tax treaty applies to reduce or eliminate withholding. interest (including OID) if such payments are effectively connected with the conduct of a trade or business by the non-U.S. Holder in the A non-U.S. Holder will generally be subject to tax in the same manner as a U.S. Holder with respect to payments of United States and, if an applicable tax treaty provides, such gain is attributable to a United States permanent establishment maintained by the non-U.S. Holder. In some circumstances, such effectively connected income received by a non-U.S. Holder which is a corporation may be subject to an additional “branch profits tax” at a 30% base rate or, if applicable, a lower treaty rate. To claim the benefit of a lower treaty rate or to claim exemption from withholding because the income is effectively connected with a United States trade or business, the non-U.S. Holder must provide a properly executed IRS Form W-8BEN or W-8BEN- E or IRS Form W-8ECI or other applicable form, or a suitable substitute form, as applicable, prior to the payment of interest. Such certificate must contain, among other information, the name and address of the non-U.S. Holder as well as applicable U.S. and foreign tax identification numbers. provide different rules. Non-U.S. Holders are urged to consult their own tax advisors regarding applicable income tax treaties, which may Sale or Retirement of Debt Securities. Subject to the discussions of backup withholding and “FATCA” below, a non- U.S. Holder generally will not be subject to U.S. federal income tax or withholding tax on gain realized on the sale, exchange or redemption of debt securities unless:   the non-U.S. shareholder is a nonresident alien individual who was present in the U.S. for 183 days or more during the taxable year and has a “tax home” in the United States, in which case the non-U.S. shareholder will incur a 30% tax on capital gains; or the gain is effectively connected with the conduct of a trade or business of the non-U.S. Holder in the United States and, if an applicable tax treaty so provides, such gain is attributable to a United States permanent establishment maintained by such holder. Except to the extent that an applicable tax treaty provides otherwise, a non-U.S. Holder will generally be subject to tax in the same manner as a U.S. Holder with respect to gain realized on the sale, exchange or redemption of debt securities if such gain is effectively connected with the conduct of a trade or business by the non-U.S. Holder in the United States and, if an applicable tax treaty provides, such gain is attributable to a United States permanent establishment maintained by the non-U.S. Holder. In certain circumstances, a non-U.S. Holder that is a corporation will be subject to an additional “branch profits tax” at a 30% rate or, if applicable, a lower treaty rate on such income. U.S. Federal Estate Tax. If you are an individual, your estate will not be subject to U.S. federal estate tax on the debt securities beneficially owned by you at the time of your death, provided that any payment to you on the debt securities, including OID, would be eligible for exemption from the 30% U.S. federal withholding tax under the “portfolio interest exemption” described above, without regard to the certification requirement. Information Reporting and Backup Withholding Applicable to Holders of Debt Securities U.S. Holders Certain U.S. Holders may be subject to information reporting requirements on payments of principal and interest (including OID) on debt securities and payments of the proceeds of the sale, exchange, or redemption of debt securities, and backup withholding, currently imposed at a rate of 28% (for tax years beginning on or before December 31, 2017 and 24% for tax years beginning after that date), may apply to such payment if the U.S. Holder:    fails to furnish an accurate taxpayer identification number, or TIN, to the payor in the manner required; is notified by the IRS that it has failed to properly report payments of interest or dividends; or under certain circumstances, fails to certify, under penalties of perjury, that it has furnished a correct TIN and that it has not been notified by the IRS that it is subject to backup withholding. Non-U.S. Holders A non-U.S. Holder is generally not subject to backup withholding with respect to payments of interest (including OID) on debt securities if it certifies as to its status as a non-U.S. Holder under penalties of perjury or if it otherwise establishes an exemption, provided that neither we nor our paying agent has actual knowledge or reason to know that the non-U.S. Holder is a United States person or that the conditions of any other exemptions are not, in fact, satisfied. Information reporting requirements, however, will apply to payments of interest (including OID) to non-U.S. Holders where such interest is subject to withholding or exempt from United States withholding tax pursuant to a tax treaty. Copies of these information returns may also be made available under the provisions of a specific treaty or agreement to the tax authorities of the country in which the non-U.S. Holder resides. The payment of the proceeds from the disposition of debt securities to or through the United States office of any broker, United States or foreign, will be subject to information reporting and possible backup withholding unless the owner certifies as to its non- United States status under penalties of perjury or otherwise establishes an exemption, provided that the broker does not have actual knowledge or reason to know that the non-U.S. Holder is a United States person or that the conditions of any other exemption are not, in fact, satisfied. The payment of the proceeds from the disposition of debt securities to or through a non-United States office of a non- United States broker that is not a “United States related person” generally will not be subject to information reporting or backup withholding. For this purpose, a “United States related person” is:    a controlled foreign corporation for U.S. federal income tax purposes; a foreign person 50% or more of whose gross income from all sources for the three-year period ending with the close of its taxable year preceding the payment, or for such part of the period that the broker has been in existence, is derived from activities that are effectively connected with the conduct of a United States trade or business; or a foreign partnership that at any time during the partnership’s taxable year is either engaged in the conduct of a trade or business in the United States or of which 50% or more of its income or capital interests are held by United States persons. In the case of the payment of proceeds from the disposition of debt securities to or through a non-United States office of a broker that is either a United States person or a United States related person, the payment may be subject to information reporting unless the broker has documentary evidence in its files that the owner is a non-U.S. Holder and the broker has no knowledge or reason to know to the contrary. Backup withholding will not apply to payments made through foreign offices of a broker that is a United States person or a United States related person, absent actual knowledge that the payee is a United States person. Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules from a payment to a Holder will be allowed as a refund or a credit against such Holder’s U.S. federal income tax liability, provided that the requisite procedures are followed. withholding and the procedure for obtaining such an exemption, if applicable. Holders of debt securities are urged to consult their tax advisors regarding their qualification for exemption from backup FATCA Withholding Under Sections 1471 through 1474 of the Code (such Sections commonly referred to as “FATCA”), payments of interest to a non-U.S. Holder will be subject to a 30% withholding tax if the non-U.S. Holder fails to provide the withholding agent with documentation sufficient to show that it is compliant with FATCA. Generally such documentation is provided on an executed IRS Form W-8BEN or IRS Form W-8BEN-E, as applicable. If interest is subject to the 30% tax under FATCA, it will not be subject to the 30% tax described above under “Taxation of Non-U.S. Shareholders” and “Taxation of Non-U.S. Holders of Debt Securities.” Based upon proposed Treasury regulations, which may be relied upon by taxpayers until the final Treasury regulations are issued, the FATCA withholding that was to be effective on January 1, 2019 with respect to payments of the gross proceeds no longer applies. Prospective investors should consult their tax advisors regarding the possible implications of this legislation on their investment in common shares or preferred shares of CubeSmart or debt securities of the Operating Partnership.  CORPORATE OFFICERS Christopher P. Marr President & Chief Executive Officer American Stock Transfer & CORPORATE INFORMATION Transfer Agent Investor Relations 5 Old Lancaster Road BOARD OF TRUSTEES Marianne M. Keler Chair of the Board Partner, Keler & Kershow, PLLC Timothy M. Martin Chief Financial Officer Christopher P. Marr President & Chief Executive Officer, CubeSmart Jeffrey P. Foster Senior Vice President, Chief Legal Officer & Secretary Joel D. Keaton Chief Operating Officer symbol CUBE Trust Co., LLC Operations Center 6201 15th Avenue Brooklyn, NY 11219 877.237.6885 Stock Listing CubeSmart trades on the New York Stock Exchange under the Malvern, PA 19355 610.535.5000 Form 10-K The Annual Report on Form 10-K filed with the Securities and Exchange Commission is available to shareholders without charge upon written request to: Annual Meeting The annual meeting of Investor Relations 5 Old Lancaster Road shareholders will be held at 5 Old Lancaster Road Malvern, PA 19355 610.535.5000 Malvern, PA 19355 on May 12, 2020 at 8:00 A.M. Internet Eastern Time Corporate Headquarters 5 Old Lancaster Road Malvern, PA 19355 Financial statements and other information are available electronically on CubeSmart's website at www.cubesmart.com Piero Bussani Chief Legal Officer & Senior Vice President, ReVantage Corporate Services Dorothy Dowling Chief Marketing Officer & Senior Vice President of Sales, BWH Hotel Group John W. Fain Senior Vice President, Sales and Marketing (retired), UPS Freight John F. Remondi President, Chief Executive Officer & Director, Navient Jeffrey F. Rogatz Managing Director, Robert W. Baird & Co. Deborah R. Salzberg Partner, RMS Investment Group CubeSmart submitted to the New York Stock Exchange the certification of the Chief Executive Officer certifying that he is not aware of any violation of the New York Stock Exchange corporate governance listing standards in effect at the time of the submission of such certificate. In addition, the Company has filed, as exhibits 31.1, 31.2, 31.3 and 31.4 to the Annual Report on Form 10-K for the year ended December 31, 2019, the certifications of the Chief Executive Officer and Chief Financial Officer, respectively, required by Section 302 of the Sarbanes-Oxley Act of 2002 regarding the quality of CubeSmart and CubeSmart L.P.’s public disclosure. Forward-looking Statements This Annual Report contains 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. 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 the Company believes 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. Risk, uncertainties and other factors that might cause such differences, some of which could be material, include but are not limited to: adverse changes in the national and local economic, business, real estate and other market conditions; the effect of competition from existing and new self-storage properties and operators on the Company’s ability to maintain or raise occupancy and rental rates; the failure to execute the Company’s business plan; reduced availability and increased costs of external sources of capital; financing risks, including the risk of over-leverage and the corresponding risk of default on the Company’s mortgage and other debt and potential inability to refinance existing or future indebtedness; increases in interest rates and operating costs; counterparty non-performance related to the use of derivative financial instruments; risks related the Company’s ability to maintain its qualification as a REIT for federal income tax purposes; the failure of acquisition and developments to close on expected terms, or at all, or to perform as expected; increases in taxes, fees, and assessments from state and local jurisdictions; the failure of the Company’s joint venture partners to fulfill their obligations to the Company or their pursuit of actions that are inconsistent with the Company’s objectives; reductions in asset valuations and related impairment charges; cyber security breaches or a failure of the Company’s networks, systems or technology, which could adversely impact the Company’s business, customer and employee relationships; changes in real estate, zoning, use and occupancy laws or regulations; risks related to natural disasters or acts of violence, pandemics, active shooters, terrorism or war that affect the markets in which the Company operates; potential environmental and other liabilities; uninsured or uninsurable losses and the ability to obtain insurance coverage against risks and losses; the Company’s ability to attract and retain talent in the current labor market; other factors affecting the real estate industry generally or the self-storage industry in particular; and other risks identified in this Annual Report and, from time to time, in other reports that the Company files with the SEC or in other documents that the Company publicly disseminates. The Company undertakes 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. 5 Old Lancaster Road Malvern, PA 19355 www.cubesmart.com 

Continue reading text version or see original annual report in PDF format above