10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

____________________

FORM 10-Q

_______________________________________

(Mark one)
R	Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended June 30, 2013.
or
o	Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
	For the transition period from ________________to ________________.

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

____________________

CUBESMART

CUBESMART, L.P.

(Exact Name of Registrant as Specified in its Charter)

____________________

Maryland (CubeSmart) Delaware (CubeSmart, L.P.)	20-1024732 34-1837021
(State or Other Jurisdiction of	(I.R.S. Employer
Incorporation or Organization)	Identification No.)
460 East Swedesford Road Suite 3000
Wayne, Pennsylvania	19087
(Address of Principal Executive Offices)	(Zip Code)

(610) 293-5700

(Registrant’s Telephone Number, Including Area Code)

____________________

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

CubeSmart	Yes R No o
CubeSmart, L.P.	Yes R No o

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

CubeSmart	Yes R No £
CubeSmart, L.P.	Yes R No £

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

CubeSmart:

Large accelerated filer R Accelerated filer o Non-accelerated filer o Smaller reporting company o

CubeSmart, L.P.:

Large accelerated filer £ Accelerated filer £ Non-accelerated filer R Smaller reporting company £

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

CubeSmart	Yes £ No R
CubeSmart, L.P.	Yes £ No R

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

Class	Outstanding at August 7, 2013
Common shares, $0.01 par value per share, of CubeSmart	135,120,940

EXPLANATORY NOTE

This report combines the quarterly reports on Form 10-Q for the period ended June 30, 2013 of CubeSmart (the “Parent Company” or “CubeSmart”) and CubeSmart, L.P. (the “Operating Partnership”). The Parent Company is a Maryland real estate investment trust, or REIT, that owns its assets and conducts its operations through the Operating Partnership, a Delaware limited partnership, and subsidiaries of the Operating Partnership.  The Parent Company, the Operating Partnership and their consolidated subsidiaries are collectively referred to in this report as the “Company.” In addition, terms such as “we”, “us”, or “our” used in this report may refer to the Company, the Parent Company, or the Operating Partnership.

The Parent Company is the sole general partner of the Operating Partnership and, as of June 30, 2013, owned a 98.3% interest in the Operating Partnership. The remaining 1.7% 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 few differences between the Parent Company and the Operating Partnership, which are reflected in the note disclosures in this report. The Company believes it is important to understand the differences between the Parent Company and the Operating Partnership in the context of how these entities operate as a consolidated enterprise. The Parent Company is a REIT, whose only material asset is its ownership of the partnership interests of the Operating Partnership.  As a result, the Parent Company does not conduct business itself, other than acting as the sole general partner of the Operating Partnership, issuing public equity from time to time and guaranteeing the debt obligations of the Operating Partnership. The Operating Partnership holds substantially all the assets of the Company and, directly or indirectly, holds the ownership interests in the Company’s real estate ventures. The Operating Partnership conducts the operations of the Company’s business and is structured as a partnership with no publicly traded equity. Except for net proceeds from equity issuances by the Parent Company, which are contributed to the Operating Partnership in exchange for partnership units, the Operating Partnership generates the capital required by the Company’s business through the Operating Partnership’s operations, by the Operating Partnership’s direct or indirect incurrence of indebtedness or through the issuance of partnership units of the Operating Partnership or equity interests in subsidiaries of the Operating Partnership.

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

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

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

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

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

To help investors understand the significant differences between the Parent Company and the Operating Partnership, this report presents Item 1 –Financial Statements as separate sections for each of the Parent Company and the Operating Partnership.

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

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

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

2

TABLE OF CONTENTS

Part I. FINANCIAL INFORMATION
Item 1.	Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	41
Item 4.	Controls and Procedures	41
Part II. OTHER INFORMATION
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	42
Item 6.	Exhibits	43

Filing Format

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

3

Forward-Looking Statements

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

There are a number of risks and uncertainties that could cause our actual results to differ materially from the forward-looking statements contained in or contemplated by this Report.  Any forward-looking statements should be considered in light of the risks and uncertainties referred to in Item 1A. “Risk Factors” in the Parent Company’s and the Operating Partnership’s combined Annual Report on Form 10-K for the year ended December 31, 2012 and in our other filings with the Securities and Exchange Commission (“SEC”).  These risks include, but are not limited to, the following:

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

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

·the execution of our business plan;

·the availability of external sources of capital;

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

·increases in interest rates and operating costs;

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

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

·acquisition and development risks;

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

·changes in real estate and zoning laws or regulations;

·risks related to natural disasters;

·potential environmental and other liabilities;

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

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

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

4

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CUBESMART AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

(unaudited)

	June 30,			December 31,
	2013			2012
ASSETS
Storage facilities	$	2,536,592		$	2,443,022
Less: Accumulated depreciation	(386,924		)	(353,315		)
Storage facilities, net	2,149,668			2,089,707
Cash and cash equivalents	4,021			4,495
Restricted cash	4,540			6,070
Loan procurement costs, net of amortization	9,421			8,253
Other assets, net	30,072			41,794
Total assets	$	2,197,722		$	2,150,319
LIABILITIES AND EQUITY
Unsecured senior notes	$	250,000		$	250,000
Revolving credit facility	110,000			45,000
Unsecured term loans	500,000			500,000
Mortgage loans and notes payable	214,453			228,759
Accounts payable, accrued expenses and other liabilities	54,241			60,708
Distributions payable	16,550			16,419
Deferred revenue	12,682			11,090
Security deposits	427			444
Total liabilities	1,158,353			1,112,420
Noncontrolling interests in the Operating Partnership	36,446			47,990
Commitments and contingencies
Equity
7.75% Series A Preferred shares $.01 par value, 3,220,000 shares authorized, 3,100,000 shares issued and outstanding at June 30, 2013 and December 31, 2012, respectively	31			31
Common shares $.01 par value, 200,000,000 shares authorized, 134,430,071 and 131,794,547 shares issued and outstanding at June 30, 2013 and December 31, 2012, respectively	1,344			1,318
Additional paid in capital	1,457,271			1,418,463
Accumulated other comprehensive loss	(11,794		)	(19,796		)
Accumulated deficit	(444,044		)	(410,225		)
Total CubeSmart shareholders’ equity	1,002,808			989,791
Noncontrolling interest in subsidiaries	115			118
Total equity	1,002,923			989,909
Total liabilities and equity	$	2,197,722		$	2,150,319

See accompanying notes to the unaudited consolidated financial statements.

5

CUBESMART AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
REVENUES
Rental income	$	72,231		$	59,424		$	141,849		$	116,741
Other property related income	8,854			6,741			16,548			12,517
Property management fee income	1,217			1,103			2,362			2,123
Total revenues	82,302			67,268			160,759			131,381
OPERATING EXPENSES
Property operating expenses	29,955			26,707			60,776			52,650
Depreciation and amortization	29,241			27,077			59,073			52,160
General and administrative	7,515			6,278			15,128			12,722
Total operating expenses	66,711			60,062			134,977			117,532
OPERATING INCOME	15,591			7,206			25,782			13,849
OTHER INCOME (EXPENSE)
Interest:
Interest expense on loans	(10,683		)	(9,280		)	(21,050		)	(18,570		)
Loan procurement amortization expense	(497		)	(1,114		)	(973		)	(1,917		)
Acquisition related costs	(1,648		)	(313		)	(1,763		)	(863		)
Equity in losses of real estate ventures	-			(210		)	-			(461		)
Other	(187		)	(107		)	(260		)	(178		)
Total other expense	(13,015		)	(11,024		)	(24,046		)	(21,989		)
INCOME (LOSS) FROM CONTINUING OPERATIONS	2,576			(3,818		)	1,736			(8,140		)
DISCONTINUED OPERATIONS
(Loss) Income from discontinued operations	(8		)	967			176			2,031
Gain on disposition of discontinued operations	-			6,206			228			6,206
Total discontinued operations	(8		)	7,173			404			8,237
NET INCOME	2,568			3,355			2,140			97
NET (INCOME) LOSS ATTRIBUTABLE TO NONCONTROLLING INTERESTS
Noncontrolling interests in the Operating Partnership	(18		)	(38		)	17			111
Noncontrolling interest in subsidiaries	-			(774		)	1			(1,508		)
NET INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY	2,550			2,543			2,158			(1,300		)
Distribution to Preferred Shares	(1,502		)	(1,502		)	(3,004		)	(3,004		)
NET INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY’S
COMMON SHAREHOLDERS	$	1,048		$	1,041		$	(846	)	$	(4,304	)
Basic earnings (loss) per share from continuing operations attributable to common shareholders	$	0.01		$	(0.05	)	$	(0.01	)	$	(0.10	)
Basic earnings per share from discontinued operations attributable to common shareholders	$	-		$	0.06		$	-		$	0.06
Basic earnings (loss) per share attributable to common shareholders	$	0.01		$	0.01		$	(0.01	)	$	(0.04	)
Diluted earnings (loss) per share from continuing operations attributable to common shareholders	$	0.01		$	(0.05	)	$	(0.01	)	$	(0.10	)
Diluted earnings per share from discontinued operations attributable to common shareholders	$	-		$	0.06		$	-		$	0.06
Diluted earnings (loss) per share attributable to common shareholders	$	0.01		$	0.01		$	(0.01	)	$	(0.04	)
Weighted-average basic shares outstanding	133,677			122,599			133,316			122,433
Weighted-average diluted shares outstanding	136,329			122,599			133,316			122,433
AMOUNTS ATTRIBUTABLE TO THE COMPANY’S COMMON SHAREHOLDERS:
Income (loss) from continuing operations	$	1,056		$	(5,960	)	$	(1,243	)	$	(12,343	)
Total discontinued operations	(8		)	7,001			397			8,039
Net income (loss)	$	1,048		$	1,041		$	(846	)	$	(4,304	)

See accompanying notes to the unaudited consolidated financial statements.

6

CUBESMART AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands)

(unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
NET INCOME	$	2,568		$	3,355		$	2,140		$	97
Other comprehensive income (loss):
Unrealized gain (loss) on interest rate swap	5,595			(8,303		)	5,286			(9,099		)
Reclassification of realized losses on interest rate swap	1,554			1,512			3,085			2,996
Unrealized gain (loss) on foreign currency translation	25			(105		)	(231		)	19
OTHER COMPREHENSIVE INCOME (LOSS)	7,174			(6,896		)	8,140			(6,084		)
COMPREHENSIVE INCOME (LOSS)	9,742			(3,541		)	10,280			(5,987		)
Comprehensive (income) loss attributable to noncontrolling interests in the Operating Partnership	(140		)	197			(123		)	317
Comprehensive (income) loss attributable to noncontrolling interests in subsidiaries	(7		)	(771		)	3			(1,509		)
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO
THE COMPANY	$	9,595		$	(4,115	)	$	10,160		$	(7,179	)

See accompanying notes to the unaudited consolidated financial statements.

7

CUBESMART AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY

(in thousands)

(unaudited)

																								Noncontrolling
	Common Shares			Preferred Shares			Additional Paid in		Accumulated Other Comprehensive			Accumulated			Total Shareholders’			Noncontrolling Interest in			Total			Interests in the Operating
	Number	Amount		Number	Amount		Capital		(Loss) Income			Deficit			Equity			Subsidiaries			Equity			Partnership
Balance at December 31, 2012	131,795	$	1,318	3,100	$	31	$	1,418,463	$	(19,796	)	$	(410,225	)	$	989,791		$	118		$	989,909		$	47,990
Issuance of common shares	1,225	12					20,374								20,386						20,386
Issuance of restricted shares	215	2													2						2
Conversion from units to shares	1,013	10					14,591								14,601						14,601			(14,601		)
Exercise of stock options	182	2					1,276								1,278						1,278
Amortization of restricted shares							2,131								2,131						2,131
Share compensation expense							436								436						436
Adjustment for noncontrolling interest in the Operating Partnership												(3,436		)	(3,436		)				(3,436		)	3,436
Net income (loss)												2,158			2,158			(1		)	2,157			(17		)
Other comprehensive gain (loss):
Unrealized gain on interest rate swap									8,227						8,227						8,227			144
Unrealized loss on foreign currency translation									(225		)				(225		)	(2		)	(227		)	(4		)
Preferred distributions												(3,004		)	(3,004		)				(3,004		)
Common distributions												(29,537		)	(29,537		)				(29,537		)	(502		)
Balance at June 30, 2013	134,430	$	1,344	3,100	$	31	$	1,457,271	$	(11,794	)	$	(444,044	)	$	1,002,808		$	115		$	1,002,923		$	36,446

																								Noncontrolling
	Common Shares			Preferred Shares			Additional Paid in		Accumulated Other Comprehensive			Accumulated			Total Shareholders’			Noncontrolling Interest in			Total			Interests in the Operating
	Number	Amount		Number	Amount		Capital		(Loss) Income			Deficit			Equity			Subsidiaries			Equity			Partnership
Balance at December 31, 2011	122,059	$	1,221	3,100	$	31	$	1,309,505	$	(12,831	)	$	(342,013	)	$	955,913		$	39,409		$	995,322		$	49,732
Issuance of restricted shares	238	2													2						2
Conversion from units to shares	265	3					3,310								3,313						3,313			(3,313		)
Exercise of stock options	123	1					971								972						972
Amortization of restricted shares							1,032								1,032						1,032
Share compensation expense							606								606						606
Adjustment for noncontrolling interest in the Operating Partnership												(6,072		)	(6,072		)				(6,072		)	6,072
Net (loss) income												(1,300		)	(1,300		)	1,508			208			(111		)
Other comprehensive (loss) gain:
Unrealized loss on interest rate swap									(5,897		)				(5,897		)				(5,897		)	(206		)
Unrealized gain on foreign currency translation									18						18			1			19
Preferred distributions												(3,004		)	(3,004		)				(3,004		)
Common distributions												(19,693		)	(19,693		)	(2,309		)	(22,002		)	(724		)
Balance at June 30, 2012	122,685	$	1,227	3,100	$	31	$	1,315,424	$	(18,710	)	$	(372,082	)	$	925,890		$	38,609		$	964,499		$	51,450

See accompanying notes to the unaudited consolidated financial statements.

8

CUBESMART AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

	Six Months Ended June 30,
	2013			2012
Operating Activities
Net income	$	2,140		$	97
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization	60,103			55,297
Gain on disposition of discontinued operations	(228		)	(6,206		)
Equity compensation expense	2,567			1,638
Accretion of fair market value adjustment of debt	(488		)	(242		)
Equity in loss of real estate venture	-			461
Changes in other operating accounts:
Other assets	(2,133		)	(127		)
Restricted cash	1,062			3,294
Accounts payable and accrued expenses	1,099			(2,418		)
Other liabilities	1,189			801
Net cash provided by operating activities	$	65,311		$	52,595
Investing Activities
Acquisitions of storage facilities	$	(93,743	)	$	(86,778	)
Additions and improvements to storage facilities	(9,399		)	(9,187		)
Development costs	(17,557		)	-
Cash distributions from real estate venture	-			633
Proceeds from sales of properties, net	10,993			22,662
Proceeds from notes receivable	5,192			-
Change in restricted cash	468			1,789
Net cash used in investing activities	$	(104,046	)	$	(70,881	)
Financing Activities
Proceeds from:
Unsecured senior notes, net of discounts	$	-		$	249,638
Revolving credit facility	229,200			246,300
Unsecured term loans	-			100,000
Principal payments on:
Revolving credit facility	(164,200		)	(246,300		)
Mortgage loans and notes payable	(13,352		)	(175,963		)
Loan procurement costs	(2,141		)	(2,019		)
Settlement of hedge transaction	-			(195		)
Proceeds from issuance of common shares, net	20,388			-
Exercise of stock options	1,278			972
Distributions paid to common shareholders	(29,258		)	(19,643		)
Distributions paid to preferred shareholders	(3,004		)	(2,720		)
Distributions paid to noncontrolling interests in Operating Partnership	(650		)	(749		)
Distributions paid to noncontrolling interests in subsidiaries	-			(2,308		)
Net cash provided by financing activities	$	38,261		$	147,013
Change in cash and cash equivalents	(474		)	128,727
Cash and cash equivalents at beginning of period	4,495			9,069
Cash and cash equivalents at end of period	$	4,021		$	137,796
Supplemental Cash Flow and Noncash Information
Cash paid for interest, net of interest capitalized	$	22,522		$	18,030
Supplemental disclosure of noncash activities:
Derivative valuation adjustment	$	8,371		$	(5,908	)
Foreign currency translation adjustment	$	(231	)	$	19
Mortgage loan assumption - acquisition of storage facility	$	-		$	62,467

See accompanying notes to the unaudited consolidated financial statements.

9

CUBESMART, L.P. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands)

(unaudited)

	June 30,			December 31,
	2013			2012
ASSETS
Storage facilities	$	2,536,592		$	2,443,022
Less: Accumulated depreciation	(386,924		)	(353,315		)
Storage facilities, net	2,149,668			2,089,707
Cash and cash equivalents	4,021			4,495
Restricted cash	4,540			6,070
Loan procurement costs, net of amortization	9,421			8,253
Other assets, net	30,072			41,794
Total assets	$	2,197,722		$	2,150,319
LIABILITIES AND CAPITAL
Unsecured senior notes	$	250,000		$	250,000
Revolving credit facility	110,000			45,000
Unsecured term loan	500,000			500,000
Mortgage loans and notes payable	214,453			228,759
Accounts payable, accrued expenses and other liabilities	54,241			60,708
Distributions payable	16,550			16,419
Deferred revenue	12,682			11,090
Security deposits	427			444
Total liabilities	1,158,353			1,112,420
Limited Partnership interest of third parties	36,446			47,990
Commitments and contingencies
Capital
Operating Partner	1,014,602			1,009,587
Accumulated other comprehensive loss	(11,794		)	(19,796		)
Total CubeSmart L.P. capital	1,002,808			989,791
Noncontrolling interests in subsidiaries	115			118
Total capital	1,002,923			989,909
Total liabilities and capital	$	2,197,722		$	2,150,319

See accompanying notes to the unaudited consolidated financial statements.

10

CUBESMART, L.P. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per common unit data)

(unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
REVENUES
Rental income	$	72,231		$	59,424		$	141,849		$	116,741
Other property related income	8,854			6,741			16,548			12,517
Property management fee income	1,217			1,103			2,362			2,123
Total revenues	82,302			67,268			160,759			131,381
OPERATING EXPENSES
Property operating expenses	29,955			26,707			60,776			52,650
Depreciation and amortization	29,241			27,077			59,073			52,160
General and administrative	7,515			6,278			15,128			12,722
Total operating expenses	66,711			60,062			134,977			117,532
OPERATING INCOME	15,591			7,206			25,782			13,849
OTHER INCOME (EXPENSE)
Interest:
Interest expense on loans	(10,683		)	(9,280		)	(21,050		)	(18,570		)
Loan procurement amortization expense	(497		)	(1,114		)	(973		)	(1,917		)
Acquisition related costs	(1,648		)	(313		)	(1,763		)	(863		)
Equity in losses of real estate ventures	-			(210		)	-			(461		)
Other	(187		)	(107		)	(260		)	(178		)
Total other expense	(13,015		)	(11,024		)	(24,046		)	(21,989		)
INCOME (LOSS) FROM CONTINUING OPERATIONS	2,576			(3,818		)	1,736			(8,140		)
DISCONTINUED OPERATIONS
(Loss) income from discontinued operations	(8		)	967			176			2,031
Gain of disposition of discontinued operations	-			6,206			228			6,206
Total discontinued operations	(8		)	7,173			404			8,237
NET INCOME	2,568			3,355			2,140			97
NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS
Noncontrolling interest in subsidiaries	-			(774		)	1			(1,508		)
NET INCOME (LOSS) ATTRIBUTABLE TO CUBESMART L.P.	2,568			2,581			2,141			(1,411		)
Limited Partnership interest of third parties	(18		)	(38		)	17			111
NET INCOME (LOSS) ATTRIBUTABLE TO OPERATING PARTNER	2,550			2,543			2,158			(1,300		)
Distribution to Preferred Units	(1,502		)	(1,502		)	(3,004		)	(3,004		)
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON UNITHOLDERS	$	1,048		$	1,041		$	(846	)	$	(4,304	)
Basic earnings (loss) per unit from continuing operations attributable to common unitholders	$	0.01		$	(0.05	)	$	(0.01	)	$	(0.10	)
Basic earnings per unit from discontinued operations attributable to common unitholders	$	-		$	0.06		$	-		$	0.06
Basic earnings (loss) per unit attributable to common unitholders	$	0.01		$	0.01		$	(0.01	)	$	(0.04	)
Diluted earnings (loss) per unit from continuing operations attributable to common unitholders	$	0.01		$	(0.05	)	$	(0.01	)	$	(0.10	)
Diluted earnings per unit from discontinued operations attributable to common unitholders	$	-		$	0.06		$	-		$	0.06
Diluted earnings (loss) per unit attributable to common unitholders	$	0.01		$	0.01		$	(0.01	)	$	(0.04	)
Weighted-average basic units outstanding	133,677			122,599			133,316			122,433
Weighted-average diluted units outstanding	136,329			122,599			133,316			122,433
AMOUNTS ATTRIBUTABLE TO COMMON UNITHOLDERS
Income (loss) from continuing operations	$	1,056		$	(5,960	)	$	(1,243	)	$	(12,343	)
Total discontinued operations	(8		)	7,001			397			8,039
Net income (loss)	$	1,048		$	1,041		$	(846	)	$	(4,304	)

See accompanying notes to the unaudited consolidated financial statements.

11

CUBESMART, L.P. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands)

(unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
NET INCOME	$	2,568		$	3,355		$	2,140		$	97
Other comprehensive income (loss):
Unrealized gain (loss) on interest rate swap	5,595			(8,303		)	5,286			(9,099		)
Reclassification of realized losses on interest rate swap	1,554			1,512			3,085			2,996
Unrealized gain (loss) on foreign currency translation	25			(105		)	(231		)	19
OTHER COMPREHENSIVE INCOME (LOSS)	7,174			(6,896		)	8,140			(6,084		)
COMPREHENSIVE INCOME (LOSS)	9,742			(3,541		)	10,280			(5,987		)
Comprehensive (income) loss attributable to Limited Partnership interest of third parties	(140		)	197			(123		)	317
Comprehensive (income) loss attributable to noncontrolling interests in subsidiaries	(7		)	(771		)	3			(1,509		)
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO
OPERATING PARTNER	$	9,595		$	(4,115	)	$	10,160		$	(7,179	)

See accompanying notes to the unaudited consolidated financial statements.

12

CUBESMART, L.P. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CAPITAL

(in thousands)

(unaudited)

	Number of OP Units Outstanding		Operating			Accumulated Other Comprehensive			Total CubeSmart L.P.			Noncontrolling Interest in			Total			Limited Partnership Interest
	Common	Preferred	Partner			(Loss) Income			Capital			Subsidiaries			Capital			of Third Parties
Balance at December 31, 2012	131,795	3,100	$	1,009,587		$	(19,796	)	$	989,791		$	118		$	989,909		$	47,990
Issuance of common OP units	1,225		20,386						20,386						20,386
Issuance of restricted OP units	215		2						2						2
Conversion from OP units to shares	1,013		14,601						14,601						14,601			(14,601		)
Exercise of OP unit options	182		1,278						1,278						1,278
Amortization of restricted OP units			2,131						2,131						2,131
OP unit compensation expense			436						436						436
Adjustment for Limited Partnership interest of third parties			(3,436		)				(3,436		)				(3,436		)	3,436
Net income (loss)			2,158						2,158			(1		)	2,157			(17		)
Other comprehensive gain (loss):
Unrealized gain on interest rate swap						8,227			8,227						8,227			144
Unrealized loss on foreign currency translation						(225		)	(225		)	(2		)	(227		)	(4		)
Preferred OP unit distributions			(3,004		)				(3,004		)				(3,004		)
Common OP unit distributions			(29,537		)				(29,537		)				(29,537		)	(502		)
Balance at June 30, 2013	134,430	3,100	$	1,014,602		$	(11,794	)	$	1,002,808		$	115		$	1,002,923		$	36,446

	Number of OP Units Outstanding		Operating			Accumulated Other Comprehensive			Total CubeSmart L.P.			Noncontrolling Interest in			Total			Limited Partnership Interest
	Common	Preferred	Partner			(Loss) Income			Capital			Subsidiaries			Capital			of Third Parties
Balance at December 31, 2011	122,059	3,100	$	968,744		$	(12,831	)	$	955,913		$	39,409		$	995,322		$	49,732
Issuance of restricted OP units	238		2						2						2
Conversion from OP units to shares	265		3,313						3,313						3,313			(3,313		)
Exercise of OP unit options	123		972						972						972
Amortization of restricted OP units			1,032						1,032						1,032
OP unit compensation expense			606						606						606
Adjustment for Limited Partnership interest of third parties			(6,072		)				(6,072		)				(6,072		)	6,072
Net (loss) income			(1,300		)				(1,300		)	1,508			208			(111		)
Other comprehensive (loss) gain:
Unrealized loss on interest rate swap						(5,897		)	(5,897		)				(5,897		)	(206		)
Unrealized gain on foreign currency translation						18			18			1			19
Preferred OP unit distributions			(3,004		)				(3,004		)				(3,004		)
Common OP unit distributions			(19,693		)				(19,693		)	(2,309		)	(22,002		)	(724		)
Balance at June 30, 2012	122,685	3,100	$	944,600		$	(18,710	)	$	925,890		$	38,609		$	964,499		$	51,450

See accompanying notes to the unaudited consolidated financial statements.

13

CUBESMART, L.P. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

	Six Months Ended June 30,
	2013			2012
Operating Activities
Net income	$	2,140		$	97
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization	60,103			55,297
Gain on disposition of discontinued operations	(228		)	(6,206		)
Equity compensation expense	2,567			1,638
Accretion of fair market value adjustment of debt	(488		)	(242		)
Equity in loss of real estate venture	-			461
Changes in other operating accounts:
Other assets	(2,133		)	(127		)
Restricted cash	1,062			3,294
Accounts payable and accrued expenses	1,099			(2,418		)
Other liabilities	1,189			801
Net cash provided by operating activities	$	65,311		$	52,595
Investing Activities
Acquisitions of storage facilities	$	(93,743	)	$	(86,778	)
Additions and improvements to storage facilities	(9,399		)	(9,187		)
Development costs	(17,557		)	-
Cash distributed from real estate venture	-			633
Proceeds from sales of properties, net	10,993			22,662
Proceeds from notes receivable	5,192			-
Change in restricted cash	468			1,789
Net cash used in investing activities	$	(104,046	)	$	(70,881	)
Financing Activities
Proceeds from:
Unsecured senior notes, net of discounts	$	-		$	249,638
Revolving credit facility	229,200			246,300
Unsecured term loans	-			100,000
Principal payments on:
Revolving credit facility	(164,200		)	(246,300		)
Unsecured term loans	-			-
Mortgage loans and notes payable	(13,352		)	(175,963		)
Loan procurement costs	(2,141		)	(2,019		)
Settlement of hedge transaction	-			(195		)
Proceeds from issuance of common OP units	20,388			-
Exercise of OP unit options	1,278			972
Distributions paid to common unitholders	(29,908		)	(20,392		)
Distributions paid to preferred unitholders	(3,004		)	(2,720		)
Distributions paid to noncontrolling interests in subsidiaries	0			(2,308		)
Net cash provided by financing activities	$	38,261		$	147,013
Change in cash and cash equivalents	(474		)	128,727
Cash and cash equivalents at beginning of period	4,495			9,069
Cash and cash equivalents at end of period	$	4,021		$	137,796
Supplemental Cash Flow and Noncash Information
Cash paid for interest, net of interest capitalized	$	22,522		$	18,030
Supplemental disclosure of noncash activities:
Derivative valuation adjustment	$	8,371		$	(5,908	)
Foreign currency translation adjustment	$	(231	)	$	19
Mortgage loan assumption - acquisition of storage facility	$	-		$	62,467

See accompanying notes to the unaudited consolidated financial statements.

14

CUBESMART AND CUBESMART, L.P.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1.  ORGANIZATION AND NATURE OF OPERATIONS

CubeSmart (the “Parent Company”) operates as a self-managed and self-administered real estate investment trust (“REIT”) with its operations conducted solely through CubeSmart, L.P. and its subsidiaries.  CubeSmart, L.P., a Delaware limited partnership (the “Operating Partnership”), operates through an umbrella partnership structure, with the Parent Company, a Maryland REIT, as its sole general partner.  In the notes to the consolidated financial statements, we use the terms “the Company”, ‘we” or “our” to refer to the Parent Company and the Operating Partnership together, unless the context indicates otherwise.   The Company’s self-storage facilities (collectively, the “Properties”) are located in 21 states throughout the United States and the District of Columbia and are presented under one reportable segment: the Company owns, operates, develops, manages and acquires self-storage facilities.

As of June 30, 2013, the Parent Company owned approximately 98.3% 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 us in exchange for OP Units.  Under the partnership agreement, these persons have the right to tender their OP Units for redemption to the Operating Partnership at any time for cash equal to the fair value of an equivalent number of common shares of the Parent Company.  In lieu of delivering cash, however, the Parent Company, as the Operating Partnership’s general partner, may, at its option, choose to acquire any OP Units so tendered by issuing common shares in exchange for the tendered OP Units.  If the Parent Company so chooses, its common shares will be exchanged for OP Units on a one-for-one basis.  This one-for-one exchange ratio is subject to adjustment to prevent dilution.  With each such exchange or redemption, the Parent Company’s percentage ownership in the Operating Partnership will increase.  In addition, whenever the Parent Company issues common or other classes of its shares, it contributes the net proceeds it receives from the issuance to the Operating Partnership and the Operating Partnership issues to the Parent Company an equal number of OP Units or other partnership interests having preferences and rights that mirror the preferences and rights of the shares issued.  This structure is commonly referred to as an umbrella partnership REIT or “UPREIT.”

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared pursuant to the rules and regulations of the SEC regarding interim financial reporting and, in the opinion of each of the Parent Company’s and Operating Partnership’s respective management, include all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of financial position, results of operations and cash flows for each respective company for the interim periods presented in accordance with generally accepted accounting principles (“GAAP”) in the United States.  Accordingly, readers of this Quarterly Report on Form 10-Q should refer to the Parent Company’s and the Operating Partnership’s audited financial statements prepared in accordance with GAAP, and the related notes thereto, for the year ended December 31, 2012, which are included in the Parent Company’s and the Operating Partnership’s Annual Report on Form 10-K for the fiscal year ended December 31, 2012.  The results of operations for the three and six months ended June 30, 2013 and 2012 are not necessarily indicative of the results of operations to be expected for any future period or the full year.

Immaterial Correction to Prior Period Financial Statements

In the second quarter of 2013, we revised our 2012 disclosure in the consolidated statement of cash flows to reflect a decrease in both net cash provided by operating activities and net cash used in investing activities of $6.0 million. This adjustment was made after completing an analysis that determined cash paid for acquisitions of storage facilities did not properly reflect the use of earnest money deposits, paid to Storage Deluxe in 2011, when certain facilities within the portfolio were acquired in 2012. After evaluating the quantitative and qualitative effects of this error, we have concluded that the impact on the Company’s prior interim period consolidated statements of cash flows was not material.

15

Recent Accounting Pronouncements

In February 2013, the Financial Accounting Standards Board (“FASB”) issued an amendment to the accounting standard for the reporting of amounts reclassified out of accumulated other comprehensive income (“AOCI”).  The amendment requires entities to disclose for items reclassified out of AOCI and into net income in their entirety, the effect of the reclassification on each affected income statement line item and for AOCI items that are not reclassified in their entirety into net income, a cross reference to other required GAAP disclosures.  This amendment became effective for fiscal years and interim periods beginning after December 15, 2012.  The adoption of this guidance in 2013 did not have a material impact on the Company’s consolidated financial position or results of operations as its impact was limited to disclosure requirements (see note 8).

3.  STORAGE FACILITIES

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

	June 30,		December 31,
	2013		2012
	(in thousands)
Land	$	470,598	$	462,626
Buildings and improvements	1,888,942		1,828,388
Equipment	151,836		143,836
Construction in progress	25,216		8,172
Storage facilities	2,536,592		2,443,022
Less: Accumulated depreciation	(386,924)		(353,315)
Storage facilities, net	$	2,149,668	$	2,089,707

16

The following table summarizes the Company’s acquisition and disposition activity from January 1, 2012 through June 30, 2013:

Facility/Portfolio	Location	Transaction Date	Number of Facilities	Purchase / Sales Price (in thousands)
2013 Acquisitions:
Gilbert Asset	Gilbert, AZ	March 2013	1	$	6,900
Evanston Asset	Evanston, IL	May 2013	1	8,300
Delray Beach Asset	Delray Beach, FL	May 2013	1	7,150
Miramar Asset	Miramar, FL	June 2013	1	9,000
Stoneham Asset	Stoneham, MA	June 2013	1	10,600
Maryland/New Jersey Assets	Multiple locations in MD and NJ	June 2013	5	52,400
			10	$	94,350
2013 Dispositions:
Texas/Indiana Assets	Multiple locations in TX and IN	March 2013	5	$	11,400
2012 Acquisitions:
Houston Asset	Houston, TX	February 2012	1	$	5,100
Dunwoody Asset	Dunwoody, GA	February 2012	1	6,900
Mansfield Asset	Mansfield, TX	June 2012	1	4,970
Texas Assets	Multiple locations in TX	July 2012	4	18,150
Allen Asset	Allen, TX	July 2012	1	5,130
Norwalk Asset	Norwalk, CT	July 2012	1	5,000
Storage Deluxe Assets	Multiple locations in NY and CT	February/ April/ August 2012	6	201,910
Eisenhower Asset	Alexandria, VA	August 2012	1	19,750
New Jersey Assets	Multiple locations in NJ	August 2012	2	10,750
Georgia/ Florida Assets	Multiple locations in GA and FL	August 2012	3	13,370
Peachtree Asset	Peachtree City, GA	August 2012	1	3,100
HSREV Assets	Multiple locations in PA, NY, NJ, VA and FL	September 2012	9	102,000
Leetsdale Asset	Denver, CO	September 2012	1	10,600
Orlando/ West Palm Beach Assets	Multiple locations in FL	November 2012	2	13,010
Exton/ Cherry Hill Assets	Multiple locations in NJ and PA	December 2012	2	7,800
Carrollton Asset	Carrollton, TX	December 2012	1	4,800
			37	$	432,340
2012 Dispositions:
Michigan Assets	Multiple locations in MI	June 2012	3	$	6,362
Gulf Coast Assets	Multiple locations in LA, AL and MS	June 2012	5	16,800
New Mexico Assets	Multiple locations in NM	August 2012	6	7,500
San Bernardino Asset	San Bernardino, CA	August 2012	1	5,000
Florida/ Tennessee Assets	Multiple locations in FL and TN	November 2012	3	6,550
Ohio Assets	Multiple locations in OH	November 2012	8	17,750
			26	$	59,962

17

4.  INVESTMENT ACTIVITY

2013 Acquisitions

During the six months ended June 30, 2013, the Company acquired ten facilities located throughout the United States for an aggregate purchase price of approximately $94.4 million.  In connection with these acquisitions, the Company allocated a portion of the purchase price to the intangible value of in-place leases which aggregated $6.9 million.   The estimated life of these in-place leases is 12 months and the amortization expense that was recognized during the six months ended June 30, 2013 was approximately $0.7 million.

Development

During 2012, the Company commenced construction of 5 Old Lancaster Road located in Malvern, PA, a suburb of Philadelphia.  Upon completion, the mixed-use facility will be comprised of rentable storage space and office space for the Company’s corporate headquarters.  Construction is expected to be completed during the fourth quarter of 2013.  At June 30, 2013 and December 31, 2012, development costs for this project totaled $11.6 million and $4.7 million, respectively.  These costs are capitalized to construction in progress while the project is under development and are reflected in Storage facilities on the Company’s consolidated balance sheets.

During the second quarter of 2013, the Company entered into contracts for the construction of a storage facility located in Bronx, NY.  Construction is expected to be completed during the first quarter of 2014.  At June 30, 2013, development costs for this project totaled $11.8 million.  These costs are capitalized to construction in progress while the project is under development and are reflected in Storage facilities on the Company’s consolidated balance sheets.

2012 Acquisitions

During 2012, as part of the $560 million Storage Deluxe transaction involving 22 Class A self-storage facilities located primarily in the greater New York City area, the Company acquired the final six properties with a purchase price of approximately $201.9 million. The six properties purchased are located in New York and Connecticut.  In connection with the acquisitions, the Company allocated a portion of the purchase price to the intangible value of in-place leases which aggregated $12.3 million.  The estimated life of these in-place leases is 12 months and the amortization expense that was recognized during the six months ended June 30, 2013 was approximately $4.1 million.   In connection with the six acquired facilities, the Company assumed mortgage debt, and recorded the debt at a fair value of $93.1 million, which includes an outstanding principal balance totaling $88.9 million and a net premium of $4.2 million in addition to the face value of the assumed debt to reflect the fair values of the debt at the time of assumption.

On September 28, 2012, the Company purchased, from its joint venture partner, the remaining 50% ownership in a partnership that owned nine storage facilities in Pennsylvania, Virginia, New York, New Jersey and Florida, collectively the HSRE Venture (“HSREV”), for cash of $21.7 million. In addition, upon taking control of these assets, the Company repaid $59.3 million of mortgage loans related to the properties.  Following the purchase, the Company wholly owned the nine storage facilities which were unencumbered and had a fair value of $102 million at acquisition.  In connection with this acquisition, the Company allocated a portion of the fair value to the intangible value of in-place leases which aggregated $8.3 million. The estimated life of these in-place leases is 12 months and the amortization expense that was recognized during the six months ended June 30, 2013 was approximately $4.2 million.

During 2012, the Company acquired an additional 22 self-storage facilities located throughout the United States for an aggregate purchase price of approximately $128.4 million.  In connection with these acquisitions, the Company allocated a portion of the purchase price to the intangible value of in-place leases which aggregated $13.2 million. The estimated life of these in-place leases is 12 months and the amortization expense that was recognized during the six months ended June 30, 2013 was approximately $6.1 million.  In connection with two of the acquired facilities, the Company assumed mortgage debt, and recorded the debt at a fair value of $13.9 million, which includes an outstanding principal balance totaling $13.4 million and a net premium of $0.5 million in addition to the face value of the assumed debt to reflect the fair values of the debt at the time of assumption.

18

5.  UNSECURED SENIOR NOTES

On June 26, 2012, the Operating Partnership issued $250 million in aggregate principal amount of unsecured senior notes due July 15, 2022 (the “senior notes”) which bear interest at a rate of 4.80%.  The indenture under which the unsecured 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 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. The Operating Partnership is currently in compliance with all of the financial covenants under the senior notes.

6.  REVOLVING CREDIT FACILITY AND UNSECURED TERM LOANS

On June 20, 2011, the Company entered into an unsecured term loan agreement (the “Term Loan Facility”) which consisted of a $100 million term loan with a five-year maturity (“Term Loan A”) and a $100 million term loan with a seven-year maturity (“Term Loan B”).  The Company incurred costs of $2.1 million in connection with executing the agreement and capitalized such costs as a component of loan procurement costs, net of amortization on the consolidated balance sheet.

On December 9, 2011, the Company entered into a credit facility (the “Credit Facility”) comprised of a $100 million unsecured term loan maturing in December 2014 (“Term Loan C”); a $200 million unsecured term loan maturing in March 2017 (“Term Loan D”); and a $300 million unsecured revolving facility maturing in December 2015 (“Revolver”).  The Company incurred costs of $3.4 million in connection with executing the agreement and capitalized such costs as a component of loan procurement costs, net of amortization on the consolidated balance sheet.

On June 18, 2013, the Company amended both the Term Loan Facility and Credit Facility.  With respect to the Term Loan Facility, among other things, the amendment extended the maturity and decreased the pricing of Term Loan A, while Term Loan B remained unchanged by the amendment. Pricing on the Term Loan Facility depends on the Company’s unsecured debt credit ratings.  At the Company’s current Baa3/BBB- level, amounts drawn under Term Loan A are priced at 1.50% over LIBOR, with no LIBOR floor, while amounts drawn under Term Loan B are priced at 2.00% over LIBOR, with no LIBOR floor.

		Term Loan Facility Prior to Amendment		Term Loan Facility As Amended
	Amount	Maturity Date	LIBOR Spread	Maturity Date	LIBOR Spread
Term Loan A	$100 million	June 2016	1.85%	June 2018	1.50%
Term Loan B	$100 million	June 2018	2.00%	June 2018	2.00%

With respect to the Credit Facility, among other things, the amendment extended the maturities of the Revolver and Term Loan D and decreased the pricing of the Revolver, Term Loan C and Term Loan D.  Pricing on the Credit Facility depends on the Company’s unsecured debt credit ratings.  At the Company’s current Baa3/BBB- level, amounts drawn under the Revolver are priced at 1.60% over LIBOR, inclusive of a facility fee of 0.30%, with no LIBOR floor, while amounts drawn under Term Loan C and Term Loan D are priced at 1.50% over LIBOR, with no LIBOR floor.

		Credit Facility Prior to Amendment		Credit Facility As Amended
	Amount	Maturity Date	LIBOR Spread	Maturity Date	LIBOR Spread
Revolver	$300 million	December 2015	1.80%	June 2017	1.60%
Term Loan C	$100 million	December 2014	1.75%	December 2014	1.50%
Term Loan D	$200 million	March 2017	1.75%	January 2019	1.50%

The Company incurred costs of $2.1 million in connection with amending the agreements and capitalized such costs as a component of loan procurement costs, net of amortization on the consolidated balance sheet.  Unamortized costs, along with costs incurred in connection with the amendments, are amortized as an adjustment to interest expense over the remaining term of the modified facilities.

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As of June 30, 2013, $200 million of unsecured term loan borrowings were outstanding under the Term Loan Facility, $300 million of unsecured term loan borrowings were outstanding under the Credit Facility, $110 million of unsecured revolving credit facility borrowings were outstanding and $189.8 million was available for borrowing on the unsecured revolving portion of the Credit Facility.  The available balance under the unsecured revolving portion of the Credit Facility is reduced by an outstanding letter of credit of $0.2 million.  In connection with the unsecured borrowings, the Company had interest rate swaps as of June 30, 2013 that fix 30-day LIBOR (see note 9).  As of June 30, 2013, borrowings under the Credit Facility and Term Loan Facility, as amended, had an effective weighted average interest rate of 2.80%.

The Term Loan Facility and the term loans under the Credit Facility were fully drawn at June 30, 2013 and no further borrowings may be made under that facility and those term loans.  The Company’s ability to borrow under the revolving facility is subject to ongoing compliance with certain financial covenants which include:

·Maximum total indebtedness to total asset value of 60.0% at any time;

·Minimum fixed charge coverage ratio of 1.50:1.00; and

·Minimum tangible net worth of $821,211,200 plus 75% of net proceeds from equity issuances after June 30, 2010.

Further, under the Credit Facility and Term Loan Facility, the Company is restricted from paying distributions on common shares that would exceed an amount equal to the greater of (i) 95% of funds from operations, and (ii) such amount as may be necessary to maintain the Parent Company’s REIT status.

The Company is currently in compliance with all of its financial covenants and anticipates being in compliance with all of its financial covenants through the terms of the Credit Facility and Term Loan Facility.

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7.  MORTGAGE LOANS AND NOTES PAYABLE

The Company’s mortgage loans and notes payable are summarized as follows:

	Carrying Value as of:
	June 30,		December 31,		Effective	Maturity
Mortgage Loans and Notes Payable	2013		2012		Interest Rate	Date
	(dollars in thousands)
YSI 7	$	-	$	2,962	6.50%	Jun-13
YSI 8	-		1,692		6.50%	Jun-13
YSI 9	-		1,862		6.50%	Jun-13
YSI 17	-		3,846		6.32%	Jul-13
YSI 27	451		461		5.59%	Nov-13
YSI 30	6,616		6,765		5.59%	Nov-13
USIFB	6,437		7,221		3.57%	Dec-13
YSI 11	2,236		2,276		5.87%	Jan-14
YSI 5	2,949		3,001		5.25%	Jan-14
YSI 28	1,435		1,460		5.59%	Mar-14
YSI 10	3,884		3,928		5.87%	Jan-15
YSI 15	1,758		1,784		6.41%	Jan-15
YSI 52	4,636		4,721		5.63%	Jan-15
YSI 58	8,826		8,974		2.97%	Jan-15
YSI 29	12,957		13,060		3.69%	Aug-15
YSI 20	57,465		58,524		5.97%	Nov-15
YSI 59	9,511		9,603		4.82%	Mar-16
YSI 60	3,698		3,725		5.04%	Aug-16
YSI 51	7,272		7,325		5.15%	Sep-16
YSI 35	4,324		4,373		6.90%	Jul-19	(a)
YSI 33	10,811		10,930		6.42%	Jul-19
YSI 26	9,024		9,102		4.56%	Nov-20
YSI 57	3,168		3,195		4.61%	Nov-20
YSI 55	24,325		24,502		4.85%	Jun-21
YSI 24	28,832		29,141		4.64%	Jun-21
Unamortized fair value adjustment	3,838		4,326
Total mortgage loans and notes payable	$	214,453	$	228,759

(a)This borrowing has a fixed interest rate for the first five years of the term, and the rate then resets and remains constant over the final five years of the loan term.

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The following table represents the future principal payment requirements on the outstanding mortgage loans and notes payable at June 30, 2013 (in thousands):

2013	$	16,071
2014	11,633
2015	86,978
2016	21,342
2017	1,915
2018 and thereafter	72,676
Total mortgage payments	210,615
Plus: Unamortized fair value adjustment	3,838
Total mortgage indebtedness	$	214,453

The Company currently intends to fund its remaining 2013 principal payment requirements from cash provided by operating activities, new debt originations, and/or additional borrowings under its unsecured Credit Facility ($189.8 million available as of June 30, 2013).

8.  ACCUMULATED OTHER COMPREHENSIVE LOSS

The following table summarizes the changes in accumulated other comprehensive loss by component for the six months ended June 30, 2013 (dollars in thousands):

	Unrealized loss on  interest rate swap			Unrealized loss on foreign currency translation		Total
Balance at December 31, 2012	$	(18,973)		$	(823)	$	(19,796)
Other comprehensive gain (loss) before reclassifications	5,196			(225)		4,971
Amounts reclassified from accumulated other comprehensive loss	3,031		(a)	-		3,031
Net current-period other comprehensive income (loss)	8,227			(225)		8,002
Balance at June 30, 2013	$	(10,746)		$	(1,048)	$	(11,794)

(a)See note 9 for additional information about the effects of the amounts reclassified.

9.  RISK MANAGEMENT AND USE OF FINANCIAL INSTRUMENTS

The Company’s use of derivative instruments is limited to the utilization of interest rate 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.

The Company has entered into interest rate swap agreements that qualify and are designated as cash flow hedges designed to reduce the impact of interest rate changes on its variable rate debt.   Therefore, the interest rate swaps are recorded in the consolidated balance sheet at fair value and the related gains or losses are 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.  However, to the extent that the interest rate swaps are not perfectly effective in offsetting the change in value of the interest payments being hedged, the ineffective portion of these contracts is recognized in earnings immediately.  The Company formally assesses, both at inception of a hedge and on an on-going basis, whether each derivative is highly-effective in offsetting changes in cash flows of the hedged item. If management determines that a derivative is highly-effective as a hedge, then the Company accounts for the derivative using hedge accounting, pursuant to which gains or losses inherent in the derivative do not impact the Company’s results of operations.  If management determines that a derivative is not highly-effective as a hedge or if a derivative ceases to be a highly-effective hedge, the Company will discontinue hedge accounting prospectively and will reflect in its statement of operations realized and unrealized gains and losses in respect of the derivative.

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The following table summarizes the terms and fair values of the Company’s derivative financial instruments at June 30, 2013 and December 31, 2012, respectively (dollars in thousands):

								Fair Value
Hedge		Notional						June 30,		December 31,
Product	Hedge Type (a)	Amount		Strike		Effective Date	Maturity	2013		2012
Swap	Cash flow	$	40,000	1.8025	%	6/20/2011	6/20/2016	$	(1,347)	$	(1,873	)
Swap	Cash flow	$	40,000	1.8025	%	6/20/2011	6/20/2016	(1,348)		(1,875		)
Swap	Cash flow	$	20,000	1.8025	%	6/20/2011	6/20/2016	(673)		(937		)
Swap	Cash flow	$	75,000	1.3360	%	12/30/2011	3/31/2017	(1,036)		(2,378		)
Swap	Cash flow	$	50,000	1.3360	%	12/30/2011	3/31/2017	(681)		(1,583		)
Swap	Cash flow	$	50,000	1.3360	%	12/30/2011	3/31/2017	(684)		(1,583		)
Swap	Cash flow	$	25,000	1.3375	%	12/30/2011	3/31/2017	(350)		(799		)
Swap	Cash flow	$	40,000	2.4590	%	6/20/2011	6/20/2018	(2,053)		(3,433		)
Swap	Cash flow	$	40,000	2.4725	%	6/20/2011	6/20/2018	(2,082)		(3,470		)
Swap	Cash flow	$	20,000	2.4750	%	6/20/2011	6/20/2018	(1,040)		(1,734		)
		$	400,000					$	(11,294)	$	(19,665	)

(a)Hedging unsecured variable rate debt by fixing 30-day LIBOR.

The Company measures its derivative instruments at fair value and records them in the balance sheet as either an asset or liability.  As of June 30, 2013 and December 31, 2012, all derivative instruments were included in accounts payable, accrued expenses and other liabilities in the accompanying consolidated balance sheets.  The effective portions of changes in the fair value of the derivatives are reported in accumulated other comprehensive income (loss).  Amounts reported in accumulated other comprehensive income (loss) related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable-rate debt.  The change in unrealized loss on interest rate swap reflects a reclassification of approximately $3.1 million of unrealized losses from accumulated other comprehensive loss as an increase to interest expense during the six months ended June 30, 2013.

10.  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.

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Financial assets and liabilities carried at fair value as of June 30, 2013 are classified in the table below in one of the three categories described above (dollars in thousands):

	Level 1		Level 2		Level 3
Interest Rate Swap Derivative Liabilities	$	-	$	11,294	$	-
Total liabilities at fair value	$	-	$	11,294	$	-

Financial assets and liabilities carried at fair value as of December 31, 2012 are classified in the table below in one of the three categories described above (dollars in thousands):

	Level 1		Level 2		Level 3
Interest Rate Swap Derivative Liabilities	$	-	$	19,665	$	-
Total liabilities at fair value	$	-	$	19,665	$	-

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 in 2013 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 June 30, 2013, 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 at June 30, 2013 and December 31, 2012.   The aggregate carrying value of the Company’s debt was $1,074.5 million and $1,023.8 million at June 30, 2013 and December 31, 2012, respectively.  The estimated fair value of the Company’s debt was $1,085.9 million and $1,017.3 million at June 30, 2013 and December 31, 2012, respectively. These estimates were based on a discounted cash flow analysis assuming market interest rates for comparable obligations at June 30, 2013 and December 31, 2012.  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 policies, which is classified within level 2 of the fair value hierarchy. Rates and credit spreads take into consideration general market conditions and maturity.

11.  NONCONTROLLING INTERESTS

Variable Interests in Consolidated Real Estate Joint Ventures

USIFB, LLP (“the Venture”) was formed to own, operate, acquire and develop self-storage facilities in England.  The Company owns a 97% interest in the Venture through a wholly-owned subsidiary and the Venture commenced operations at two facilities in London, England during 2008.  The Company determined that the Venture is a variable interest entity, and that the Company is the primary beneficiary.  Accordingly, the Company consolidates the assets, liabilities and results of operations of the Venture.  At June 30, 2013, the Venture had total assets of $11.2 million and total liabilities of $7.1 million, including two mortgage loans totaling $6.4 million secured by storage facilities with a net book value of $10.8 million.  At June 30, 2013, the Venture’s creditors had no recourse to the general credit of the Company.

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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 1.7% and 2.4% of the outstanding OP Units as of June 30, 2013 and December 31, 2012, respectively, 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 facilities. 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 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 will record 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.

At June 30, 2013 and December 31, 2012, 2,280,730 and 3,293,730 OP units, respectively, were outstanding. 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 10 trading days ending prior to CubeSmart’s receipt of the redemption notice for the applicable Unit.  Based on the Company’s evaluation of the redemption value of the redeemable noncontrolling interest, the Company has reflected these interests at their redemption value at June 30, 2013 and December 31, 2012, 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 $3.4 million and $19.5 million at June 30, 2013 and December 31, 2012, respectively.

12.  RELATED PARTY TRANSACTIONS

Corporate Office Leases

Subsequent to its entry into lease agreements with related parties for office space, the Operating Partnership entered into sublease agreements with various unrelated tenants for the related office space.  Each of these properties are part of Airport Executive Park, a 50-acre office and flex development located in Cleveland, Ohio, which is owned by former executives. Our independent Trustees approved the terms of, and entry into, each of the office lease agreements by the Operating Partnership.  The table below shows the office space subject to these lease agreements and certain key provisions, including the term of each lease agreement, the period for which the Operating Partnership may extend the term of each lease agreement, and the minimum and maximum rents payable per month during the term.

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Office Space	Approximate Square Footage	Maturity Date	Period of Extension Option (1)	Fixed Minimum Rent Per Month		Fixed Maximum Rent Per Month
The Parkview Building — 6745 Engle Road; and 6751 Engle Road	21,900	12/31/2014	Five-year	$	25,673	$	31,205
6745 Engle Road — Suite 100	2,212	12/31/2014	Five-year	$	3,051	$	3,709
6745 Engle Road — Suite 110	1,731	12/31/2014	Five-year	$	2,387	$	2,901
6751 Engle Road — Suites C and D	3,000	12/31/2014	Five-year	$	3,137	$	3,771

(1)Our Operating Partnership may extend the lease agreement beyond the termination date by the period set forth in this column at prevailing market rates upon the same terms and conditions contained in each of the lease agreements.

In addition to monthly rent, the office lease agreements provide that our Operating Partnership reimburse for certain maintenance and improvements to the leased office space.  The aggregate amount of payments incurred under these lease agreements for each of the six months ended June 30, 2013 and 2012, was approximately $0.3 million.

Total future minimum rental payments due in accordance with the related party lease agreements and total future cash receipts due from our subtenants as of June 30, 2013 are as follows:

	Due to Related Party Amount		Due from Subtenant Amount
	(in thousands)
2013	$	250	$	157
2014	499		315
	$	749	$	472

13.  DISCONTINUED OPERATIONS

For the three and six months ended June 30, 2013, discontinued operations relates to five properties that the Company sold during 2013.  Each of the sales during 2013 resulted in the recognition of a gain, which in the aggregate totaled $0.2 million. For the three and six months ended June 30, 2012, discontinued operations relates to five properties that the Company sold during 2013 and 26 properties that the Company sold during 2012.

The following table summarizes the revenue and expense information for the period the Company owned the properties classified as discontinued operations during the three and six months ended June 30, 2013 and 2012 (in thousands):

	Three months ended June 30,				Six months ended June 30,
	2013		2012		2013		2012
REVENUES
Rental income	$	-	$	2,706	$	389	$	5,497
Other property related income	5		347		78		643
Total revenues	5		3,053		467		6,140
OPERATING EXPENSES
Property operating expenses	13		1,469		234		2,812
Depreciation and amortization	-		617		57		1,297
Total operating expenses	13		2,086		291		4,109
OPERATING (LOSS) INCOME	(8)		967		176		2,031
(Loss) Income from discontinued operations	(8)		967		176		2,031
Gain on disposition of discontinued operations	-		6,206		228		6,206
(Loss) Income from discontinued operations	$	(8)	$	7,173	$	404	$	8,237

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14.  PRO FORMA FINANCIAL INFORMATION

During the six months ended June 30, 2013 and 2012, the Company acquired ten self-storage facilities for an aggregate purchase price of approximately $94.4 million (see note 4) and 37 self-storage facilities for an aggregate purchase price of approximately $432.3 million, respectively.

The condensed consolidated pro forma financial information set forth below reflects adjustments to the Company’s historical financial data to give effect to each of the acquisitions and related financing activity (including the issuance of common shares) that occurred during 2013 and 2012 as if each had occurred as of January 1, 2012 and 2011, respectively.  The unaudited pro forma information presented below does not purport to represent what the Company’s actual results of operations would have been for the periods indicated, nor does it purport to represent the Company’s future results of operations.

The following table summarizes, on a pro forma basis, the Company’s consolidated results of operations for the six months ended June 30, 2013 and 2012 based on the assumptions described above: 

	Six Months Ended June 30,
	2013		2012
	(in thousands, except per share data)
Pro forma revenue	$	164,656	$	145,949
Pro forma net income (loss) from continuing operations	$	5,153	$	(7,718	)
Net income (loss) per common share from continuing operations
Basic and diluted - as reported	$	(0.01)	$	(0.10	)
Basic and diluted - as pro forma	$	0.04	$	(0.06	)

The following table summarizes the Company’s revenue and earnings related to the 2013 and 2012 acquisitions from the respective acquisition dates in the period they were acquired, included in the consolidated income statement for the three and six months ended June 30, 2013 and 2012:

	Three months ended June 30,				Six months ended June 30,
	2013		2012		2013		2012
	(in thousands)
Total revenue	$	755	$	2,832	$	788	$	3,672
Net loss	(582)		(1,741)		(634)		(2,110)

15.  SUBSEQUENT EVENTS

Subsequent to June 30, 2013, the Company sold eight facilities in the Knoxville, TN area for an aggregate sales price of $25.0 million.

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ITEM 2.  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.  The Company makes certain statements in this section that are forward-looking statements within the meaning of the federal securities laws.  For a 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 entitled “Risk Factors” in the Parent Company’s and Operating Partnership’s combined Annual Report on Form 10-K for the year ended December 31, 2012.

Overview

The Company is 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 facilities.  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 June 30, 2013 and December 31, 2012, the Company owned 386 and 381 self-storage facilities, respectively, totaling approximately 25.8 million and 25.5 million rentable square feet, respectively.  As of June 30, 2013, the Company owned facilities in the District of Columbia and the following 21 states:  Arizona, California, Colorado, Connecticut, Florida, Georgia, Illinois, Maryland, Massachusetts, Nevada, New Jersey, New Mexico, New York, North Carolina, Ohio, Pennsylvania, Tennessee, Texas, Utah, Virginia and Wisconsin.  In addition, as of June 30, 2013, the Company managed 133 facilities for third parties bringing the total number of facilities which it owned and/or managed to 519.  As of June 30, 2013, the Company managed facilities for third parties in the District of Columbia and the following 25 states: Alabama, Arkansas , California, Colorado, Connecticut, Florida, Georgia, Illinois, Louisiana, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, New Hampshire, New Jersey, New York, North Carolina, Ohio, Pennsylvania, Rhode Island, South Carolina, Tennessee, Texas, and Virginia.

The Company derives revenues principally from rents received from its customers who rent cubes at its self-storage facilities 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.  We have a decentralized approach to the management and operation of our facilities, which places an emphasis on local, market level oversight and control.  We believe this approach allows us to respond quickly and effectively to changes in local market conditions, and to maximize revenues by managing rental rates and occupancy levels.

The Company typically experiences seasonal fluctuations in the occupancy levels of our facilities, which are generally slightly higher during the summer months due to increased moving activity.

The United States continues to experience slow economic growth as it recovers from an economic downturn that resulted in higher unemployment, stagnant employment growth, shrinking demand for products, large-scale business failures and tight credit markets.  Our results of operations may be 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.  A continuation of – or slow recovery from – ongoing 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.

In the future, the Company intends to continue its focus on maximizing internal growth opportunities and selectively pursuing targeted acquisitions and developments of self-storage facilities.

The Company has one reportable segment:  we own, operate, develop, manage and acquire self-storage facilities.

The Company’s self-storage facilities are located in major metropolitan and rural areas and have numerous tenants per facility.  No single tenant represents a significant concentration of our revenues.  The facilities in New York, Florida, California and Texas provided approximately 17%, 15%, 10% and 10%, respectively, of total revenues for the three months ended June 30, 2013.

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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 an understanding of the unaudited 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 historical consolidated financial statements included in this report.  A summary of significant accounting policies is also provided in the aforementioned notes to our 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 from estimates calculated and utilized by management.

Self-Storage Facilities

The Company records self-storage facilities at cost less accumulated depreciation.  Depreciation on the buildings and equipment is recorded on a straight-line basis over their estimated useful lives, which range from five to 40 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 facilities are acquired, the purchase price is allocated to the tangible and intangible assets acquired and liabilities assumed based on estimated fair values.  When a portfolio of facilities is acquired, the purchase price is allocated to the individual facilities based upon an income approach or a cash flow analysis using appropriate risk adjusted capitalization rates, which take into account the relative size, age and location of the individual facility along with current and projected occupancy and rental rate levels or appraised values, if available.  Allocations to the individual assets and liabilities are based upon comparable market sales information for land, buildings and improvements and estimates of depreciated replacement cost of equipment.

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 in-place leases.  Substantially all of the leases in place at acquired facilities are at market rates, as the majority of the leases are month-to-month contracts.   Accordingly, to date no portion of the purchase price for an acquired property has been allocated to above- or below-market lease intangibles.  To date, no intangible asset has been recorded for the value of tenant relationships, because the Company does not have any concentrations of significant tenants and the average tenant 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 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 property’s basis is recoverable.  If a property’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 2013 and 2012.

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 facility (or group of facilities), (b) the facility is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such facilities, (c) an active program to locate a buyer and other actions required to complete the plan to sell the facility have been initiated, (d) the sale of the facility is probable and transfer of the asset is expected to be completed within one year, (e) the facility 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.  Properties classified as held for sale are reported at the lesser of carrying value or fair value less estimated costs to sell.

29

Revenue Recognition

Management has determined that all of our leases with tenants are operating leases.  Rental income is recognized in accordance with the terms of the lease agreements or contracts, which generally are month-to-month.

The Company recognizes gains on disposition of properties only upon closing in accordance with the guidance on sales of real estate.  Payments received from purchasers prior to closing are recorded as deposits.  Profit on real estate sold is recognized using the full accrual method upon closing when the collectability of the sales price is reasonably assured and the Company is not obligated to perform significant activities after the sale.  Profit may be deferred in whole or part until the sale meets the requirements of profit recognition on sales under this guidance.

Share-Based Payments

We apply the fair value method of accounting for contingently issued shares and share options issued under our equity incentive plans.  Accordingly, share compensation expense is recorded ratably over the vesting period relating to such contingently issued shares and options.   The Company has elected to recognize compensation expense on a straight-line method over the requisite service period.

Noncontrolling Interests

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.  In accordance with authoritative guidance issued on noncontrolling interests in consolidated financial statements, such noncontrolling interests are reported on the consolidated balance sheets within equity/capital, separately from the Parent Company’s equity/capital.  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 value.  On the consolidated statements of operations, revenues, expenses and net income or loss from less-than-wholly-owned subsidiaries are reported at the consolidated amounts, including both the amounts attributable to the Parent Company and noncontrolling interests.  Presentation of consolidated equity/capital activity is included for both quarterly and annual financial statements, including beginning balances, activity for the period and ending balances for shareholders’ equity/capital, noncontrolling interests and total equity/capital.

Recent Accounting Pronouncements

In February 2013, the Financial Accounting Standards Board (“FASB”) issued an amendment to the accounting standard for the reporting of amounts reclassified out of accumulated other comprehensive income (“AOCI”).  The amendment requires entities to disclose for items reclassified out of AOCI and into net income in their entirety, the effect of the reclassification on each affected net income line item and for AOCI items that are not reclassified in their entirety into net income, a cross reference to other required GAAP disclosures.  This amendment became effective for fiscal years and interim periods beginning after December 15, 2012.  The adoption of this guidance in 2013 did not have a material impact on the Company’s consolidated financial position or results of operations as its impact was limited to disclosure requirements.

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 facilities and should not be taken as indicative of future operations.  The Company considers its same-store portfolio to consist of only those facilities owned and operated on a stabilized basis at the beginning and at the end of the applicable years presented.   We consider a property to be stabilized once it has achieved an occupancy rate representative of similar self-storage assets in the respective markets for a full year measured as of the most recent January 1 or has otherwise been placed in-service and has not been significantly damaged by natural disaster or undergone significant renovation.  Same-store results are considered to be useful to investors in evaluating our performance because it provides information relating to changes in facility-level operating performance without taking into account the effects of acquisitions, developments or dispositions.  At June 30, 2013, there were 328 same-store properties and 58 non same-store properties, of which 47 were 2012 and 2013 acquisitions and 11 were properties that were not stabilized, had been damaged by natural disaster or had undergone significant renovation.

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Acquisition and Disposition Activities

The comparability of the Company’s results of operations is affected by the timing of acquisition and disposition activities during the periods reported.  At June 30, 2013 and 2012, the Company owned 386 and 370 self-storage facilities and related assets, respectively.  The following table summarizes the change in number of owned self-storage facilities from January 1, 2012 through June 30, 2013:

	2013	2012
Balance - January 1	381	370
Facilities acquired	1	6
Facilities sold	(5)	-
Balance - March 31	377	376
Facilities acquired	9	2
Facilities sold	-	(8	)
Balance - June 30	386	370
Facilities acquired		24
Facilities sold		(7	)
Balance - September 30		387
Facilities acquired		5
Facilities sold		(11	)
Balance - December 31		381

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Comparison of the three months ended June 30, 2013 to the three months ended June 30, 2012 (in thousands, except property counts, occupancies and rates)

								Non Same-Store				Other/
	Same-Store Property Portfolio							Properties				Eliminations					Total Portfolio
					Increase/		%														Increase/		%
	2013		2012		(Decrease)		Change	2013		2012		2013			2012		2013		2012		(Decrease)		Change
REVENUES
Rental income	$	58,317	$	54,195	$	4,122	7.6%	$	13,914	$	5,229	$		-	$	-	$	72,231	$	59,424	$	12,807	21.6%
Other property related income	6,744		5,511		1,233		22.4%	1,433		669		677			561		8,854		6,741		2,113		31.3%
Property management fee income	-		-		-		-	-		-		1,217			1,103		1,217		1,103		114		10.3%
Total revenues	65,061		59,706		5,355		9.0%	15,347		5,898		1,894			1,664		82,302		67,268		15,034		22.3%
OPERATING EXPENSES
Property operating expenses	21,520		21,204		316		1.5%	5,001		2,391		3,434			3,112		29,955		26,707		3,248		12.2%
NET OPERATING INCOME	$	43,541	$	38,502	$	5,039	13.1%	$	10,346	$	3,507	$	(1,540)		$	(1,448)	$	52,347	$	40,561	$	11,786	29.1%
Property count	328		328					58		17							386		345
Total square footage	21,786		21,786					4,050		1,081							25,836		22,867
Period End Occupancy (1)	90.0%		84.1%					89.1%		76.1%							89.7%		83.7%
Period Average Occupancy (2)	88.2%		81.9%
Realized annual rent per occupied square foot (3)	$	12.14	$	12.14
Depreciation and amortization																	29,241		27,077		2,164		8.0%
General and administrative																	7,515		6,278		1,237		19.7%
Subtotal																	36,756		33,355		3,401		10.2%
OPERATING INCOME																	15,591		7,206		8,385		116.4%
OTHER INCOME (EXPENSE)
Interest:
Interest expense on loans																	(10,683)		(9,280)		(1,403)		-15.1%
Loan procurement amortization expense																	(497)		(1,114)		617		55.4%
Acquisition related costs																	(1,648)		(313)		(1,335)		-426.5%
Equity in losses of real estate ventures																	-		(210)		210		100.0%
Other																	(187)		(107)		(80)		-74.8%
Total other expense																	(13,015)		(11,024)		(1,991)		-18.1%
INCOME (LOSS) FROM CONTINUING OPERATIONS																	2,576		(3,818)		6,394		167.5%
DISCONTINUED OPERATIONS
(Loss) income from discontinued operations																	(8)		967		(975)		-100.8%
Gain on disposition of discontinued operations																	-		6,206		(6,206)		-100.0%
Total discontinued operations																	(8)		7,173		(7,181)		-100.1%
NET INCOME																	2,568		3,355		(787)		-23.5%
NET (INCOME) LOSS ATTRIBUTABLE TO NONCONTROLLING INTERESTS
Noncontrolling interests in the Operating Partnership																	(18)		(38)		20		52.6%
Noncontrolling interests in subsidiaries																	-		(774)		774		100.0%
NET INCOME ATTRIBUTABLE TO THE COMPANY																	2,550		2,543		7		0.3%

(1)Represents occupancy at June 30th 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.

Revenues

Rental income increased from $59.4 million during the three months ended June 30, 2012 to $72.2 million during the three months ended June 30, 2013, an increase of $12.8 million, or 22%. This increase is primarily attributable to $8.7 million of additional income from the properties acquired in 2012 and 2013 and increases in average occupancy on the same-store portfolio which contributed $4.1 million to the increase in rental income during the three months ended June 30, 2013 as compared to the three months ended June 30, 2012.

Other property related income increased from $6.7 million during the three months ended June 30, 2012 to $8.9 million during the three months ended June 30, 2013, an increase of $2.1 million, or 31%.  This increase is primarily attributable to $0.8 million of additional income from the 2012 and 2013 acquisitions and increased tenant insurance commissions of $1.2 million during the three months ended June 30, 2013 as compared to the three months ended June 30, 2012.

Operating Expenses

Property operating expenses increased from $26.7 million during the three months ended June 30, 2012 to $30.0 million during the three months ended June 30, 2013, an increase of $3.2 million, or 12%.  This increase is primarily attributable to $2.6 million of increased expenses associated with newly acquired properties as well as increased expenses on the same store portfolio.  The escalations in same store expenses were primarily associated with expected increases in real estate tax assessments.

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Depreciation and amortization increased from $27.1 million in the three months ended June 30, 2012 to $29.2 million in the three months ended June 30, 2013, an increase of $2.2 million, or 8%.  This increase is primarily attributable to depreciation and amortization expense related to the 2012 acquisitions.

Other Income (Expenses)

Interest expense increased from $9.3 million during the three months ended June 30, 2012 to $10.7 million during the three months ended June 30, 2013, an increase of $1.4 million, or 15%.  The increase is attributable to a higher amount of outstanding debt in 2013.  To fund a portion of the Company’s growth, the average debt balance during the three months ended June 30, 2013 increased approximately $119 million from the same period in 2012, from $906 million to $1,025 million.  This increase was offset by a decrease in the weighted average effective interest rate of our outstanding debt from 4.08% for the three months ended June 30, 2012 to 4.17% for the three months ended June 30, 2013 as a result of the amendments to our Term Loan Facility and Credit Facility.

Loan procurement amortization expense decreased from $1.1 million during 2012 to $0.5 million during 2013.  This decrease is the result of accelerated amortization expense in the prior year related to early repayment of debt.

Acquisition related costs increased from $0.3 million during the three months ended June 30, 2012 to $1.6 million during the three months ended June 30, 2013.  Acquisition costs are non-recurring and fluctuate based on quarterly investment activity.

Equity in losses of real estate ventures was $0.2 million for the three months ended June 30, 2012 with no comparable amount during the 2013 period.  This expense is related to earnings attributable to HSREV, a partnership in which the Company purchased the remaining 50% ownership interest during September 2012.

33

Comparison of the six months ended June 30, 2013 to the six months ended June 30, 2012 (in thousands, except property counts, occupancies and rates)

								Non Same-Store				Other/
	Same-Store Property Portfolio							Properties				Eliminations				Total Portfolio
					Increase/		%														Increase/		%
	2013		2012		(Decrease)		Change	2013		2012		2013		2012		2013			2012		(Decrease)		Change
REVENUES
Rental income	$	114,971	$	107,959	$	7,012	6.5%	$	26,878	$	8,782	$	-	$	-	$	141,849		$	116,741	$	25,108	21.5%
Other property related income	12,652		10,330		2,322		22.5%	2,645		1,116		1,251		1,071		16,548			12,517		4,031		32.2%
Property management fee income	-		-		-		-	-		-		2,362		2,123		2,362			2,123		239		11.3%
Total revenues	127,623		118,289		9,334		7.9%	29,523		9,898		3,613		3,194		160,759			131,381		29,378		22.4%
OPERATING EXPENSES
Property operating expenses	43,676		42,217		1,459		3.5%	9,901		3,993		7,199		6,440		60,776			52,650		8,126		15.4%
NET OPERATING INCOME	$	83,947	$	76,072	$	7,875	10.4%	$	19,622	$	5,905	$	(3,586)	$	(3,246)	$		99,983	$	78,731	$	21,252	27.0%
Property count	328		328					58		17						386			345
Total square footage	21,786		21,786					4,050		1,081						25,836			22,867
Period End Occupancy (1)	90.0%		84.1%					89.1%		76.1%						89.7%			83.7%
Period Average Occupancy (2)	86.7%		80.5%
Realized annual rent per occupied square foot (3)	$	12.17	$	12.31
Depreciation and amortization																59,073			52,160		6,913		13.3%
General and administrative																15,128			12,722		2,406		18.9%
Subtotal																74,201			64,882		9,319		14.4%
OPERATING INCOME																25,782			13,849		11,933		86.2%
OTHER INCOME (EXPENSE)
Interest:
Interest expense on loans																(21,050)			(18,570)		(2,480)		-13.4%
Loan procurement amortization expense																(973)			(1,917)		944		49.2%
Acquisition related costs																(1,763)			(863)		(900)		-104.3%
Equity in losses of real estate ventures																-			(461)		461		100.0%
Other																(260)			(178)		(82)		-46.1%
Total other expense																(24,046)			(21,989)		(2,057)		-9.4%
INCOME (LOSS) FROM CONTINUING OPERATIONS																1,736			(8,140)		9,876		121.3%
DISCONTINUED OPERATIONS
Income from discontinued operations																176			2,031		(1,855)		-91.3%
Gain on disposition of discontinued operations																228			6,206		(5,978)		-96.3%
Total discontinued operations																404			8,237		(7,833)		-95.1%
NET INCOME																2,140			97		2,043		2106.2%
NET LOSS (INCOME) ATTRIBUTABLE TO NONCONTROLLING INTERESTS
Noncontrolling interests in the Operating Partnership																17			111		(94)		-84.7%
Noncontrolling interests in subsidiaries																1			(1,508)		1,509		100.1%
NET INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY																2,158			(1,300)		3,458		266.0%

(1)Represents occupancy at June 30th 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.

Revenues

Rental income increased from $116.7 million during the six months ended June 30, 2012 to $141.8 million during the six months ended June 30, 2013, an increase of $25.1 million, or 22%. This increase is primarily attributable to $18.1 million of additional income from the properties acquired in 2012 and 2013 and increases in average occupancy on the same-store portfolio, which contributed $7.0 million to the increase in rental income during the six months ended June 30, 2013 as compared to the six months ended June 30, 2012.

Other property related income increased from $12.5 million during the six months ended June 30, 2012 to $16.5 million during the six months ended June 30, 2013, an increase of $4.0 million, or 32%.  This increase is primarily attributable to $1.5 million of additional income from the 2012 and 2013 acquisitions and increased tenant insurance commissions of $2.3 million during the six months ended June 30, 2013 as compared to the six months ended June 30, 2012.

Operating Expenses

Property operating expenses increased from $52.7 million during the six months ended June 30, 2012 to $60.8 million during the six months ended June 30, 2013, an increase of $8.1 million, or 15%.  This increase is primarily attributable to $5.9 million of increased expenses associated with newly acquired properties as well as increased expenses on the same store portfolio.  The increases in same store expenses were associated with snow removal and utilities due to a colder winter in 2013 compared to the prior year and expected increases in real estate tax assessments.

34

Depreciation and amortization increased from $52.2 million in the six months ended June 30, 2012 to $59.1 million in the six months ended June 30, 2013, an increase of $6.9 million, or 13%.  This increase is primarily attributable to depreciation and amortization expense related to the 2012 acquisitions.

Other Income (Expenses)

Interest expense increased from $18.6 million during the six months ended June 30, 2012 to $21.1 million during the six months ended June 30, 2013, an increase of $2.5 million, or 13%.  The increase is attributable to a higher amount of outstanding debt in 2013.  To fund a portion of the Company’s growth, the average debt balance during the six months ended June 30, 2013 increased approximately $171 million from the same period in 2012, from $856 million to $1,027 million.  This increase was offset by a decrease in the weighted average effective interest rate of our outstanding debt from 4.34% for the six months ended June 30, 2012 to 4.10% for the six months ended June 30, 2013 as a result of the amendments to our Term Loan Facility and Credit Facility.

Loan procurement amortization expense decreased from $1.9 million during 2012 to $1.0 million during 2013.  This decrease is the result of accelerated amortization expense in the prior year related to early repayment of debt.

Acquisition related costs increased from $0.9 million during the six months ended June 30, 2012 to $1.8 million during the six months ended June 30, 2013.  Acquisition costs are non-recurring and fluctuate based on investment activity.

Equity in losses of real estate ventures was $0.5 million for the six months ended June 30, 2012 with no comparable amount during the 2013 period.  This expense is related to earnings attributable to HSREV, a partnership in which the Company purchased the remaining 50% ownership interest during September 2012.

Cash Flows

Comparison of the six months ended June 30, 2013 to the six months ended June 30, 2012

A comparison of cash flow from operating, investing and financing activities for the six months ended June 30, 2013 and 2012 is as follows (in thousands):

	Six Months Ended June 30,
	2013		2012		Change
Net cash flow provided by (used in):
Operating activities	$	65,311	$	52,595	$	12,716
Investing activities	$	(104,046)	$	(70,881)	$	(33,165)
Financing activities	$	38,261	$	147,013	$	(108,752)

Cash flows provided by operating activities for the six months ended June 30, 2013 and 2012 were $65.3 million and $52.6 million, respectively, an increase of $12.7 million.  Our principal source of cash flow is from the operation of our properties. Our increased cash flow from operating activities is primarily attributable to our 2012 acquisitions, the majority of which were completed subsequent to the six months ended June 30, 2012.  These acquisitions contributed to the increase in operating cash flows for the six months ended June 30, 2013 when compared to the same period in 2012.

For the six months ended June 30, 2013 and 2012, cash flows used in investing activities were $104.0 million and $70.9 million, respectively, an increase of $33.1 million.  Cash flows used in investing activities, except for recurring capital expenditures, are typically non-recurring and fluctuate based on acquisition and disposition activity.  The increase was driven in large part by $17.6 million in development costs incurred during the six months ended June 30, 2013 relating to two development properties.  Additionally, cash flows from investing activities decreased $11.7 million due to more proceeds from property dispositions during the six months ended June 30, 2012 than during the same period in 2013.

For the six months ended June 30, 2013 and 2012, cash flows provided by financing activities were $38.3 million and $147.0 million, respectively, a decrease of $108.7 million.  Cash flows provided by financing activities are primarily used to fund investing activities.  The decrease in cash flow provided by financing activities of $108.7 million exceeds the increase in cash flow used in investing activities of $33.1 million as a portion of proceeds from the Company’s $249.6 million senior note issuance during the six months ended June 30, 2012 were held as cash as of June 30, 2012 and used to fund investing activities in subsequent quarters.

35

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 from us at our facilities.  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 facilities in which we invest — self-storage facilities — are less sensitive than other real estate product types to current 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 its 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 term and the long term.

Our short-term liquidity needs consist primarily of funds necessary to pay operating expenses associated with our facilities, refinancing of certain mortgage indebtedness, interest expense and scheduled principal payments on debt, expected distributions to limited partners and shareholders, costs to develop facilities and recurring capital expenditures.  These funding requirements will vary from year to year, in some cases significantly.  We expect remaining recurring capital expenditures in the 2013 fiscal year to be approximately $4.0 million to $8.0 million.  In addition, we expect costs associated with development activities for the remainder of the 2013 fiscal year to be approximately $10.0 million to $15.0 million.  Our currently scheduled principal payments on debt (including debt maturities) are approximately $16.1 million for the remainder of 2013.

Our most restrictive debt covenants limit the amount of additional leverage we can add; however, we believe cash flow from operations, access to our “at the market” equity program and access to our Credit Facility are adequate to execute our current business plan and remain in compliance with our debt covenants.

Our liquidity needs beyond 2013 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 facilities; (iii) acquisitions of additional facilities; and (iv) development of new facilities.  We will have to satisfy our needs through either additional borrowings, including borrowings under the revolving portion of our Credit Facility, sales of common or preferred shares and/or cash generated through facility dispositions and joint venture transactions.

Notwithstanding the discussion above, we believe that, as a publicly traded REIT, we will have access to multiple sources of capital to fund 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 June 30, 2013, we had approximately $4.0 million in available cash and cash equivalents.  In addition, we had approximately $189.8 million of availability for borrowings under our Credit Facility.

36

Unsecured Senior Notes and Bank Credit Facilities

On June 26, 2012, the Operating Partnership issued $250 million in aggregate principal amount of unsecured senior notes due July 15, 2022 (the “senior notes”) which bear interest at a rate of 4.80%.  The indenture under which the unsecured 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 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. The Operating Partnership is currently in compliance with all of the financial covenants under the senior notes.

On June 20, 2011, the Company entered into an unsecured term loan agreement (the “Term Loan Facility”) which consisted of a $100 million term loan with a five-year maturity (“Term Loan A”) and a $100 million term loan with a seven-year maturity (“Term Loan B”).

On December 9, 2011, the Company entered into a credit facility (the “Credit Facility”) comprised of a $100 million unsecured term loan maturing in December 2014 (“Term Loan C”); a $200 million unsecured term loan maturing in March 2017 (“Term Loan D”); and a $300 million unsecured revolving facility maturing in December 2015 (“Revolver”).

On June 18, 2013, the Company amended both the Term Loan Facility and Credit Facility.  With respect to the Term Loan Facility, among other things, the amendment extended the maturity and decreased the pricing of Term Loan A, while Term Loan B remained unchanged by the amendment. Pricing on the Term Loan Facility depends on the Company’s unsecured debt credit ratings.  At the Company’s current Baa3/BBB- level, amounts drawn under Term Loan A are priced at 1.50% over LIBOR, with no LIBOR floor, while amounts drawn under Term Loan B are priced at 2.00% over LIBOR, with no LIBOR floor.

		Term Loan Facility Prior to Amendment		Term Loan Facility As Amended
	Amount	Maturity Date	LIBOR Spread	Maturity Date	LIBOR Spread
Term Loan A	$100 million	June 2016	1.85%	June 2018	1.50%
Term Loan B	$100 million	June 2018	2.00%	June 2018	2.00%

With respect to the Credit Facility, among other things, the amendment extended the maturities of the Revolver and Term Loan D and decreased the pricing of the Revolver, Term Loan C and Term Loan D.  Pricing on the Credit Facility depends on the Company’s unsecured debt credit ratings.  At the Company’s current Baa3/BBB- level, amounts drawn under the Revolver are priced at 1.60% over LIBOR, inclusive of a facility fee of 0.30%, with no LIBOR floor, while amounts drawn under Term Loan C and Term Loan D are priced at 1.50% over LIBOR, with no LIBOR floor.

		Credit Facility Prior to Amendment		Credit Facility As Amended
	Amount	Maturity Date	LIBOR Spread	Maturity Date	LIBOR Spread
Revolver	$300 million	December 2015	1.80%	June 2017	1.60%
Term Loan C	$100 million	December 2014	1.75%	December 2014	1.50%
Term Loan D	$200 million	March 2017	1.75%	January 2019	1.50%

As of June 30, 2013, $200 million of unsecured term loan borrowings were outstanding under the Term Loan Facility, $300 million of unsecured term loan borrowings were outstanding under the Credit Facility, $110 million of unsecured revolving credit facility borrowings were outstanding and $189.8 million was available for borrowing on the unsecured revolving portion of the Credit Facility.  The available balance under the unsecured revolving portion of the Credit Facility is reduced by an outstanding letter of credit of $0.2 million.

37

In connection with the unsecured borrowings, the Company had interest rate swaps as of June 30, 2013 that fix 30-day LIBOR.

Applicable Hedging Arrangements

Notional Amount	Maturity Date	Effective LIBOR Fixed Rate
$100 million	June 2016	1.803%
$200 million	March 2017	1.336%
$100 million	June 2018	2.468%

As of June 30, 2013, borrowings under the Credit Facility and Term Loan Facility, as amended, had an effective weighted average interest rate of 2.80%.

The Term Loan Facility and the term loans under the Credit Facility were fully drawn at June 30, 2013 and no further borrowings may be made under that facility and those term loans.  The Company’s ability to borrow under the revolving facility is subject to ongoing compliance with certain financial covenants which include:

·         Maximum total indebtedness to total asset value of 60.0% at any time;

·         Minimum fixed charge coverage ratio of 1.50:1.00; and

·         Minimum tangible net worth of $821,211,200 plus 75% of net proceeds from equity issuances after June 30, 2010.

Further, under the Credit Facility and Term Loan Facility, the Company is restricted from paying distributions on common shares that would exceed an amount equal to the greater of (i) 95% of funds from operations, and (ii) such amount as may be necessary to maintain the Parent Company’s REIT status.

The Company is currently in compliance with all of its financial covenants and anticipates being in compliance with all of its financial covenants through the terms of the Credit Facility and Term Loan Facility.

At The Market Program

Pursuant to our previous sales agreement with Cantor Fitzgerald & Co. (the “Previous Sales Agent”), dated April 3, 2009, as amended on January 26, 2011 and September 16, 2011 (as amended, the “Previous Sales Agreement”), the Company had the option to sell up to 20 million common shares at “at the market” prices. From January 1, 2013 until the termination of the Previous Sales Agreement on May 7, 2013, we sold 0.1 million common shares under the Previous Sales Agreement with an average sales price of $15.30 per share, resulting in gross proceeds of $1.5 million under the program ($165.3 million of gross proceeds and 16.2 million shares sold with an average sales price of $10.19 since program inception in 2009). The Company incurred $0.02 million of offering costs in conjunction with the 2013 sales. The proceeds from the sales conducted during the six months ended June 30, 2013 under the Previous Sales Agreement were used to fund general working purposes.

On May 7, 2013, the Company terminated the Previous Sales Agreement with the Previous Sales Agent and entered into separate Equity Distribution Agreements (the “Equity Distribution Agreements”) with each of Wells Fargo Securities LLC; BMO Capital Markets Corp.; Jefferies LLC; Merrill Lynch, Pierce, Fenner & Smith Incorporated; and RBC Capital Markets, LLC (collectively, the “Sales Agents”).   Pursuant to the Equity Distribution Agreements, the Company may sell, from time to time, up to 12 million common shares of beneficial interest through the Sales Agents.  From the inception of the Equity Distribution Agreements on May 7, 2013 to June 30, 2013, the Company sold 1.1 million shares under the Equity Distribution Agreements, with an average sales price of $17.19 per share, resulting in gross proceeds of $19.3 million under the program.  The Company incurred $0.5 million of offering costs in conjunction with the sales.  The proceeds from the sales conducted under the Equity Distribution Agreements from the inception of such agreements on May 7, 2013 to June 30, 2013 were used to fund acquisitions of storage facilities and general working purposes.  As of June 30, 2013, 10.9 million common shares remained available for issuance under the Equity Distribution Agreements.

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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, acquisition related costs, equity in losses of real estate venture, amounts attributable to noncontrolling interests, other expense, depreciation and amortization expense, general and administrative expense, and deducting from net income: income from discontinued operations, gain on disposition of discontinued operations, other income, gain from remeasurement of investment in real estate venture 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 facilities, and for all of our facilities 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 facility managers to evaluate the economic productivity of our facilities, including our ability to lease our facilities, 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 expense, which can vary depending upon accounting methods and the book value of assets; and

·It enables 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 (the “White Paper”), as amended, defines FFO as net income (computed in accordance with GAAP), excluding gains (or losses) from sales of property and real estate 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 the Company’s facilities. Given the nature of its business as a real estate owner and operator, the Company considers FFO to be a key measure of its operating performance that is not specifically defined by accounting principles generally accepted in the United States. The Company believes that FFO is useful to management and investors as a starting point in measuring its operational performance because it excludes various items included in net income that do not relate to or are not indicative of its operating performance - such as gains (or losses) from sales of property, gains on remeasurement of investment in real estate ventures, impairments of depreciable assets, and depreciation - and 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.

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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 in accordance with GAAP, as presented in our Consolidated Financial Statements.

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 other non-recurring items, which we believe are not indicative of the Company’s operating results.

The following table presents a reconciliation of net income to FFO for the three and six months ended June 30, 2013 and 2012 (in thousands):

	Three months ended June 30,					Six months ended June 30,
	2013		2012			2013			2012
Net income (loss) attributable to common shareholders	$	1,048	$	1,041		$	(846	)	$	(4,304	)
Add (deduct):
Real estate depreciation and amortization
Real property - continuing operations	28,860		26,662			58,322			51,434
Real property - discontinued operations	-		666			57			1,297
Company’s share of unconsolidated real estate ventures	-		513			-			1,027
Noncontrolling interest’s share of consolidated real estate ventures	-		(424		)	-			(858		)
Gains on sale of real estate	-		(6,206		)	(228		)	(6,206		)
Noncontrolling interests in the Operating Partnership	18		38			(17		)	(111		)
FFO	$	29,926	$	22,290		$	57,288		$	42,279
Add (deduct):
Acquisition related costs	1,648		313			1,763			863
FFO, as adjusted	$	31,574	$	22,603		$	59,051		$	43,142
Weighted-average diluted shares and units outstanding	138,610		128,760			138,220			128,156

Off-Balance Sheet Arrangements

We do not currently have any off-balance sheet arrangements.

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ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company’s future income, cash flows and fair values relevant to financial instruments depend upon prevailing 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 fix 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 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 rates chosen.

As of June 30, 2013 our consolidated debt consisted of $859.7 million of outstanding mortgages, unsecured senior notes and unsecured term loans that are subject to fixed rates, including variable rate debt that is effectively fixed through our use of interest rate swaps.  As of June 30, 2013, there was $214.8 million of outstanding mortgages and credit facility borrowings subject to floating rates.  Changes in interest rates have different impacts on the fixed and variable rate portions of our debt portfolio.  A change in 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 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.

If market rates of interest on our variable rate debt increase by 100 basis points, the increase in annual interest expense on our variable rate debt would decrease future earnings and cash flows by approximately $2.1 million a year.  If market rates of interest on our variable rate debt decrease by 100 basis points, the decrease in interest expense on our variable rate debt would increase future earnings and cash flows by approximately $2.1 million a year.

If market rates of interest increase by 100 basis points, the fair value of our outstanding fixed-rate mortgage debt, unsecured senior notes and unsecured term loans would decrease by approximately $50.5 million.  If market rates of interest decrease by 100 basis points, the fair value of our outstanding fixed-rate mortgage debt, unsecured senior notes and unsecured term loans would increase by approximately $47.8 million.

ITEM 4. 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 Securities Exchange Act of 1934, as amended (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.

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Changes in Internal Controls 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.

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.

Changes in Internal Controls 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 its most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Operating Partnership’s internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following table provides information about repurchases of the Parent Company’s common shares during the three-month period ended June 30, 2013:

	Total Number of Shares Purchased (1)		Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs (2)
April 1 – April 30	1,969		$	16.57	N/A	3,000,000
May 1 – May 31	106		17.14		N/A	3,000,000
June 1 – June 30		-	-		N/A	3,000,000
Total	2,075		$	16.60	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.

(2)    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.

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ITEM 6.  EXHIBITS

Exhibit No.	Exhibit Description
10.1	Waiver of Ownership Limitation, incorporated by reference to Exhibit 10.1 to CubeSmart’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2013, filed on May 6, 2013.
10.2	Form of Equity Distribution Agreement, dated May 7, 2013, by and among CubeSmart, CubeSmart, L.P. and each of Wells Fargo Securities, LLC, BMO Capital Markets Corp., Jefferies LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated and RBC Capital Markets, LLC, incorporated by reference to Exhibit 1.1. to CubeSmart’s Current Report on Form 8-K, filed on May 7, 2013.
10.3	Second Amendment to Credit Agreement, dated as of June 18, 2013, by and among CubeSmart, L.P., CubeSmart, Wells Fargo Bank, National Association and each of the lenders party to the credit agreement dated December 9, 2011, incorporated by reference to Exhibit 99.1 to CubeSmart’s Current Report on Form 8-K, filed on June 19, 2013.
10.4	Second Amendment to Term Loan Agreement, dated as of June 18, 2013, by and among CubeSmart, L.P., CubeSmart, Wells Fargo Bank, National Association, and each of the lenders party to the term loan agreement dated June 20, 2011, incorporated by reference to Exhibit 99.2 to CubeSmart’s Current Report on Form 8-K, filed on June 19, 2013.
12.1	Statement regarding Computation of Ratios of CubeSmart. (filed herewith)
12.2	Statement regarding Computation of Ratios of CubeSmart L.P. (filed herewith)
31.1	Certification of Chief Executive Officer of CubeSmart as 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. (filed herewith)
31.2	Certification of Chief Financial Officer of CubeSmart as 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. (filed herewith)
31.3	Certification of Chief Executive Officer of CubeSmart, L.P., as 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. (filed herewith)
31.4	Certification of Chief Financial Officer of CubeSmart, L.P., as 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. (filed herewith)
32.1	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. (furnished herewith)
32.2	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 (furnished herewith)
101	The following CubeSmart and CubeSmart, L.P. financial information for the quarter ended June 30, 2013, formatted in XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Operations, (iii) the Condensed Consolidated Statements of Cash Flows, and (iv) the Notes to Condensed Consolidated Financial Statements, tagged as blocks of text. (filed herewith)

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SIGNATURES OF REGISTRANT

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	CUBESMART
	(Registrant)
Date: August 9, 2013	By:	/s/ Dean Jernigan
	Dean Jernigan, Chief Executive Officer
	(Principal Executive Officer)
Date: August 9, 2013	By:	/s/ Timothy M. Martin
	Timothy M. Martin, Chief Financial Officer
	(Principal Financial Officer)

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SIGNATURES OF REGISTRANT

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	CUBESMART, L.P.
	(Registrant)
Date: August 9, 2013	By:	/s/ Dean Jernigan
	Dean Jernigan, Chief Executive Officer
	(Principal Executive Officer)
Date: August 9, 2013	By:	/s/ Timothy M. Martin
	Timothy M. Martin, Chief Financial Officer
	(Principal Financial Officer)

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EXHIBIT LIST

Exhibit No.	Exhibit Description
10.1	Waiver of Ownership Limitation, incorporated by reference to Exhibit 10.1 to CubeSmart’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2013, filed on May 6, 2013.
10.2	Form of Equity Distribution Agreement, dated May 7, 2013, by and among CubeSmart, CubeSmart, L.P. and each of Wells Fargo Securities, LLC, BMO Capital Markets Corp., Jefferies LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated and RBC Capital Markets, LLC, incorporated by reference to Exhibit 1.1. to CubeSmart’s Current Report on Form 8-K, filed on May 7, 2013.
10.3	Second Amendment to Credit Agreement, dated as of June 18, 2013, by and among CubeSmart, L.P., CubeSmart, Wells Fargo Bank, National Association and each of the lenders party to the credit agreement dated December 9, 2011, incorporated by reference to Exhibit 99.1 to CubeSmart’s Current Report on Form 8-K, filed on June 19, 2013.
10.4	Second Amendment to Term Loan Agreement, dated as of June 18, 2013, by and among CubeSmart, L.P., CubeSmart, Wells Fargo Bank, National Association, and each of the lenders party to the term loan agreement dated June 20, 2011, incorporated by reference to Exhibit 99.2 to CubeSmart’s Current Report on Form 8-K, filed on June 19, 2013.
12.1	Statement regarding Computation of Ratios of CubeSmart.
12.2	Statement regarding Computation of Ratios of CubeSmart L.P.
31.1	Certification of Chief Executive Officer of CubeSmart as 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.
31.2	Certification of Chief Financial Officer of CubeSmart as 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.
31.3	Certification of Chief Executive Officer of CubeSmart, L.P., as 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.
31.4	Certification of Chief Financial Officer of CubeSmart, L.P., as 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.
32.1	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.
32.2	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
101	The following CubeSmart and CubeSmart, L.P. financial information for the quarter ended June 30, 2013, formatted in XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Operations, (iii) the Condensed Consolidated Statements of Cash Flows, and (iv) the Notes to Condensed Consolidated Financial Statements, tagged as blocks of text.

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EX-12.1

Exhibit 12.1

CubeSmart

Computation of Ratio of Earnings to Fixed Charges

(dollars in thousands)

	Year Ended December 31,										Six Months Ended June 30,
	2008		2009		2010		2011		2012		2012		2013
Earnings before fixed charges:
Add:
(Loss) income from continuing operations	$	(31,166)	$	(23,938)	$	(15,000)	$	(8,614)	$	(8,296)	$	(8,140)	$	1,736
Fixed charges - per below	54,192		47,831		44,539		46,626		44,329		20,624		22,292
Less:
Capitalized interest	(99)		(73)		(132)		(82)		(185)		(62)		(194)
Earnings before fixed charges	22,927		23,820		29,407		37,930		35,848		12,422		23,834
Fixed charges:
Interest expense (including amortization premiums and discounts related to indebtedness)	53,943		47,608		44,257		46,394		43,994		20,487		22,023
Early extinguishment of debt	—		—		—		—		—		—		—
Capitalized interest	99		73		132		82		185		62		194
Estimate of interest within rental expense	150		150		150		150		150		75		75
Total Fixed Charges	54,192		47,831		44,539		46,626		44,329		20,624		22,292
Income allocated to preferred shareholders	—		—		—		1,218		6,008		3,004		3,004
Total combined fixed charges and preferred distributions	54,192		47,831		44,539		47,844		50,337		23,628		25,296
Ratio of earnings to fixed charges (a)	0.42		0.50		0.66		0.79		0.71		0.53		0.94

(a)  In fiscal 2008, 2009, 2010, 2011 and 2012 and in the six months ended June 30, 2012 and 2013, earnings were insufficient to cover combined fixed charges and preferred distributions.  The Company must generate additional earnings of $31.3 million, $24.0 million, $15.1 million, $9.9 million and $14.5 million in fiscal 2008, 2009, 2010, 2011 and 2012, and $11.2 million and $1.5 million in the six months ended June 30, 2012 and 2013, respectively, to achieve a fixed charge coverage ratio of 1:1.

EX-12.2

Exhibit 12.2

CubeSmart L.P.

Computation of Ratio of Earnings to Fixed Charges

(dollars in thousands)

	Year Ended December 31,										Six Months Ended June 30,
	2008		2009		2010		2011		2012		2012		2013
Earnings before fixed charges:
Add:
(Loss) income from continuing operations	$	(31,166)	$	(23,938)	$	(15,000)	$	(8,614)	$	(8,296)	$	(8,140)	$	1,736
Fixed charges - per below	54,192		47,831		44,539		46,626		44,329		20,624		22,292
Less:
Capitalized interest	(99)		(73)		(132)		(82)		(185)		(62)		(194)
Earnings before fixed charges	22,927		23,820		29,407		37,930		35,848		12,422		23,834
Fixed charges:
Interest expense (including amortization premiums and discounts related to indebtedness)	53,943		47,608		44,257		46,394		43,994		20,487		22,023
Early extinguishment of debt	—		—		—		—		—		—		—
Capitalized interest	99		73		132		82		185		62		194
Estimate of interest within rental expense	150		150		150		150		150		75		75
Total Fixed Charges	54,192		47,831		44,539		46,626		44,329		20,624		22,292
Income allocated to preferred shareholders	—		—		—		1,218		6,008		3,004		3,004
Total combined fixed charges and preferred distributions	54,192		47,831		44,539		47,844		50,337		23,628		25,296
Ratio of earnings to fixed charges (a)	0.42		0.50		0.66		0.79		0.71		0.53		0.94

(a)  In fiscal 2008, 2009, 2010, 2011 and 2012 and in the six months ended June 30, 2012 and 2013, earnings were insufficient to cover combined fixed charges and preferred distributions.  The Company must generate additional earnings of $31.3 million, $24.0 million, $15.1 million, $9.9 million and $14.5 million in fiscal 2008, 2009, 2010, 2011 and 2012, and $11.2 million and $1.5 million in the six months ended June 30, 2012 and 2013, respectively, to achieve a fixed charge coverage ratio of 1:1.

EX-31.1

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Dean Jernigan, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q 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 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: August 9, 2013	/s/ Dean Jernigan
	Dean Jernigan
	Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Timothy M. Martin, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q 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 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: August 9, 2013	/s/ Timothy M. Martin
	Timothy M. Martin
	Chief Financial Officer

EX-31.3

Exhibit 31.3

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Dean Jernigan, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q 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 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: August 9, 2013	/s/ Dean Jernigan
	Dean Jernigan
	Chief Executive Officer

EX-31.4

Exhibit 31.4

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Timothy M. Martin, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q 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 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: August 9, 2013	/s/ Timothy M. Martin
	Timothy M. Martin
	Chief Financial Officer

EX-32.1

Exhibit 32.1

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

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 Quarterly Report on Form 10-Q of the Company for the period ended June 30, 2013 (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.

Date: August 9, 2013	/s/ Dean Jernigan
	Dean Jernigan
	Chief Executive Officer

Date: August 9, 2013	/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.

EX-32.2

Exhibit 32.2

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

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 Quarterly Report on Form 10-Q of the Company for the period ended June 30, 2013 (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.

Date: August 9, 2013	/s/ Dean Jernigan
	Dean Jernigan
	Chief Executive Officer

Date: August 9, 2013	/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.

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FAIR VALUE MEASUREMENTS

6 Months Ended

Jun. 30, 2013

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS

10.  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.

Financial assets and liabilities carried at fair value as of June 30, 2013 are classified in the table below in one of the three categories described above (dollars in thousands):

	Level 1		Level 2		Level 3
Interest Rate Swap Derivative Liabilities	$	-	$	11,294	$	-
Total liabilities at fair value	$	-	$	11,294	$	-

Financial assets and liabilities carried at fair value as of December 31, 2012 are classified in the table below in one of the three categories described above (dollars in thousands):

	Level 1		Level 2		Level 3
Interest Rate Swap Derivative Liabilities	$	-	$	19,665	$	-
Total liabilities at fair value	$	-	$	19,665	$	-

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 in 2013 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 June 30, 2013, 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 at June 30, 2013 and December 31, 2012.   The aggregate carrying value of the Company’s debt was $1,074.5 million and $1,023.8 million at June 30, 2013 and December 31, 2012, respectively.  The estimated fair value of the Company’s debt was $1,085.9 million and $1,017.3 million at June 30, 2013 and December 31, 2012, respectively. These estimates were based on a discounted cash flow analysis assuming market interest rates for comparable obligations at June 30, 2013 and December 31, 2012.  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 policies, which is classified within level 2 of the fair value hierarchy. Rates and credit spreads take into consideration general market conditions and maturity.

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CONSOLIDATED STATEMENTS OF OPERATIONS (LP cube) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
REVENUES
Rental income	$ 72,231	$ 59,424	$ 141,849	$ 116,741
Other property related income	8,854	6,741	16,548	12,517
Property management fee income	1,217	1,103	2,362	2,123
Total revenues	82,302	67,268	160,759	131,381
OPERATING EXPENSES
Property operating expenses	29,955	26,707	60,776	52,650
Depreciation and amortization	29,241	27,077	59,073	52,160
General and administrative	7,515	6,278	15,128	12,722
Total operating expenses	66,711	60,062	134,977	117,532
OPERATING INCOME	15,591	7,206	25,782	13,849
Interest:
Interest expense on loans	(10,683)	(9,280)	(21,050)	(18,570)
Loan procurement amortization expense	(497)	(1,114)	(973)	(1,917)
Acquisition related costs	(1,648)	(313)	(1,763)	(863)
Equity in losses of real estate ventures		(210)		(461)
Other	(187)	(107)	(260)	(178)
Total other expense	(13,015)	(11,024)	(24,046)	(21,989)
INCOME (LOSS) FROM CONTINUING OPERATIONS	2,576	(3,818)	1,736	(8,140)
DISCONTINUED OPERATIONS
(Loss) income from discontinued operations	(8)	967	176	2,031
Gain of disposition of discontinued operations		6,206	228	6,206
Total discontinued operations	(8)	7,173	404	8,237
NET INCOME	2,568	3,355	2,140	97
NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS
Noncontrolling interest in subsidiaries		(774)	1	(1,508)
Distribution to Preferred Units	(1,502)	(1,502)	(3,004)	(3,004)
NET INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY'S COMMON SHAREHOLDERS	1,048	1,041	(846)	(4,304)
Basic earnings (loss) per unit from continuing operations attributable to common unitholders (in dollars per unit)	$ 0.01	$ (0.05)	$ (0.01)	$ (0.10)
Basic earnings per unit from discontinued operations attributable to common unitholders (in dollars per unit)		$ 0.06		$ 0.06
Basic earnings (loss) per share attributable to common shareholders (in dollars per share)	$ 0.01	$ 0.01	$ (0.01)	$ (0.04)
Diluted earnings (loss) per unit from continuing operations attributable to common unitholders (in dollars per unit)	$ 0.01	$ (0.05)	$ (0.01)	$ (0.10)
Diluted earnings per unit from discontinued operations attributable to common unitholders (in dollars per unit)		$ 0.06		$ 0.06
Diluted earnings (loss) per share attributable to common shareholders (in dollars per share)	$ 0.01	$ 0.01	$ (0.01)	$ (0.04)
Weighted-average basic units outstanding (in units)	133,677	122,599	133,316	122,433
Weighted-average diluted units outstanding (in units)	136,329	122,599	133,316	122,433
AMOUNTS ATTRIBUTABLE TO COMMON UNITHOLDERS
Income (loss) from continuing operations	1,056	(5,960)	(1,243)	(12,343)
Total discontinued operations	(8)	7,001	397	8,039
Net income (loss)	1,048	1,041	(846)	(4,304)
CubeSmart, L.P. and Subsidiaries
REVENUES
Rental income	72,231	59,424	141,849	116,741
Other property related income	8,854	6,741	16,548	12,517
Property management fee income	1,217	1,103	2,362	2,123
Total revenues	82,302	67,268	160,759	131,381
OPERATING EXPENSES
Property operating expenses	29,955	26,707	60,776	52,650
Depreciation and amortization	29,241	27,077	59,073	52,160
General and administrative	7,515	6,278	15,128	12,722
Total operating expenses	66,711	60,062	134,977	117,532
OPERATING INCOME	15,591	7,206	25,782	13,849
Interest:
Interest expense on loans	(10,683)	(9,280)	(21,050)	(18,570)
Loan procurement amortization expense	(497)	(1,114)	(973)	(1,917)
Acquisition related costs	(1,648)	(313)	(1,763)	(863)
Equity in losses of real estate ventures		(210)		(461)
Other	(187)	(107)	(260)	(178)
Total other expense	(13,015)	(11,024)	(24,046)	(21,989)
INCOME (LOSS) FROM CONTINUING OPERATIONS	2,576	(3,818)	1,736	(8,140)
DISCONTINUED OPERATIONS
(Loss) income from discontinued operations	(8)	967	176	2,031
Gain of disposition of discontinued operations		6,206	228	6,206
Total discontinued operations	(8)	7,173	404	8,237
NET INCOME	2,568	3,355	2,140	97
NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS
Noncontrolling interest in subsidiaries		(774)	1	(1,508)
NET INCOME (LOSS) ATTRIBUTABLE TO CUBESMART L.P.	2,568	2,581	2,141	(1,411)
Limited Partnership interest of third parties	(18)	(38)	17	111
NET INCOME (LOSS) ATTRIBUTABLE TO OPERATING PARTNER	2,550	2,543	2,158	(1,300)
Distribution to Preferred Units	(1,502)	(1,502)	(3,004)	(3,004)
NET INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY'S COMMON SHAREHOLDERS	1,048	1,041	(846)	(4,304)
Basic earnings (loss) per unit from continuing operations attributable to common unitholders (in dollars per unit)	$ 0.01	$ (0.05)	$ (0.01)	$ (0.10)
Basic earnings per unit from discontinued operations attributable to common unitholders (in dollars per unit)		$ 0.06		$ 0.06
Basic earnings (loss) per share attributable to common shareholders (in dollars per share)	$ 0.01	$ 0.01	$ (0.01)	$ (0.04)
Diluted earnings (loss) per unit from continuing operations attributable to common unitholders (in dollars per unit)	$ 0.01	$ (0.05)	$ (0.01)	$ (0.10)
Diluted earnings per unit from discontinued operations attributable to common unitholders (in dollars per unit)		$ 0.06		$ 0.06
Diluted earnings (loss) per share attributable to common shareholders (in dollars per share)	$ 0.01	$ 0.01	$ (0.01)	$ (0.04)
Weighted-average basic units outstanding (in units)	133,677	122,599	133,316	122,433
Weighted-average diluted units outstanding (in units)	136,329	122,599	133,316	122,433
AMOUNTS ATTRIBUTABLE TO COMMON UNITHOLDERS
Income (loss) from continuing operations	1,056	(5,960)	(1,243)	(12,343)
Total discontinued operations	(8)	7,001	397	8,039
Net income (loss)	$ 1,048	$ 1,041	$ (846)	$ (4,304)

XML

CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
REVENUES
Rental income	$ 72,231	$ 59,424	$ 141,849	$ 116,741
Other property related income	8,854	6,741	16,548	12,517
Property management fee income	1,217	1,103	2,362	2,123
Total revenues	82,302	67,268	160,759	131,381
OPERATING EXPENSES
Property operating expenses	29,955	26,707	60,776	52,650
Depreciation and amortization	29,241	27,077	59,073	52,160
General and administrative	7,515	6,278	15,128	12,722
Total operating expenses	66,711	60,062	134,977	117,532
OPERATING INCOME	15,591	7,206	25,782	13,849
Interest:
Interest expense on loans	(10,683)	(9,280)	(21,050)	(18,570)
Loan procurement amortization expense	(497)	(1,114)	(973)	(1,917)
Acquisition related costs	(1,648)	(313)	(1,763)	(863)
Equity in losses of real estate ventures		(210)		(461)
Other	(187)	(107)	(260)	(178)
Total other expense	(13,015)	(11,024)	(24,046)	(21,989)
INCOME (LOSS) FROM CONTINUING OPERATIONS	2,576	(3,818)	1,736	(8,140)
DISCONTINUED OPERATIONS
(Loss) Income from discontinued operations	(8)	967	176	2,031
Gain on disposition of discontinued operations		6,206	228	6,206
Total discontinued operations	(8)	7,173	404	8,237
NET INCOME	2,568	3,355	2,140	97
NET (INCOME) LOSS ATTRIBUTABLE TO NONCONTROLLING INTERESTS
Noncontrolling interests in the Operating Partnership	(18)	(38)	17	111
Noncontrolling interest in subsidiaries		(774)	1	(1,508)
NET INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY	2,550	2,543	2,158	(1,300)
Distribution to Preferred Shares	(1,502)	(1,502)	(3,004)	(3,004)
NET INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY'S COMMON SHAREHOLDERS	1,048	1,041	(846)	(4,304)
Basic earnings (loss) per share from continuing operations attributable to common shareholders (in dollars per share)	$ 0.01	$ (0.05)	$ (0.01)	$ (0.10)
Basic earnings per share from discontinued operations attributable to common shareholders (in dollars per share)		$ 0.06		$ 0.06
Basic earnings (loss) per share attributable to common shareholders (in dollars per share)	$ 0.01	$ 0.01	$ (0.01)	$ (0.04)
Diluted earnings (loss) per share from continuing operations attributable to common shareholders (in dollars per share)	$ 0.01	$ (0.05)	$ (0.01)	$ (0.10)
Diluted earnings per share from discontinued operations attributable to common shareholders (in dollars per share)		$ 0.06		$ 0.06
Diluted earnings (loss) per share attributable to common shareholders (in dollars per share)	$ 0.01	$ 0.01	$ (0.01)	$ (0.04)
Weighted-average basic shares outstanding (in shares)	133,677	122,599	133,316	122,433
Weighted-average diluted shares outstanding (in shares)	136,329	122,599	133,316	122,433
AMOUNTS ATTRIBUTABLE TO THE COMPANY'S COMMON SHAREHOLDERS:
Income (loss) from continuing operations	1,056	(5,960)	(1,243)	(12,343)
Total discontinued operations	(8)	7,001	397	8,039
Net income (loss)	$ 1,048	$ 1,041	$ (846)	$ (4,304)

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STORAGE FACILITIES

6 Months Ended

Jun. 30, 2013

STORAGE FACILITIES

STORAGE FACILITIES

3.  STORAGE FACILITIES

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

	June 30,		December 31,
	2013		2012
	(in thousands)
Land	$	470,598	$	462,626
Buildings and improvements	1,888,942		1,828,388
Equipment	151,836		143,836
Construction in progress	25,216		8,172
Storage facilities	2,536,592		2,443,022
Less: Accumulated depreciation	(386,924)		(353,315)
Storage facilities, net	$	2,149,668	$	2,089,707

The following table summarizes the Company’s acquisition and disposition activity from January 1, 2012 through June 30, 2013:

Facility/Portfolio	Location	Transaction Date	Number of Facilities	Purchase / Sales Price (in thousands)
2013 Acquisitions:
Gilbert Asset	Gilbert, AZ	March 2013	1	$	6,900
Evanston Asset	Evanston, IL	May 2013	1	8,300
Delray Beach Asset	Delray Beach, FL	May 2013	1	7,150
Miramar Asset	Miramar, FL	June 2013	1	9,000
Stoneham Asset	Stoneham, MA	June 2013	1	10,600
Maryland/New Jersey Assets	Multiple locations in MD and NJ	June 2013	5	52,400
			10	$	94,350
2013 Dispositions:
Texas/Indiana Assets	Multiple locations in TX and IN	March 2013	5	$	11,400
2012 Acquisitions:
Houston Asset	Houston, TX	February 2012	1	$	5,100
Dunwoody Asset	Dunwoody, GA	February 2012	1	6,900
Mansfield Asset	Mansfield, TX	June 2012	1	4,970
Texas Assets	Multiple locations in TX	July 2012	4	18,150
Allen Asset	Allen, TX	July 2012	1	5,130
Norwalk Asset	Norwalk, CT	July 2012	1	5,000
Storage Deluxe Assets	Multiple locations in NY and CT	February/ April/ August 2012	6	201,910
Eisenhower Asset	Alexandria, VA	August 2012	1	19,750
New Jersey Assets	Multiple locations in NJ	August 2012	2	10,750
Georgia/ Florida Assets	Multiple locations in GA and FL	August 2012	3	13,370
Peachtree Asset	Peachtree City, GA	August 2012	1	3,100
HSREV Assets	Multiple locations in PA, NY, NJ, VA and FL	September 2012	9	102,000
Leetsdale Asset	Denver, CO	September 2012	1	10,600
Orlando/ West Palm Beach Assets	Multiple locations in FL	November 2012	2	13,010
Exton/ Cherry Hill Assets	Multiple locations in NJ and PA	December 2012	2	7,800
Carrollton Asset	Carrollton, TX	December 2012	1	4,800
			37	$	432,340
2012 Dispositions:
Michigan Assets	Multiple locations in MI	June 2012	3	$	6,362
Gulf Coast Assets	Multiple locations in LA, AL and MS	June 2012	5	16,800
New Mexico Assets	Multiple locations in NM	August 2012	6	7,500
San Bernardino Asset	San Bernardino, CA	August 2012	1	5,000
Florida/ Tennessee Assets	Multiple locations in FL and TN	November 2012	3	6,550
Ohio Assets	Multiple locations in OH	November 2012	8	17,750
			26	$	59,962

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STORAGE FACILITIES (Tables)

6 Months Ended

Jun. 30, 2013

STORAGE FACILITIES

Summary of real estate assets

	June 30,		December 31,
	2013		2012
	(in thousands)
Land	$	470,598	$	462,626
Buildings and improvements	1,888,942		1,828,388
Equipment	151,836		143,836
Construction in progress	25,216		8,172
Storage facilities	2,536,592		2,443,022
Less: Accumulated depreciation	(386,924)		(353,315)
Storage facilities, net	$	2,149,668	$	2,089,707

Schedule of acquisitions, dispositions and consolidations of real estate assets

Facility/Portfolio	Location	Transaction Date	Number of Facilities	Purchase / Sales Price (in thousands)
2013 Acquisitions:
Gilbert Asset	Gilbert, AZ	March 2013	1	$	6,900
Evanston Asset	Evanston, IL	May 2013	1	8,300
Delray Beach Asset	Delray Beach, FL	May 2013	1	7,150
Miramar Asset	Miramar, FL	June 2013	1	9,000
Stoneham Asset	Stoneham, MA	June 2013	1	10,600
Maryland/New Jersey Assets	Multiple locations in MD and NJ	June 2013	5	52,400
			10	$	94,350
2013 Dispositions:
Texas/Indiana Assets	Multiple locations in TX and IN	March 2013	5	$	11,400
2012 Acquisitions:
Houston Asset	Houston, TX	February 2012	1	$	5,100
Dunwoody Asset	Dunwoody, GA	February 2012	1	6,900
Mansfield Asset	Mansfield, TX	June 2012	1	4,970
Texas Assets	Multiple locations in TX	July 2012	4	18,150
Allen Asset	Allen, TX	July 2012	1	5,130
Norwalk Asset	Norwalk, CT	July 2012	1	5,000
Storage Deluxe Assets	Multiple locations in NY and CT	February/ April/ August 2012	6	201,910
Eisenhower Asset	Alexandria, VA	August 2012	1	19,750
New Jersey Assets	Multiple locations in NJ	August 2012	2	10,750
Georgia/ Florida Assets	Multiple locations in GA and FL	August 2012	3	13,370
Peachtree Asset	Peachtree City, GA	August 2012	1	3,100
HSREV Assets	Multiple locations in PA, NY, NJ, VA and FL	September 2012	9	102,000
Leetsdale Asset	Denver, CO	September 2012	1	10,600
Orlando/ West Palm Beach Assets	Multiple locations in FL	November 2012	2	13,010
Exton/ Cherry Hill Assets	Multiple locations in NJ and PA	December 2012	2	7,800
Carrollton Asset	Carrollton, TX	December 2012	1	4,800
			37	$	432,340
2012 Dispositions:
Michigan Assets	Multiple locations in MI	June 2012	3	$	6,362
Gulf Coast Assets	Multiple locations in LA, AL and MS	June 2012	5	16,800
New Mexico Assets	Multiple locations in NM	August 2012	6	7,500
San Bernardino Asset	San Bernardino, CA	August 2012	1	5,000
Florida/ Tennessee Assets	Multiple locations in FL and TN	November 2012	3	6,550
Ohio Assets	Multiple locations in OH	November 2012	8	17,750
			26	$	59,962

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CONSOLIDATED STATEMENTS OF CASH FLOWS (LP cube) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Operating Activities
Net income	$ 2,140	$ 97
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization	60,103	55,297
Gain on disposition of discontinued operations	(228)	(6,206)
Equity compensation expense	2,567	1,638
Accretion of fair market value adjustment of debt	(488)	(242)
Changes in other operating accounts:
Other assets	(2,133)	(127)
Restricted cash	1,062	3,294
Accounts payable and accrued expenses	1,099	(2,418)
Other liabilities	1,189	801
Net cash provided by operating activities	65,311	52,595
Investing Activities
Acquisitions of storage facilities	(93,743)	(86,778)
Additions and improvements to storage facilities	(9,399)	(9,187)
Development costs	(17,557)
Cash distributed from real estate venture		633
Proceeds from sales of properties, net	10,993	22,662
Proceeds from notes receivable	5,192
Change in restricted cash	468	1,789
Net cash used in investing activities	(104,046)	(70,881)
Proceeds from:
Unsecured senior notes, net of discounts		249,638
Revolving credit facility	229,200	246,300
Unsecured term loans		100,000
Principal payments on:
Revolving credit facility	(164,200)	(246,300)
Mortgage loans and notes payable	(13,352)	(175,963)
Loan procurement costs	(2,141)	(2,019)
Settlement of hedge transaction		(195)
Distributions paid to common unitholders	(29,258)	(19,643)
Distributions paid to preferred unitholders	(3,004)	(2,720)
Distributions paid to noncontrolling interests in subsidiaries		(2,308)
Net cash provided by financing activities	38,261	147,013
Change in cash and cash equivalents	(474)	128,727
Cash and cash equivalents at beginning of period	4,495	9,069
Cash and cash equivalents at end of period	4,021	137,796
Supplemental Cash Flow and Noncash Information
Cash paid for interest, net of interest capitalized	22,522	18,030
Supplemental disclosure of noncash activities:
Derivative valuation adjustment	8,371	(5,908)
Foreign currency translation adjustment	(231)	19
Mortgage loan assumption - acquisition of storage facility		62,467
CubeSmart, L.P. and Subsidiaries
Operating Activities
Net income	2,140	97
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization	60,103	55,297
Gain on disposition of discontinued operations	(228)	(6,206)
Equity compensation expense	2,567	1,638
Accretion of fair market value adjustment of debt	(488)	(242)
Equity in loss of real estate venture		461
Changes in other operating accounts:
Other assets	(2,133)	(127)
Restricted cash	1,062	3,294
Accounts payable and accrued expenses	1,099	(2,418)
Other liabilities	1,189	801
Net cash provided by operating activities	65,311	52,595
Investing Activities
Acquisitions of storage facilities	(93,743)	(86,778)
Additions and improvements to storage facilities	(9,399)	(9,187)
Development costs	(17,557)
Cash distributed from real estate venture		633
Proceeds from sales of properties, net	10,993	22,662
Proceeds from notes receivable	5,192
Change in restricted cash	468	1,789
Net cash used in investing activities	(104,046)	(70,881)
Proceeds from:
Unsecured senior notes, net of discounts		249,638
Revolving credit facility	229,200	246,300
Unsecured term loans		100,000
Principal payments on:
Revolving credit facility	(164,200)	(246,300)
Mortgage loans and notes payable	(13,352)	(175,963)
Loan procurement costs	(2,141)	(2,019)
Settlement of hedge transaction		(195)
Proceeds from issuance of common OP units	20,388
Exercise of OP unit options	1,278	972
Distributions paid to common unitholders	(29,908)	(20,392)
Distributions paid to preferred unitholders	(3,004)	(2,720)
Distributions paid to noncontrolling interests in subsidiaries		(2,308)
Net cash provided by financing activities	38,261	147,013
Change in cash and cash equivalents	(474)	128,727
Cash and cash equivalents at beginning of period	4,495	9,069
Cash and cash equivalents at end of period	4,021	137,796
Supplemental Cash Flow and Noncash Information
Cash paid for interest, net of interest capitalized	22,522	18,030
Supplemental disclosure of noncash activities:
Derivative valuation adjustment	8,371	(5,908)
Foreign currency translation adjustment	(231)	19
Mortgage loan assumption - acquisition of storage facility		$ 62,467

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NONCONTROLLING INTERESTS

6 Months Ended

Jun. 30, 2013

NONCONTROLLING INTERESTS

NONCONTROLLING INTERESTS

11.  NONCONTROLLING INTERESTS

Variable Interests in Consolidated Real Estate Joint Ventures

USIFB, LLP (“the Venture”) was formed to own, operate, acquire and develop self-storage facilities in England.  The Company owns a 97% interest in the Venture through a wholly-owned subsidiary and the Venture commenced operations at two facilities in London, England during 2008.  The Company determined that the Venture is a variable interest entity, and that the Company is the primary beneficiary.  Accordingly, the Company consolidates the assets, liabilities and results of operations of the Venture.  At June 30, 2013, the Venture had total assets of $11.2 million and total liabilities of $7.1 million, including two mortgage loans totaling $6.4 million secured by storage facilities with a net book value of $10.8 million.  At June 30, 2013, the Venture’s creditors had no recourse to the general credit of the Company.

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 1.7% and 2.4% of the outstanding OP Units as of June 30, 2013 and December 31, 2012, respectively, 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 facilities. 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 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 will record 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.

At June 30, 2013 and December 31, 2012, 2,280,730 and 3,293,730 OP units, respectively, were outstanding. 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 10 trading days ending prior to CubeSmart’s receipt of the redemption notice for the applicable Unit.  Based on the Company’s evaluation of the redemption value of the redeemable noncontrolling interest, the Company has reflected these interests at their redemption value at June 30, 2013 and December 31, 2012, 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 $3.4 million and $19.5 million at June 30, 2013 and December 31, 2012, respectively.

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RELATED PARTY TRANSACTIONS (Details 2) (Operating Partnership, USD $) In Thousands, unless otherwise specified	Jun. 30, 2013
Due from Subtenant Amount
2013	$ 157
2014	315
Total	472
Lease agreements with related parties
Due to Related Party Amount
2013	250
2014	499
Total	$ 749

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UNSECURED SENIOR NOTES (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended	1 Months Ended	12 Months Ended
	Dec. 31, 2012 Maximum	Jun. 30, 2012 Senior notes 4.80% due July 15, 2022	Dec. 31, 2012 Senior notes 4.80% due July 15, 2022 Maximum	Dec. 31, 2012 Senior notes 4.80% due July 15, 2022 Minimum
Senior Notes
Senior notes, principal amount		$ 250
Senior notes, interest rate (as a percent)		4.80%
Consolidated leverage ratio			0.60
Consolidated interest coverage ratio				1.50
Secured debt leverage ratio	0.40
Financial and customary covenant, minimum unencumbered asset (as a percent)				150.00%

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ACCUMULATED OTHER COMPREHENSIVE LOSS (Tables)

6 Months Ended

Jun. 30, 2013

ACCUMULATED OTHER COMPREHENSIVE LOSS

Summary of changes in accumulated other comprehensive loss by component

The following table summarizes the changes in accumulated other comprehensive loss by component for the six months ended June 30, 2013 (dollars in thousands):

	Unrealized loss on  interest rate swap			Unrealized loss on foreign currency translation		Total
Balance at December 31, 2012	$	(18,973)		$	(823)	$	(19,796)
Other comprehensive gain (loss) before reclassifications	5,196			(225)		4,971
Amounts reclassified from accumulated other comprehensive loss	3,031		(a)	-		3,031
Net current-period other comprehensive income (loss)	8,227			(225)		8,002
Balance at June 30, 2013	$	(10,746)		$	(1,048)	$	(11,794)

(a) See note 9 for additional information about the effects of the amounts reclassified.

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MORTGAGE LOANS AND NOTES PAYABLE (Tables)

6 Months Ended

Jun. 30, 2013

MORTGAGE LOANS AND NOTES PAYABLE

Summary of mortgage loans and notes payable

	Carrying Value as of:
	June 30,		December 31,		Effective	Maturity
Mortgage Loans and Notes Payable	2013		2012		Interest Rate	Date
	(dollars in thousands)
YSI 7	$	-	$	2,962	6.50%	Jun-13
YSI 8	-		1,692		6.50%	Jun-13
YSI 9	-		1,862		6.50%	Jun-13
YSI 17	-		3,846		6.32%	Jul-13
YSI 27	451		461		5.59%	Nov-13
YSI 30	6,616		6,765		5.59%	Nov-13
USIFB	6,437		7,221		3.57%	Dec-13
YSI 11	2,236		2,276		5.87%	Jan-14
YSI 5	2,949		3,001		5.25%	Jan-14
YSI 28	1,435		1,460		5.59%	Mar-14
YSI 10	3,884		3,928		5.87%	Jan-15
YSI 15	1,758		1,784		6.41%	Jan-15
YSI 52	4,636		4,721		5.63%	Jan-15
YSI 58	8,826		8,974		2.97%	Jan-15
YSI 29	12,957		13,060		3.69%	Aug-15
YSI 20	57,465		58,524		5.97%	Nov-15
YSI 59	9,511		9,603		4.82%	Mar-16
YSI 60	3,698		3,725		5.04%	Aug-16
YSI 51	7,272		7,325		5.15%	Sep-16
YSI 35	4,324		4,373		6.90%	Jul-19	(a)
YSI 33	10,811		10,930		6.42%	Jul-19
YSI 26	9,024		9,102		4.56%	Nov-20
YSI 57	3,168		3,195		4.61%	Nov-20
YSI 55	24,325		24,502		4.85%	Jun-21
YSI 24	28,832		29,141		4.64%	Jun-21
Unamortized fair value adjustment	3,838		4,326
Total mortgage loans and notes payable	$	214,453	$	228,759

(a) This borrowing has a fixed interest rate for the first five years of the term, and the rate then resets and remains constant over the final five years of the loan term.

Schedule of the future principal payment requirements on the outstanding mortgage loans and notes payable

The following table represents the future principal payment requirements on the outstanding mortgage loans and notes payable at June 30, 2013 (in thousands):

2013	$	16,071
2014	11,633
2015	86,978
2016	21,342
2017	1,915
2018 and thereafter	72,676
Total mortgage payments	210,615
Plus: Unamortized fair value adjustment	3,838
Total mortgage indebtedness	$	214,453

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NONCONTROLLING INTERESTS (Details 2) (USD $) In Thousands, except Share data, unless otherwise specified	6 Months Ended		12 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Dec. 31, 2012
Operating Partnership Ownership
Increase to OP units owned by third parties and a corresponding decrease to capital	$ 3,436	$ 6,072
Operating Partnership
Operating Partnership Ownership
OP Units outstanding which are not owned by the general partner (as a percent)	1.70%		2.40%
OP units outstanding (in shares)	2,280,730		3,293,730
Number of trading days used to determine average of the closing prices of the common shares	10 days
Increase to OP units owned by third parties and a corresponding decrease to capital	$ 3,436	$ 6,072	$ 19,500

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Net cash provided by (used in) operating activities	$ 65,311	$ 52,595
Net cash provided by (used in) investing activities	(104,046)	(70,881)
Prior period correction
Net cash provided by (used in) operating activities		(6,000)
Net cash provided by (used in) investing activities		$ 6,000

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MORTGAGE LOANS AND NOTES PAYABLE (Details) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2013	Dec. 31, 2012
Mortgage loans and notes payable
Carrying value	$ 210,615
Unamortized fair value adjustment	3,838	4,326
Total mortgage loans and notes payable	214,453	228,759
Fixed interest rate period	5 years
Constant interest rate period	5 years
YSI 7
Mortgage loans and notes payable
Carrying value		2,962
Effective interest rate (as a percent)	6.50%
YSI 8
Mortgage loans and notes payable
Carrying value		1,692
Effective interest rate (as a percent)	6.50%
YSI 9
Mortgage loans and notes payable
Carrying value		1,862
Effective interest rate (as a percent)	6.50%
YSI 17
Mortgage loans and notes payable
Carrying value		3,846
Effective interest rate (as a percent)	6.32%
YSI 27
Mortgage loans and notes payable
Carrying value	451	461
Effective interest rate (as a percent)	5.59%
YSI 30
Mortgage loans and notes payable
Carrying value	6,616	6,765
Effective interest rate (as a percent)	5.59%
USIFB
Mortgage loans and notes payable
Carrying value	6,437	7,221
Effective interest rate (as a percent)	3.57%
YSI 11
Mortgage loans and notes payable
Carrying value	2,236	2,276
Effective interest rate (as a percent)	5.87%
YSI 5
Mortgage loans and notes payable
Carrying value	2,949	3,001
Effective interest rate (as a percent)	5.25%
YSI 28
Mortgage loans and notes payable
Carrying value	1,435	1,460
Effective interest rate (as a percent)	5.59%
YSI 10
Mortgage loans and notes payable
Carrying value	3,884	3,928
Effective interest rate (as a percent)	5.87%
YSI 15
Mortgage loans and notes payable
Carrying value	1,758	1,784
Effective interest rate (as a percent)	6.41%
YSI 52
Mortgage loans and notes payable
Carrying value	4,636	4,721
Effective interest rate (as a percent)	5.63%
YSI 58
Mortgage loans and notes payable
Carrying value	8,826	8,974
Effective interest rate (as a percent)	2.97%
YSI 29
Mortgage loans and notes payable
Carrying value	12,957	13,060
Effective interest rate (as a percent)	3.69%
YSI 20
Mortgage loans and notes payable
Carrying value	57,465	58,524
Effective interest rate (as a percent)	5.97%
YSI 59
Mortgage loans and notes payable
Carrying value	9,511	9,603
Effective interest rate (as a percent)	4.82%
YSI 60
Mortgage loans and notes payable
Carrying value	3,698	3,725
Effective interest rate (as a percent)	5.04%
YSI 51
Mortgage loans and notes payable
Carrying value	7,272	7,325
Effective interest rate (as a percent)	5.15%
YSI 35
Mortgage loans and notes payable
Carrying value	4,324	4,373
Effective interest rate (as a percent)	6.90%
YSI 33
Mortgage loans and notes payable
Carrying value	10,811	10,930
Effective interest rate (as a percent)	6.42%
YSI 26
Mortgage loans and notes payable
Carrying value	9,024	9,102
Effective interest rate (as a percent)	4.56%
YSI 57
Mortgage loans and notes payable
Carrying value	3,168	3,195
Effective interest rate (as a percent)	4.61%
YSI 55
Mortgage loans and notes payable
Carrying value	24,325	24,502
Effective interest rate (as a percent)	4.85%
YSI 24
Mortgage loans and notes payable
Carrying value	$ 28,832	$ 29,141
Effective interest rate (as a percent)	4.64%

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DISCONTINUED OPERATIONS (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2013 property	Jun. 30, 2012 property	Jun. 30, 2013 property	Jun. 30, 2012 property	Dec. 31, 2012 property
DISCONTINUED OPERATIONS
Number of properties related to discontinued operations	5	5	5	5	26
REVENUES
Rental income	$ 72,231	$ 59,424	$ 141,849	$ 116,741
Other property related income	8,854	6,741	16,548	12,517
Total revenues	82,302	67,268	160,759	131,381
OPERATING EXPENSES
Property operating expenses	29,955	26,707	60,776	52,650
Depreciation and amortization	29,241	27,077	59,073	52,160
Total operating expenses	66,711	60,062	134,977	117,532
OPERATING INCOME	15,591	7,206	25,782	13,849
(Loss) Income from discontinued operations	(8)	967	176	2,031
Gain on disposition of discontinued operations		6,206	228	6,206
Total discontinued operations	(8)	7,173	404	8,237
Discontinued operations
REVENUES
Rental income		2,706	389	5,497
Other property related income	5	347	78	643
Total revenues	5	3,053	467	6,140
OPERATING EXPENSES
Property operating expenses	13	1,469	234	2,812
Depreciation and amortization		617	57	1,297
Total operating expenses	13	2,086	291	4,109
OPERATING INCOME	(8)	967	176	2,031
(Loss) Income from discontinued operations	(8)	967	176	2,031
Gain on disposition of discontinued operations		6,206	228	6,206
Total discontinued operations	$ (8)	$ 7,173	$ 404	$ 8,237

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DISCONTINUED OPERATIONS (Tables)

6 Months Ended

Jun. 30, 2013

DISCONTINUED OPERATIONS

Summary of information about revenue and expense related to properties classified as discontinued operations

The following table summarizes the revenue and expense information for the period the Company owned the properties classified as discontinued operations during the three and six months ended June 30, 2013 and 2012 (in thousands):

	Three months ended June 30,				Six months ended June 30,
	2013		2012		2013		2012
REVENUES
Rental income	$	-	$	2,706	$	389	$	5,497
Other property related income	5		347		78		643
Total revenues	5		3,053		467		6,140
OPERATING EXPENSES
Property operating expenses	13		1,469		234		2,812
Depreciation and amortization	-		617		57		1,297
Total operating expenses	13		2,086		291		4,109
OPERATING (LOSS) INCOME	(8)		967		176		2,031
(Loss) Income from discontinued operations	(8)		967		176		2,031
Gain on disposition of discontinued operations	-		6,206		228		6,206
(Loss) Income from discontinued operations	$	(8)	$	7,173	$	404	$	8,237

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RISK MANAGEMENT AND USE OF FINANCIAL INSTRUMENTS (Details) (USD $)	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2013 Designated Cash flow	Dec. 31, 2012 Designated Cash flow	Jun. 30, 2013 Designated Cash flow Hedge Product, Swap one	Dec. 31, 2012 Designated Cash flow Hedge Product, Swap one	Jun. 30, 2013 Designated Cash flow Hedge Product, Swap two	Dec. 31, 2012 Designated Cash flow Hedge Product, Swap two	Jun. 30, 2013 Designated Cash flow Hedge Product, Swap three	Dec. 31, 2012 Designated Cash flow Hedge Product, Swap three	Jun. 30, 2013 Designated Cash flow Hedge Product, Swap four	Dec. 31, 2012 Designated Cash flow Hedge Product, Swap four	Jun. 30, 2013 Designated Cash flow Hedge Product, Swap five	Dec. 31, 2012 Designated Cash flow Hedge Product, Swap five	Jun. 30, 2013 Designated Cash flow Hedge Product, Swap six	Dec. 31, 2012 Designated Cash flow Hedge Product, Swap six	Jun. 30, 2013 Designated Cash flow Hedge Product, Swap seven	Dec. 31, 2012 Designated Cash flow Hedge Product, Swap seven	Jun. 30, 2013 Designated Cash flow Hedge Product, Swap eight	Dec. 31, 2012 Designated Cash flow Hedge Product, Swap eight	Jun. 30, 2013 Designated Cash flow Hedge Product, Swap nine	Dec. 31, 2012 Designated Cash flow Hedge Product, Swap nine	Jun. 30, 2013 Designated Cash flow Hedge Product, Swap ten	Dec. 31, 2012 Designated Cash flow Hedge Product, Swap ten
Derivative financial instruments
Notional Amount	$ 400,000,000			$ 40,000,000		$ 40,000,000		$ 20,000,000		$ 75,000,000		$ 50,000,000		$ 50,000,000		$ 25,000,000		$ 40,000,000		$ 40,000,000		$ 20,000,000
Swap, Strike rate (as a percent)				1.8025%		1.8025%		1.8025%		1.336%		1.336%		1.336%		1.3375%		2.459%		2.4725%		2.475%
Fair Value		(11,294,000)	(19,665,000)	(1,347,000)	(1,873,000)	(1,348,000)	(1,875,000)	(673,000)	(937,000)	(1,036,000)	(2,378,000)	(681,000)	(1,583,000)	(684,000)	(1,583,000)	(350,000)	(799,000)	(2,053,000)	(3,433,000)	(2,082,000)	(3,470,000)	(1,040,000)	(1,734,000)
Maximum number of days outstanding to have the option to borrow at the LIBOR	30 days
Unrealized losses reclassified from accumulated other comprehensive loss	$ 3,100,000

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REVOLVING CREDIT FACILITY AND UNSECURED TERM LOANS (Tables)

6 Months Ended

Jun. 30, 2013

REVOLVING CREDIT FACILITY AND UNSECURED TERM LOANS

Schedule of amendment of the term loan facility

		Term Loan Facility Prior to Amendment		Term Loan Facility As Amended
	Amount	Maturity Date	LIBOR Spread	Maturity Date	LIBOR Spread
Term Loan A	$100 million	June 2016	1.85%	June 2018	1.50%
Term Loan B	$100 million	June 2018	2.00%	June 2018	2.00%

Schedule of amendment of the credit facility

		Credit Facility Prior to Amendment		Credit Facility As Amended
	Amount	Maturity Date	LIBOR Spread	Maturity Date	LIBOR Spread
Revolver	$300 million	December 2015	1.80%	June 2017	1.60%
Term Loan C	$100 million	December 2014	1.75%	December 2014	1.50%
Term Loan D	$200 million	March 2017	1.75%	January 2019	1.50%

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CONSOLIDATED STATEMENTS OF EQUITY (USD $) In Thousands, unless otherwise specified	Total	Noncontrolling Interests in the Operating Partnership	Total Shareholders' Equity	Common Shares	Preferred Shares	Additional Paid in Capital	Accumulated Other Comprehensive (Loss) Income	Accumulated Deficit	Noncontrolling Interest in Subsidiaries
Balance of Noncontrolling Interests in the Operating Partnership at Dec. 31, 2011	$ 49,732	$ 49,732
Balance at Dec. 31, 2011	995,322		955,913	1,221	31	1,309,505	(12,831)	(342,013)	39,409
Balance (in shares) at Dec. 31, 2011				122,059	3,100
Increase (Decrease) in Stockholders' Equity
Issuance of restricted shares	2		2	2
Issuance of restricted shares (in shares)				238
Conversion from units to shares	3,313	(3,313)	3,313	3		3,310
Conversion from units to shares (in shares)				265
Exercise of stock options	972		972	1		971
Exercise of stock options (in shares)				123
Amortization of restricted shares	1,032		1,032			1,032
Share compensation expense	606		606			606
Adjustment for noncontrolling interest in the Operating Partnership	(6,072)	6,072	(6,072)					(6,072)
Net income (loss)	(4,304)	(111)	(1,300)					(1,300)	1,508
Net (loss) income, including temporary equity	208
Other comprehensive gain (loss):
Unrealized gain (loss) on interest rate swap	(5,897)	(206)	(5,897)				(5,897)
Unrealized gain (loss) on foreign currency translation	19		18				18		1
Preferred distributions	(3,004)		(3,004)					(3,004)
Common distributions	(22,002)	(724)	(19,693)					(19,693)	(2,309)
Balance of Noncontrolling Interests in the Operating Partnership at Jun. 30, 2012	51,450	51,450
Balance at Jun. 30, 2012	964,499		925,890	1,227	31	1,315,424	(18,710)	(372,082)	38,609
Balance (in shares) at Jun. 30, 2012				122,685	3,100
Balance of Noncontrolling Interests in the Operating Partnership at Dec. 31, 2012	47,990	47,990
Balance at Dec. 31, 2012	989,909		989,791	1,318	31	1,418,463	(19,796)	(410,225)	118
Balance (in shares) at Dec. 31, 2012				131,795	3,100
Increase (Decrease) in Stockholders' Equity
Issuance of common shares	20,386		20,386	12		20,374
Issuance of common shares (in shares)				1,225
Issuance of restricted shares	2		2	2
Issuance of restricted shares (in shares)				215
Conversion from units to shares	14,601	(14,601)	14,601	10		14,591
Conversion from units to shares (in shares)				1,013
Exercise of stock options	1,278		1,278	2		1,276
Exercise of stock options (in shares)				182
Amortization of restricted shares	2,131		2,131			2,131
Share compensation expense	436		436			436
Adjustment for noncontrolling interest in the Operating Partnership	(3,436)	3,436	(3,436)					(3,436)
Net income (loss)	(846)	(17)	2,158					2,158	(1)
Net (loss) income, including temporary equity	2,157
Other comprehensive gain (loss):
Unrealized gain (loss) on interest rate swap	8,227	144	8,227				8,227
Unrealized gain (loss) on foreign currency translation	(227)	(4)	(225)				(225)		(2)
Preferred distributions	(3,004)		(3,004)					(3,004)
Common distributions	(29,537)	(502)	(29,537)					(29,537)
Balance of Noncontrolling Interests in the Operating Partnership at Jun. 30, 2013	36,446	36,446
Balance at Jun. 30, 2013	$ 1,002,923		$ 1,002,808	$ 1,344	$ 31	$ 1,457,271	$ (11,794)	$ (444,044)	$ 115
Balance (in shares) at Jun. 30, 2013				134,430	3,100

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ORGANIZATION AND NATURE OF OPERATIONS

6 Months Ended

Jun. 30, 2013

ORGANIZATION AND NATURE OF OPERATIONS

ORGANIZATION AND NATURE OF OPERATIONS

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.   The Company’s self-storage facilities (collectively, the “Properties”) are located in 21 states throughout the United States and the District of Columbia and are presented under one reportable segment: the Company owns, operates, develops, manages and acquires self-storage facilities.

As of June 30, 2013, the Parent Company owned approximately 98.3% 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 us in exchange for OP Units.  Under the partnership agreement, these persons have the right to tender their OP Units for redemption to the Operating Partnership at any time for cash equal to the fair value of an equivalent number of common shares of the Parent Company.  In lieu of delivering cash, however, the Parent Company, as the Operating Partnership’s general partner, may, at its option, choose to acquire any OP Units so tendered by issuing common shares in exchange for the tendered OP Units.  If the Parent Company so chooses, its common shares will be exchanged for OP Units on a one-for-one basis.  This one-for-one exchange ratio is subject to adjustment to prevent dilution.  With each such exchange or redemption, the Parent Company’s percentage ownership in the Operating Partnership will increase.  In addition, whenever the Parent Company issues common or other classes of its shares, it contributes the net proceeds it receives from the issuance to the Operating Partnership and the Operating Partnership issues to the Parent Company an equal number of OP Units or other partnership interests having preferences and rights that mirror the preferences and rights of the shares issued.  This structure is commonly referred to as an umbrella partnership REIT or “UPREIT.”

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INVESTMENT ACTIVITY

6 Months Ended

Jun. 30, 2013

INVESTMENT ACTIVITY

INVESTMENT ACTIVITY

4.  INVESTMENT ACTIVITY

2013 Acquisitions

During the six months ended June 30, 2013, the Company acquired ten facilities located throughout the United States for an aggregate purchase price of approximately $94.4 million.  In connection with these acquisitions, the Company allocated a portion of the purchase price to the intangible value of in-place leases which aggregated $6.9 million.   The estimated life of these in-place leases is 12 months and the amortization expense that was recognized during the six months ended June 30, 2013 was approximately $0.7 million.

Development

During 2012, the Company commenced construction of 5 Old Lancaster Road located in Malvern, PA, a suburb of Philadelphia.  Upon completion, the mixed-use facility will be comprised of rentable storage space and office space for the Company’s corporate headquarters.  Construction is expected to be completed during the fourth quarter of 2013.  At June 30, 2013 and December 31, 2012, development costs for this project totaled $11.6 million and $4.7 million, respectively.  These costs are capitalized to construction in progress while the project is under development and are reflected in Storage facilities on the Company’s consolidated balance sheets.

During the second quarter of 2013, the Company entered into contracts for the construction of a storage facility located in Bronx, NY.  Construction is expected to be completed during the first quarter of 2014.  At June 30, 2013, development costs for this project totaled $11.8 million.  These costs are capitalized to construction in progress while the project is under development and are reflected in Storage facilities on the Company’s consolidated balance sheets.

2012 Acquisitions

During 2012, as part of the $560 million Storage Deluxe transaction involving 22 Class A self-storage facilities located primarily in the greater New York City area, the Company acquired the final six properties with a purchase price of approximately $201.9 million. The six properties purchased are located in New York and Connecticut.  In connection with the acquisitions, the Company allocated a portion of the purchase price to the intangible value of in-place leases which aggregated $12.3 million.  The estimated life of these in-place leases is 12 months and the amortization expense that was recognized during the six months ended June 30, 2013 was approximately $4.1 million.   In connection with the six acquired facilities, the Company assumed mortgage debt, and recorded the debt at a fair value of $93.1 million, which includes an outstanding principal balance totaling $88.9 million and a net premium of $4.2 million in addition to the face value of the assumed debt to reflect the fair values of the debt at the time of assumption.

On September 28, 2012, the Company purchased, from its joint venture partner, the remaining 50% ownership in a partnership that owned nine storage facilities in Pennsylvania, Virginia, New York, New Jersey and Florida, collectively the HSRE Venture (“HSREV”), for cash of $21.7 million. In addition, upon taking control of these assets, the Company repaid $59.3 million of mortgage loans related to the properties.  Following the purchase, the Company wholly owned the nine storage facilities which were unencumbered and had a fair value of $102 million at acquisition.  In connection with this acquisition, the Company allocated a portion of the fair value to the intangible value of in-place leases which aggregated $8.3 million. The estimated life of these in-place leases is 12 months and the amortization expense that was recognized during the six months ended June 30, 2013 was approximately $4.2 million.

During 2012, the Company acquired an additional 22 self-storage facilities located throughout the United States for an aggregate purchase price of approximately $128.4 million.  In connection with these acquisitions, the Company allocated a portion of the purchase price to the intangible value of in-place leases which aggregated $13.2 million. The estimated life of these in-place leases is 12 months and the amortization expense that was recognized during the six months ended June 30, 2013 was approximately $6.1 million.  In connection with two of the acquired facilities, the Company assumed mortgage debt, and recorded the debt at a fair value of $13.9 million, which includes an outstanding principal balance totaling $13.4 million and a net premium of $0.5 million in addition to the face value of the assumed debt to reflect the fair values of the debt at the time of assumption.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

6 Months Ended

Jun. 30, 2013

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared pursuant to the rules and regulations of the SEC regarding interim financial reporting and, in the opinion of each of the Parent Company’s and Operating Partnership’s respective management, include all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of financial position, results of operations and cash flows for each respective company for the interim periods presented in accordance with generally accepted accounting principles (“GAAP”) in the United States.  Accordingly, readers of this Quarterly Report on Form 10-Q should refer to the Parent Company’s and the Operating Partnership’s audited financial statements prepared in accordance with GAAP, and the related notes thereto, for the year ended December 31, 2012, which are included in the Parent Company’s and the Operating Partnership’s Annual Report on Form 10-K for the fiscal year ended December 31, 2012.  The results of operations for the three and six months ended June 30, 2013 and 2012 are not necessarily indicative of the results of operations to be expected for any future period or the full year.

Immaterial Correction to Prior Period Financial Statements

In the second quarter of 2013, we revised our 2012 disclosure in the consolidated statement of cash flows to reflect a decrease in both net cash provided by operating activities and net cash used in investing activities of $6.0 million. This adjustment was made after completing an analysis that determined cash paid for acquisitions of storage facilities did not properly reflect the use of earnest money deposits, paid to Storage Deluxe in 2011, when certain facilities within the portfolio were acquired in 2012. After evaluating the quantitative and qualitative effects of this error, we have concluded that the impact on the Company’s prior interim period consolidated statements of cash flows was not material.

Recent Accounting Pronouncements

In February 2013, the Financial Accounting Standards Board (“FASB”) issued an amendment to the accounting standard for the reporting of amounts reclassified out of accumulated other comprehensive income (“AOCI”).  The amendment requires entities to disclose for items reclassified out of AOCI and into net income in their entirety, the effect of the reclassification on each affected income statement line item and for AOCI items that are not reclassified in their entirety into net income, a cross reference to other required GAAP disclosures.  This amendment became effective for fiscal years and interim periods beginning after December 15, 2012.  The adoption of this guidance in 2013 did not have a material impact on the Company’s consolidated financial position or results of operations as its impact was limited to disclosure requirements (see note 8).

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MORTGAGE LOANS AND NOTES PAYABLE (Details 2) (USD $)	Jun. 30, 2013	Dec. 31, 2012
Future principal payment requirements on the outstanding mortgage loans and notes payable at year end
2013	$ 16,071,000
2014	11,633,000
2015	86,978,000
2016	21,342,000
2017	1,915,000
2018 and thereafter	72,676,000
Total mortgage payments	210,615,000
Plus: Unamortized fair value adjustment	3,838,000
Total mortgage indebtedness	214,453,000	228,759,000
Credit Facility
Mortgage loans and notes payable
Remaining borrowing capacity	$ 189,800,000

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RISK MANAGEMENT AND USE OF FINANCIAL INSTRUMENTS (Tables)

6 Months Ended

Jun. 30, 2013

RISK MANAGEMENT AND USE OF FINANCIAL INSTRUMENTS

Summary of terms and fair values of the derivative financial instruments

The following table summarizes the terms and fair values of the Company’s derivative financial instruments at June 30, 2013 and December 31, 2012, respectively (dollars in thousands):

								Fair Value
Hedge		Notional						June 30,		December 31,
Product	Hedge Type (a)	Amount		Strike		Effective Date	Maturity	2013		2012
Swap	Cash flow	$	40,000	1.8025	%	6/20/2011	6/20/2016	$	(1,347)	$	(1,873	)
Swap	Cash flow	$	40,000	1.8025	%	6/20/2011	6/20/2016	(1,348)		(1,875		)
Swap	Cash flow	$	20,000	1.8025	%	6/20/2011	6/20/2016	(673)		(937		)
Swap	Cash flow	$	75,000	1.3360	%	12/30/2011	3/31/2017	(1,036)		(2,378		)
Swap	Cash flow	$	50,000	1.3360	%	12/30/2011	3/31/2017	(681)		(1,583		)
Swap	Cash flow	$	50,000	1.3360	%	12/30/2011	3/31/2017	(684)		(1,583		)
Swap	Cash flow	$	25,000	1.3375	%	12/30/2011	3/31/2017	(350)		(799		)
Swap	Cash flow	$	40,000	2.4590	%	6/20/2011	6/20/2018	(2,053)		(3,433		)
Swap	Cash flow	$	40,000	2.4725	%	6/20/2011	6/20/2018	(2,082)		(3,470		)
Swap	Cash flow	$	20,000	2.4750	%	6/20/2011	6/20/2018	(1,040)		(1,734		)
		$	400,000					$	(11,294)	$	(19,665	)

(a) Hedging unsecured variable rate debt by fixing 30-day LIBOR.

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PRO FORMA FINANCIAL INFORMATION (Tables)

6 Months Ended

Jun. 30, 2013

PRO FORMA FINANCIAL INFORMATION

Schedule of consolidated results of operations on a pro forma basis

	Six Months Ended June 30,
	2013		2012
	(in thousands, except per share data)
Pro forma revenue	$	164,656	$	145,949
Pro forma net income (loss) from continuing operations	$	5,153	$	(7,718	)
Net income (loss) per common share from continuing operations
Basic and diluted - as reported	$	(0.01)	$	(0.10	)
Basic and diluted - as pro forma	$	0.04	$	(0.06	)

Schedule of revenue and earnings from acquisitions since the acquisition dates included in consolidated income statement

	Three months ended June 30,				Six months ended June 30,
	2013		2012		2013		2012
	(in thousands)
Total revenue	$	755	$	2,832	$	788	$	3,672
Net loss	(582)		(1,741)		(634)		(2,110)

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INVESTMENT ACTIVITY (Details) (USD $)				6 Months Ended				12 Months Ended	0 Months Ended	6 Months Ended		12 Months Ended
	Jun. 30, 2013 5 Old Lancaster Road located in Malvern, PA	Dec. 31, 2012 5 Old Lancaster Road located in Malvern, PA	Jun. 30, 2013 Bronx, NY	Jun. 30, 2013 Self-storage facilities property	Jun. 30, 2012 Self-storage facilities property	Jun. 30, 2013 Self-storage facilities 2013 Acquisitions property	Jun. 30, 2013 Self-storage facilities 2012 Self-storage facilities acquisitions	Dec. 31, 2012 Self-storage facilities 2012 Self-storage facilities acquisitions property	Sep. 28, 2012 Self-storage facilities 2012 Self-storage facilities acquisitions HSRE Venture property	Jun. 30, 2013 Self-storage facilities 2012 Self-storage facilities acquisitions HSRE Venture	Jun. 30, 2013 Self-storage facilities 2012 Self-storage facilities acquisitions Storage Deluxe assets	Dec. 31, 2012 Self-storage facilities 2012 Self-storage facilities acquisitions Storage Deluxe assets facility property
Self-storage facilities
Development costs	$ 11,600,000	$ 4,700,000	$ 11,800,000
Amount of Storage Deluxe transaction												560,000,000
Number of Self Storage Facilities												22
Number of self-storage facilities acquired (in properties)				10	37	10		22	9			6
Aggregate purchase price of acquisition				94,400,000	432,300,000	94,400,000		128,400,000				201,900,000
Intangible value of the in-place leases						6,900,000		13,200,000	8,300,000			12,300,000
Estimated life						12 months		12 months	12 months			12 months
Amortization expense						700,000	6,100,000			4,200,000	4,100,000
Assumed mortgage debt, at fair value								13,900,000				93,100,000
Outstanding principal balance of mortgage debt assumed on acquisitions								13,400,000				88,900,000
Premium on debt assumed on acquisitions								500,000				4,200,000
Acquisition of remaining interest in real estate ventures (as a percent)									50.00%
Cash paid for acquisition of remaining interest in real estate ventures									21,700,000
Amount of debt repaid									59,300,000
Fair value of storage facilities									$ 102,000,000
Number of properties, assumed mortgage								2

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CONSOLIDATED STATEMENTS OF CAPITAL (LP cube) (CubeSmart, L.P. and Subsidiaries, USD $) In Thousands, unless otherwise specified	6 Months Ended												6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013 Limited Partnership Interest of Third Parties	Jun. 30, 2012 Limited Partnership Interest of Third Parties	Jun. 30, 2013 Total Shareholders' Equity	Jun. 30, 2012 Total Shareholders' Equity	Jun. 30, 2013 Operating Partner	Jun. 30, 2012 Operating Partner	Jun. 30, 2013 Preferred Operating Partner	Dec. 31, 2012 Preferred Operating Partner	Jun. 30, 2012 Preferred Operating Partner	Dec. 31, 2011 Preferred Operating Partner	Jun. 30, 2013 Accumulated Other Comprehensive (Loss) Income	Jun. 30, 2012 Accumulated Other Comprehensive (Loss) Income	Jun. 30, 2013 Noncontrolling Interest in Subsidiaries	Jun. 30, 2012 Noncontrolling Interest in Subsidiaries
Increase (Decrease) in Partners' Capital
Balance	$ 989,909	$ 995,322			$ 989,791	$ 955,913	$ 1,009,587	$ 968,744					$ (19,796)	$ (12,831)	$ 118	$ 39,409
Balance (in units)							131,795	122,059	3,100	3,100	3,100	3,100
Balance of Noncontrolling Interests in the Operating Partnership	47,990	49,732	47,990	49,732
Issuance of common OP units	20,386				20,386		20,386
Issuance of common OP units (in units)							1,225
Issuance of restricted OP units	2	2			2	2	2	2
Issuance of restricted OP units (in units)							215	238
Conversion from OP units to shares	14,601	3,313	(14,601)	(3,313)	14,601	3,313	14,601	3,313
Conversion from OP units to shares (in units)							1,013	265
Exercise of OP unit options	1,278	972			1,278	972	1,278	972
Exercise of OP unit options (in units)							182	123
Amortization of restricted OP units	2,131	1,032			2,131	1,032	2,131	1,032
OP unit compensation expense	436	606			436	606	436	606
Adjustment for Limited Partnership interest of third parties	(3,436)	(6,072)	3,436	6,072	(3,436)	(6,072)	(3,436)	(6,072)
Net income (loss)	(846)	(4,304)	(17)	(111)	2,158	(1,300)	2,158	(1,300)							(1)	1,508
Net income (loss), including temporary equity	2,157	208
Other comprehensive gain (loss):
Unrealized gain (loss) on interest rate swap	8,227	(5,897)	144	(206)	8,227	(5,897)							8,227	(5,897)
Unrealized gain (loss) on foreign currency translation	(227)	19	(4)		(225)	18							(225)	18	(2)	1
Preferred OP unit distributions	(3,004)	(3,004)			(3,004)	(3,004)	(3,004)	(3,004)
Common OP unit distributions	(29,537)	(22,002)	(502)	(724)	(29,537)	(19,693)	(29,537)	(19,693)								(2,309)
Balance	1,002,923	964,499			1,002,808	925,890	1,014,602	944,600					(11,794)	(18,710)	115	38,609
Balance (in units)							134,430	122,685	3,100	3,100	3,100	3,100
Balance of Noncontrolling Interests in the Operating Partnership	$ 36,446	$ 51,450	$ 36,446	$ 51,450

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PRO FORMA FINANCIAL INFORMATION (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Consolidated results of operations on a pro forma basis
Pro forma revenue			$ 164,656	$ 145,949
Pro forma income (loss) from continuing operations			5,153	(7,718)
Net income (loss) per common share from continuing operations
Basic and diluted - as reported (in dollars per share)			$ (0.01)	$ (0.10)
Basic and diluted - as pro forma (in dollars per share)			$ 0.04	$ (0.06)
Summary of the amounts of revenue and earnings of the 2012 and 2011 acquisitions since the acquisition dates
Total revenue	755	2,832	788	3,672
Net loss	(582)	(1,741)	(634)	(2,110)
Self-storage facilities
Self-storage facilities
Number of self-storage facilities acquired (in properties)			10	37
Aggregate purchase price of acquisition	$ 94,400	$ 432,300	$ 94,400	$ 432,300

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NONCONTROLLING INTERESTS (Details) (USIFB, LLP, USD $) In Millions, unless otherwise specified	6 Months Ended	12 Months Ended
	Jun. 30, 2013 mortgageloan	Dec. 31, 2008 property
USIFB, LLP
Variable Interests in Consolidated Real Estate Joint Ventures
Ownership interest held by the entity (as a percent)		97.00%
Number of self-storage facilities owned and operated		2
Total assets	$ 11.2
Total liabilities	7.1
Number of mortgage loans	2
Carrying amount of mortgage loans	6.4
Storage facilities, net	$ 10.8

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CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)	6 Months Ended	12 Months Ended
	Jun. 30, 2013	Dec. 31, 2012
CONSOLIDATED BALANCE SHEETS
Series A Preferred shares, percentage	7.75%	7.75%
Series A Preferred shares, par value (in dollars per share)	$ 0.01	$ 0.01
Series A Preferred shares, shares authorized	3,220,000	3,220,000
Series A Preferred shares, shares issued	3,100,000	3,100,000
Series A Preferred shares, shares outstanding	3,100,000	3,100,000
Common shares, par value (in dollars per share)	$ 0.01	$ 0.01
Common shares, shares authorized	200,000,000	200,000,000
Common shares, shares issued	134,430,071	131,794,547
Common shares, shares outstanding	134,430,071	131,794,547

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MORTGAGE LOANS AND NOTES PAYABLE

6 Months Ended

Jun. 30, 2013

MORTGAGE LOANS AND NOTES PAYABLE

MORTGAGE LOANS AND NOTES PAYABLE

7.  MORTGAGE LOANS AND NOTES PAYABLE

The Company’s mortgage loans and notes payable are summarized as follows:

	Carrying Value as of:
	June 30,		December 31,		Effective	Maturity
Mortgage Loans and Notes Payable	2013		2012		Interest Rate	Date
	(dollars in thousands)
YSI 7	$	-	$	2,962	6.50%	Jun-13
YSI 8	-		1,692		6.50%	Jun-13
YSI 9	-		1,862		6.50%	Jun-13
YSI 17	-		3,846		6.32%	Jul-13
YSI 27	451		461		5.59%	Nov-13
YSI 30	6,616		6,765		5.59%	Nov-13
USIFB	6,437		7,221		3.57%	Dec-13
YSI 11	2,236		2,276		5.87%	Jan-14
YSI 5	2,949		3,001		5.25%	Jan-14
YSI 28	1,435		1,460		5.59%	Mar-14
YSI 10	3,884		3,928		5.87%	Jan-15
YSI 15	1,758		1,784		6.41%	Jan-15
YSI 52	4,636		4,721		5.63%	Jan-15
YSI 58	8,826		8,974		2.97%	Jan-15
YSI 29	12,957		13,060		3.69%	Aug-15
YSI 20	57,465		58,524		5.97%	Nov-15
YSI 59	9,511		9,603		4.82%	Mar-16
YSI 60	3,698		3,725		5.04%	Aug-16
YSI 51	7,272		7,325		5.15%	Sep-16
YSI 35	4,324		4,373		6.90%	Jul-19	(a)
YSI 33	10,811		10,930		6.42%	Jul-19
YSI 26	9,024		9,102		4.56%	Nov-20
YSI 57	3,168		3,195		4.61%	Nov-20
YSI 55	24,325		24,502		4.85%	Jun-21
YSI 24	28,832		29,141		4.64%	Jun-21
Unamortized fair value adjustment	3,838		4,326
Total mortgage loans and notes payable	$	214,453	$	228,759

(a) This borrowing has a fixed interest rate for the first five years of the term, and the rate then resets and remains constant over the final five years of the loan term.

The following table represents the future principal payment requirements on the outstanding mortgage loans and notes payable at June 30, 2013 (in thousands):

2013	$	16,071
2014	11,633
2015	86,978
2016	21,342
2017	1,915
2018 and thereafter	72,676
Total mortgage payments	210,615
Plus: Unamortized fair value adjustment	3,838
Total mortgage indebtedness	$	214,453

The Company currently intends to fund its remaining 2013 principal payment requirements from cash provided by operating activities, new debt originations, and/or additional borrowings under its unsecured Credit Facility ($189.8 million available as of June 30, 2013).

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
NET INCOME	$ 2,568	$ 3,355	$ 2,140	$ 97
Other comprehensive income (loss):
Unrealized gain (loss) on interest rate swap	5,595	(8,303)	5,286	(9,099)
Reclassification of realized losses on interest rate swap	1,554	1,512	3,085	2,996
Unrealized gain (loss) on foreign currency translation	25	(105)	(231)	19
OTHER COMPREHENSIVE INCOME (LOSS)	7,174	(6,896)	8,140	(6,084)
COMPREHENSIVE INCOME (LOSS)	9,742	(3,541)	10,280	(5,987)
Comprehensive (income) loss attributable to noncontrolling interests in the Operating Partnership	(140)	197	(123)	317
Comprehensive (income) loss attributable to noncontrolling interests in subsidiaries	(7)	(771)	3	(1,509)
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY	$ 9,595	$ (4,115)	$ 10,160	$ (7,179)

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CONSOLIDATED BALANCE SHEETS (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
ASSETS
Storage facilities	$ 2,536,592	$ 2,443,022
Less: Accumulated depreciation	(386,924)	(353,315)
Storage facilities, net	2,149,668	2,089,707
Cash and cash equivalents	4,021	4,495
Restricted cash	4,540	6,070
Loan procurement costs, net of amortization	9,421	8,253
Other assets, net	30,072	41,794
Total assets	2,197,722	2,150,319
LIABILITIES AND EQUITY
Unsecured senior notes	250,000	250,000
Revolving credit facility	110,000	45,000
Unsecured term loans	500,000	500,000
Mortgage loans and notes payable	214,453	228,759
Accounts payable, accrued expenses and other liabilities	54,241	60,708
Distributions payable	16,550	16,419
Deferred revenue	12,682	11,090
Security deposits	427	444
Total liabilities	1,158,353	1,112,420
Noncontrolling interests in the Operating Partnership	36,446	47,990
Commitments and contingencies
Equity
7.75% Series A Preferred shares $.01 par value, 3,220,000 shares authorized, 3,100,000 shares issued and outstanding at June 30, 2013 and December 31, 2012, respectively	31	31
Common shares $.01 par value, 200,000,000 shares authorized, 134,430,071 and 131,794,547 shares issued and outstanding at June 30, 2013 and December 31, 2012, respectively	1,344	1,318
Additional paid in capital	1,457,271	1,418,463
Accumulated other comprehensive loss	(11,794)	(19,796)
Accumulated deficit	(444,044)	(410,225)
Total CubeSmart shareholders' equity	1,002,808	989,791
Noncontrolling interest in subsidiaries	115	118
Total equity	1,002,923	989,909
Total liabilities and equity	$ 2,197,722	$ 2,150,319

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SUBSEQUENT EVENTS (Details) (Subsequent Event, Knoxville, TN, USD $) In Millions, unless otherwise specified	6 Months Ended
	Jun. 30, 2013 facility
Subsequent Event | Knoxville, TN
SUBSEQUENT EVENTS
Number of facilities sold	8
Sales price of facility	$ 25.0

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FAIR VALUE MEASUREMENTS (Tables)

6 Months Ended

Jun. 30, 2013

FAIR VALUE MEASUREMENTS

Schedule of financial assets and liabilities carried at fair value

Financial assets and liabilities carried at fair value as of June 30, 2013 are classified in the table below in one of the three categories described above (dollars in thousands):

	Level 1		Level 2		Level 3
Interest Rate Swap Derivative Liabilities	$	-	$	11,294	$	-
Total liabilities at fair value	$	-	$	11,294	$	-

Financial assets and liabilities carried at fair value as of December 31, 2012 are classified in the table below in one of the three categories described above (dollars in thousands):

	Level 1		Level 2		Level 3
Interest Rate Swap Derivative Liabilities	$	-	$	19,665	$	-
Total liabilities at fair value	$	-	$	19,665	$	-

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

6 Months Ended

Jun. 30, 2013

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared pursuant to the rules and regulations of the SEC regarding interim financial reporting and, in the opinion of each of the Parent Company’s and Operating Partnership’s respective management, include all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of financial position, results of operations and cash flows for each respective company for the interim periods presented in accordance with generally accepted accounting principles (“GAAP”) in the United States.  Accordingly, readers of this Quarterly Report on Form 10-Q should refer to the Parent Company’s and the Operating Partnership’s audited financial statements prepared in accordance with GAAP, and the related notes thereto, for the year ended December 31, 2012, which are included in the Parent Company’s and the Operating Partnership’s Annual Report on Form 10-K for the fiscal year ended December 31, 2012.  The results of operations for the three and six months ended June 30, 2013 and 2012 are not necessarily indicative of the results of operations to be expected for any future period or the full year.

Immaterial Correction to Prior Period Financial Statements

Immaterial Correction to Prior Period Financial Statements

In the second quarter of 2013, we revised our 2012 disclosure in the consolidated statement of cash flows to reflect a decrease in both net cash provided by operating activities and net cash used in investing activities of $6.0 million. This adjustment was made after completing an analysis that determined cash paid for acquisitions of storage facilities did not properly reflect the use of earnest money deposits, paid to Storage Deluxe in 2011, when certain facilities within the portfolio were acquired in 2012. After evaluating the quantitative and qualitative effects of this error, we have concluded that the impact on the Company’s prior interim period consolidated statements of cash flows was not material.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In February 2013, the Financial Accounting Standards Board (“FASB”) issued an amendment to the accounting standard for the reporting of amounts reclassified out of accumulated other comprehensive income (“AOCI”).  The amendment requires entities to disclose for items reclassified out of AOCI and into net income in their entirety, the effect of the reclassification on each affected income statement line item and for AOCI items that are not reclassified in their entirety into net income, a cross reference to other required GAAP disclosures.  This amendment became effective for fiscal years and interim periods beginning after December 15, 2012.  The adoption of this guidance in 2013 did not have a material impact on the Company’s consolidated financial position or results of operations as its impact was limited to disclosure requirements (see note 8).

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FAIR VALUE MEASUREMENTS (Details) (USD $)			6 Months Ended
	Jun. 30, 2013	Dec. 31, 2012	Jun. 30, 2013 Interest rate swap item	Jun. 30, 2013 Level 2 Interest rate swap	Dec. 31, 2012 Level 2 Interest rate swap
Fair value of financial assets and liabilities carried at fair value
Interest Rate Swap Derivative Liabilities				$ 11,294,000	$ 19,665,000
Total liabilities at fair value				11,294,000	19,665,000
Number of counterparties to derivative contracts who experienced significant downgrades in 2013			0
Aggregate carrying value of total debt	1,074,500,000	1,023,800,000
Estimated fair value of total debt	$ 1,085,900,000	$ 1,017,300,000

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (LP cube) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
NET INCOME	$ 2,568	$ 3,355	$ 2,140	$ 97
Other comprehensive income (loss):
Unrealized gain (loss) on interest rate swap	5,595	(8,303)	5,286	(9,099)
Reclassification of realized losses on interest rate swap	1,554	1,512	3,085	2,996
Unrealized gain (loss) on foreign currency translation	25	(105)	(231)	19
OTHER COMPREHENSIVE INCOME (LOSS)	7,174	(6,896)	8,140	(6,084)
COMPREHENSIVE INCOME (LOSS)	9,742	(3,541)	10,280	(5,987)
Comprehensive (income) loss attributable to Limited Partnership interest of third parties	(140)	197	(123)	317
Comprehensive (income) loss attributable to noncontrolling interests in subsidiaries	(7)	(771)	3	(1,509)
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY	9,595	(4,115)	10,160	(7,179)
CubeSmart, L.P. and Subsidiaries
NET INCOME	2,568	3,355	2,140	97
Other comprehensive income (loss):
Unrealized gain (loss) on interest rate swap	5,595	(8,303)	5,286	(9,099)
Reclassification of realized losses on interest rate swap	1,554	1,512	3,085	2,996
Unrealized gain (loss) on foreign currency translation	25	(105)	(231)	19
OTHER COMPREHENSIVE INCOME (LOSS)	7,174	(6,896)	8,140	(6,084)
COMPREHENSIVE INCOME (LOSS)	9,742	(3,541)	10,280	(5,987)
Comprehensive (income) loss attributable to Limited Partnership interest of third parties	(140)	197	(123)	317
Comprehensive (income) loss attributable to noncontrolling interests in subsidiaries	(7)	(771)	3	(1,509)
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY	$ 9,595	$ (4,115)	$ 10,160	$ (7,179)

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REVOLVING CREDIT FACILITY AND UNSECURED TERM LOANS (Details) (USD $)			0 Months Ended				6 Months Ended			6 Months Ended				0 Months Ended	6 Months Ended		0 Months Ended	6 Months Ended		0 Months Ended						6 Months Ended		6 Months Ended				6 Months Ended			6 Months Ended			6 Months Ended
	Jun. 30, 2013	Dec. 31, 2012	Jun. 18, 2013 Term Loan Facility, Prior to Amendment Term Loan A	Jun. 18, 2013 Term Loan Facility, Prior to Amendment Term Loan B	Jun. 18, 2013 Term Loan Facility, As Amended Term Loan A	Jun. 18, 2013 Term Loan Facility, As Amended Term Loan B	Jun. 30, 2013 Term Loan Facility	Jun. 18, 2013 Term Loan Facility	Jun. 20, 2011 Term Loan Facility	Jun. 30, 2013 Term Loan Facility Interest rate swap agreement	Jun. 30, 2013 Term Loan Facility Minimum	Jun. 30, 2013 Term Loan Facility Maximum	Jun. 30, 2013 Term Loan Facility Unsecured term loan	Jun. 20, 2011 Term Loan Facility Term Loan A	Jun. 30, 2013 Term Loan Facility Term Loan A	Jun. 18, 2013 Term Loan Facility Term Loan A	Jun. 20, 2011 Term Loan Facility Term Loan B	Jun. 30, 2013 Term Loan Facility Term Loan B	Jun. 18, 2013 Term Loan Facility Term Loan B	Jun. 18, 2013 Credit Facility, Prior to Amendment Revolver	Jun. 18, 2013 Credit Facility, Prior to Amendment Term Loan C	Jun. 18, 2013 Credit Facility, Prior to Amendment Term Loan D	Jun. 18, 2013 Credit Facility, As Amended Revolver	Jun. 18, 2013 Credit Facility, As Amended Term Loan C	Jun. 18, 2013 Credit Facility, As Amended Term Loan D	Jun. 30, 2013 Credit Facility	Dec. 09, 2011 Credit Facility	Jun. 30, 2013 Credit Facility Interest rate cap agreement	Jun. 30, 2013 Credit Facility Minimum	Jun. 30, 2013 Credit Facility Maximum	Jun. 30, 2013 Credit Facility Unsecured term loan	Jun. 30, 2013 Credit Facility Revolver	Jun. 18, 2013 Credit Facility Revolver	Dec. 09, 2011 Credit Facility Revolver	Jun. 30, 2013 Credit Facility Term Loan C	Jun. 18, 2013 Credit Facility Term Loan C	Dec. 09, 2011 Credit Facility Term Loan C	Jun. 30, 2013 Credit Facility Term Loan D	Jun. 18, 2013 Credit Facility Term Loan D	Dec. 09, 2011 Credit Facility Term Loan D
SECURED CREDIT FACILITY, UNSECURED CREDIT FACILITY AND SECURED TERM LOANS
Term of debt instrument														5 years			7 years
Maximum borrowing capacity														$ 100,000,000		$ 100,000,000	$ 100,000,000		$ 100,000,000														$ 300,000,000	$ 300,000,000		$ 100,000,000	$ 100,000,000		$ 200,000,000	$ 200,000,000
Loan procurement costs capitalized								2,100,000	2,100,000																		3,400,000
Interest rate, basis spread (as a percent)			1.85%	2.00%	1.50%	2.00%									1.50%			2.00%		1.80%	1.75%	1.75%	1.60%	1.50%	1.50%							1.60%			1.50%			1.50%
Variable interest rate basis			LIBOR	LIBOR	LIBOR	LIBOR									LIBOR			LIBOR		LIBOR	LIBOR	LIBOR	LIBOR	LIBOR	LIBOR							LIBOR			LIBOR			LIBOR
Variable interest rate floor (as a percent)															0.00%			0.00%														0.00%			0.00%			0.00%
Line of Credit Facility, Commitment Fee Percentage																																0.30%
Unsecured term loan borrowings outstanding	500,000,000	500,000,000											200,000,000																		300,000,000	110,000,000
Remaining borrowing capacity																										189,800,000						189,800,000
Outstanding letter of credit																																200,000
Derivative, variable interest rate base										Thirty day LIBOR																		LIBOR
Effective weighted average interest rate (as a percent)							2.80%																			2.80%
Total indebtedness to total asset value ratio (as a percent)												60.00%																		60.00%
Fixed charge coverage ratio											1.50																		1.50
Tangible net worth											$ 821,211,200																		$ 821,211,200
Net proceeds from equity issuances added to minimum tangible net worth (as a percent)							75.00%																			75.00%
Percentage of funds from operations that can be distributed on common shares												95.00%																		95.00%

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STORAGE FACILITIES (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
STORAGE FACILITIES
Storage facilities	$ 2,536,592	$ 2,443,022
Less: Accumulated depreciation	(386,924)	(353,315)
Storage facilities, net	2,149,668	2,089,707
Land
STORAGE FACILITIES
Storage facilities	470,598	462,626
Buildings and improvements
STORAGE FACILITIES
Storage facilities	1,888,942	1,828,388
Equipment
STORAGE FACILITIES
Storage facilities	151,836	143,836
Construction in progress
STORAGE FACILITIES
Storage facilities	$ 25,216	$ 8,172

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STORAGE FACILITIES (Details 2) (USD $) In Thousands, unless otherwise specified	6 Months Ended	12 Months Ended
	Jun. 30, 2013 property	Dec. 31, 2012 property
Acquisitions
STORAGE FACILITIES
Number of Facilities, acquisitions	10	37
Purchase / Sales Price	$ 94,350	$ 432,340
Acquisitions | Houston, Texas
STORAGE FACILITIES
Number of Facilities, acquisitions		1
Purchase / Sales Price		5,100
Acquisitions | Dunwoody, Georgia
STORAGE FACILITIES
Number of Facilities, acquisitions		1
Purchase / Sales Price		6,900
Acquisitions | Mansfield Asset
STORAGE FACILITIES
Number of Facilities, acquisitions		1
Purchase / Sales Price		4,970
Acquisitions | Texas Asset at multiple locations in TX
STORAGE FACILITIES
Number of Facilities, acquisitions		4
Purchase / Sales Price		18,150
Acquisitions | Allen Asset
STORAGE FACILITIES
Number of Facilities, acquisitions		1
Purchase / Sales Price		5,130
Acquisitions | Norwalk Asset
STORAGE FACILITIES
Number of Facilities, acquisitions		1
Purchase / Sales Price		5,000
Acquisitions | Storage Deluxe assets
STORAGE FACILITIES
Number of Facilities, acquisitions		6
Purchase / Sales Price		201,910
Acquisitions | Eisenhower Asset
STORAGE FACILITIES
Number of Facilities, acquisitions		1
Purchase / Sales Price		19,750
Acquisitions | New Jersey Assets
STORAGE FACILITIES
Number of Facilities, acquisitions		2
Purchase / Sales Price		10,750
Acquisitions | Georgia/ Florida Assets
STORAGE FACILITIES
Number of Facilities, acquisitions		3
Purchase / Sales Price		13,370
Acquisitions | Peachtree Asset
STORAGE FACILITIES
Number of Facilities, acquisitions		1
Purchase / Sales Price		3,100
Acquisitions | HSREV Assets
STORAGE FACILITIES
Number of Facilities, acquisitions		9
Purchase / Sales Price		102,000
Acquisitions | Leetsdale Asset
STORAGE FACILITIES
Number of Facilities, acquisitions		1
Purchase / Sales Price		10,600
Acquisitions | Orlando/ West Palm Beach Assets
STORAGE FACILITIES
Number of Facilities, acquisitions		2
Purchase / Sales Price		13,010
Acquisitions | Exton/ Cherry Hill Assets
STORAGE FACILITIES
Number of Facilities, acquisitions		2
Purchase / Sales Price		7,800
Acquisitions | Carrollton Asset
STORAGE FACILITIES
Number of Facilities, acquisitions		1
Purchase / Sales Price		4,800
Acquisitions | Gilbert Asset
STORAGE FACILITIES
Number of Facilities, acquisitions	1
Purchase / Sales Price	6,900
Acquisitions | Evanston Asset
STORAGE FACILITIES
Number of Facilities, acquisitions	1
Purchase / Sales Price	8,300
Acquisitions | Delray Beach Asset
STORAGE FACILITIES
Number of Facilities, acquisitions	1
Purchase / Sales Price	7,150
Acquisitions | Miramar Asset
STORAGE FACILITIES
Number of Facilities, acquisitions	1
Purchase / Sales Price	9,000
Acquisitions | Stoneham Asset
STORAGE FACILITIES
Number of Facilities, acquisitions	1
Purchase / Sales Price	10,600
Acquisitions | Maryland/New Jersey Assets
STORAGE FACILITIES
Number of Facilities, acquisitions	5
Purchase / Sales Price	52,400
Dispositions
STORAGE FACILITIES
Number of Facilities, dispositions (in properties)	5	26
Purchase / Sales Price	11,400	59,962
Dispositions | Michigan Assets
STORAGE FACILITIES
Number of Facilities, dispositions (in properties)		3
Purchase / Sales Price		6,362
Dispositions | Gulf Coast Assets at multiple locations in LA, AL and MS
STORAGE FACILITIES
Number of Facilities, dispositions (in properties)		5
Purchase / Sales Price		16,800
Dispositions | New Mexico Assets
STORAGE FACILITIES
Number of Facilities, dispositions (in properties)		6
Purchase / Sales Price		7,500
Dispositions | San Bernardino Asset
STORAGE FACILITIES
Number of Facilities, dispositions (in properties)		1
Purchase / Sales Price		5,000
Dispositions | Florida/ Tennessee Assets
STORAGE FACILITIES
Number of Facilities, dispositions (in properties)		3
Purchase / Sales Price		6,550
Dispositions | Ohio Assets
STORAGE FACILITIES
Number of Facilities, dispositions (in properties)		8
Purchase / Sales Price		17,750
Dispositions | Texas/Indiana Assets
STORAGE FACILITIES
Number of Facilities, dispositions (in properties)	5
Purchase / Sales Price	$ 11,400

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REVOLVING CREDIT FACILITY AND UNSECURED TERM LOANS

6 Months Ended

Jun. 30, 2013

REVOLVING CREDIT FACILITY AND UNSECURED TERM LOANS

REVOLVING CREDIT FACILITY AND UNSECURED TERM LOANS

6.  REVOLVING CREDIT FACILITY AND UNSECURED TERM LOANS

On June 20, 2011, the Company entered into an unsecured term loan agreement (the “Term Loan Facility”) which consisted of a $100 million term loan with a five-year maturity (“Term Loan A”) and a $100 million term loan with a seven-year maturity (“Term Loan B”).  The Company incurred costs of $2.1 million in connection with executing the agreement and capitalized such costs as a component of loan procurement costs, net of amortization on the consolidated balance sheet.

On December 9, 2011, the Company entered into a credit facility (the “Credit Facility”) comprised of a $100 million unsecured term loan maturing in December 2014 (“Term Loan C”); a $200 million unsecured term loan maturing in March 2017 (“Term Loan D”); and a $300 million unsecured revolving facility maturing in December 2015 (“Revolver”).  The Company incurred costs of $3.4 million in connection with executing the agreement and capitalized such costs as a component of loan procurement costs, net of amortization on the consolidated balance sheet.

On June 18, 2013, the Company amended both the Term Loan Facility and Credit Facility.  With respect to the Term Loan Facility, among other things, the amendment extended the maturity and decreased the pricing of Term Loan A, while Term Loan B remained unchanged by the amendment. Pricing on the Term Loan Facility depends on the Company’s unsecured debt credit ratings.  At the Company’s current Baa3/BBB- level, amounts drawn under Term Loan A are priced at 1.50% over LIBOR, with no LIBOR floor, while amounts drawn under Term Loan B are priced at 2.00% over LIBOR, with no LIBOR floor.

		Term Loan Facility Prior to Amendment		Term Loan Facility As Amended
	Amount	Maturity Date	LIBOR Spread	Maturity Date	LIBOR Spread
Term Loan A	$100 million	June 2016	1.85%	June 2018	1.50%
Term Loan B	$100 million	June 2018	2.00%	June 2018	2.00%

With respect to the Credit Facility, among other things, the amendment extended the maturities of the Revolver and Term Loan D and decreased the pricing of the Revolver, Term Loan C and Term Loan D.  Pricing on the Credit Facility depends on the Company’s unsecured debt credit ratings.  At the Company’s current Baa3/BBB- level, amounts drawn under the Revolver are priced at 1.60% over LIBOR, inclusive of a facility fee of 0.30%, with no LIBOR floor, while amounts drawn under Term Loan C and Term Loan D are priced at 1.50% over LIBOR, with no LIBOR floor.

		Credit Facility Prior to Amendment		Credit Facility As Amended
	Amount	Maturity Date	LIBOR Spread	Maturity Date	LIBOR Spread
Revolver	$300 million	December 2015	1.80%	June 2017	1.60%
Term Loan C	$100 million	December 2014	1.75%	December 2014	1.50%
Term Loan D	$200 million	March 2017	1.75%	January 2019	1.50%

The Company incurred costs of $2.1 million in connection with amending the agreements and capitalized such costs as a component of loan procurement costs, net of amortization on the consolidated balance sheet.  Unamortized costs, along with costs incurred in connection with the amendments, are amortized as an adjustment to interest expense over the remaining term of the modified facilities.

As of June 30, 2013, $200 million of unsecured term loan borrowings were outstanding under the Term Loan Facility, $300 million of unsecured term loan borrowings were outstanding under the Credit Facility, $110 million of unsecured revolving credit facility borrowings were outstanding and $189.8 million was available for borrowing on the unsecured revolving portion of the Credit Facility.  The available balance under the unsecured revolving portion of the Credit Facility is reduced by an outstanding letter of credit of $0.2 million.  In connection with the unsecured borrowings, the Company had interest rate swaps as of June 30, 2013 that fix 30-day LIBOR (see note 9).  As of June 30, 2013, borrowings under the Credit Facility and Term Loan Facility, as amended, had an effective weighted average interest rate of 2.80%.

The Term Loan Facility and the term loans under the Credit Facility were fully drawn at June 30, 2013 and no further borrowings may be made under that facility and those term loans.  The Company’s ability to borrow under the revolving facility is subject to ongoing compliance with certain financial covenants which include:

· Maximum total indebtedness to total asset value of 60.0% at any time;

· Minimum fixed charge coverage ratio of 1.50:1.00; and

· Minimum tangible net worth of $821,211,200 plus 75% of net proceeds from equity issuances after June 30, 2010.

Further, under the Credit Facility and Term Loan Facility, the Company is restricted from paying distributions on common shares that would exceed an amount equal to the greater of (i) 95% of funds from operations, and (ii) such amount as may be necessary to maintain the Parent Company’s REIT status.

The Company is currently in compliance with all of its financial covenants and anticipates being in compliance with all of its financial covenants through the terms of the Credit Facility and Term Loan Facility.

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RELATED PARTY TRANSACTIONS (Tables)

6 Months Ended

Jun. 30, 2013

RELATED PARTY TRANSACTIONS

Schedule of office space subject to lease agreement with related parties

Office Space	Approximate Square Footage	Maturity Date	Period of Extension Option (1)	Fixed Minimum Rent Per Month		Fixed Maximum Rent Per Month
The Parkview Building — 6745 Engle Road; and 6751 Engle Road	21,900	12/31/2014	Five-year	$	25,673	$	31,205
6745 Engle Road — Suite 100	2,212	12/31/2014	Five-year	$	3,051	$	3,709
6745 Engle Road — Suite 110	1,731	12/31/2014	Five-year	$	2,387	$	2,901
6751 Engle Road — Suites C and D	3,000	12/31/2014	Five-year	$	3,137	$	3,771

(1) Our Operating Partnership may extend the lease agreement beyond the termination date by the period set forth in this column at prevailing market rates upon the same terms and conditions contained in each of the lease agreements.

Schedule of total future minimum rental payments under the related party lease agreements

	Due to Related Party Amount		Due from Subtenant Amount
	(in thousands)
2013	$	250	$	157
2014	499		315
	$	749	$	472

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ACCUMULATED OTHER COMPREHENSIVE LOSS (Details) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2013
Changes in accumulated other comprehensive income by component
Beginning balance	$ (19,796)
Other comprehensive gain (loss) before reclassifications	4,971
Amounts reclassified from accumulated other comprehensive loss	3,031
Net current-period other comprehensive income (loss)	8,002
Ending balance	(11,794)
Unrealized loss on interest rate swap
Changes in accumulated other comprehensive income by component
Beginning balance	(18,973)
Other comprehensive gain (loss) before reclassifications	5,196
Amounts reclassified from accumulated other comprehensive loss	3,031
Net current-period other comprehensive income (loss)	8,227
Ending balance	(10,746)
Unrealized loss on foreign currency translation
Changes in accumulated other comprehensive income by component
Beginning balance	(823)
Other comprehensive gain (loss) before reclassifications	(225)
Net current-period other comprehensive income (loss)	(225)
Ending balance	$ (1,048)

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RISK MANAGEMENT AND USE OF FINANCIAL INSTRUMENTS

6 Months Ended

Jun. 30, 2013

RISK MANAGEMENT AND USE OF FINANCIAL INSTRUMENTS

RISK MANAGEMENT AND USE OF FINANCIAL INSTRUMENTS

9.  RISK MANAGEMENT AND USE OF FINANCIAL INSTRUMENTS

The Company’s use of derivative instruments is limited to the utilization of interest rate 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.

The Company has entered into interest rate swap agreements that qualify and are designated as cash flow hedges designed to reduce the impact of interest rate changes on its variable rate debt.   Therefore, the interest rate swaps are recorded in the consolidated balance sheet at fair value and the related gains or losses are 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.  However, to the extent that the interest rate swaps are not perfectly effective in offsetting the change in value of the interest payments being hedged, the ineffective portion of these contracts is recognized in earnings immediately.  The Company formally assesses, both at inception of a hedge and on an on-going basis, whether each derivative is highly-effective in offsetting changes in cash flows of the hedged item. If management determines that a derivative is highly-effective as a hedge, then the Company accounts for the derivative using hedge accounting, pursuant to which gains or losses inherent in the derivative do not impact the Company’s results of operations.  If management determines that a derivative is not highly-effective as a hedge or if a derivative ceases to be a highly-effective hedge, the Company will discontinue hedge accounting prospectively and will reflect in its statement of operations realized and unrealized gains and losses in respect of the derivative.

The following table summarizes the terms and fair values of the Company’s derivative financial instruments at June 30, 2013 and December 31, 2012, respectively (dollars in thousands):

								Fair Value
Hedge		Notional						June 30,		December 31,
Product	Hedge Type (a)	Amount		Strike		Effective Date	Maturity	2013		2012
Swap	Cash flow	$	40,000	1.8025	%	6/20/2011	6/20/2016	$	(1,347)	$	(1,873	)
Swap	Cash flow	$	40,000	1.8025	%	6/20/2011	6/20/2016	(1,348)		(1,875		)
Swap	Cash flow	$	20,000	1.8025	%	6/20/2011	6/20/2016	(673)		(937		)
Swap	Cash flow	$	75,000	1.3360	%	12/30/2011	3/31/2017	(1,036)		(2,378		)
Swap	Cash flow	$	50,000	1.3360	%	12/30/2011	3/31/2017	(681)		(1,583		)
Swap	Cash flow	$	50,000	1.3360	%	12/30/2011	3/31/2017	(684)		(1,583		)
Swap	Cash flow	$	25,000	1.3375	%	12/30/2011	3/31/2017	(350)		(799		)
Swap	Cash flow	$	40,000	2.4590	%	6/20/2011	6/20/2018	(2,053)		(3,433		)
Swap	Cash flow	$	40,000	2.4725	%	6/20/2011	6/20/2018	(2,082)		(3,470		)
Swap	Cash flow	$	20,000	2.4750	%	6/20/2011	6/20/2018	(1,040)		(1,734		)
		$	400,000					$	(11,294)	$	(19,665	)

(a) Hedging unsecured variable rate debt by fixing 30-day LIBOR.

The Company measures its derivative instruments at fair value and records them in the balance sheet as either an asset or liability.  As of June 30, 2013 and December 31, 2012, all derivative instruments were included in accounts payable, accrued expenses and other liabilities in the accompanying consolidated balance sheets.  The effective portions of changes in the fair value of the derivatives are reported in accumulated other comprehensive income (loss).  Amounts reported in accumulated other comprehensive income (loss) related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable-rate debt.  The change in unrealized loss on interest rate swap reflects a reclassification of approximately $3.1 million of unrealized losses from accumulated other comprehensive loss as an increase to interest expense during the six months ended June 30, 2013.

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UNSECURED SENIOR NOTES

6 Months Ended

Jun. 30, 2013

UNSECURED SENIOR NOTES

UNSECURED SENIOR NOTES

5.  UNSECURED SENIOR NOTES

On June 26, 2012, the Operating Partnership issued $250 million in aggregate principal amount of unsecured senior notes due July 15, 2022 (the “senior notes”) which bear interest at a rate of 4.80%.  The indenture under which the unsecured 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 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. The Operating Partnership is currently in compliance with all of the financial covenants under the senior notes.

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CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Operating Activities
Net income	$ 2,140	$ 97
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization	60,103	55,297
Gain on disposition of discontinued operations	(228)	(6,206)
Equity compensation expense	2,567	1,638
Accretion of fair market value adjustment of debt	(488)	(242)
Equity in loss of real estate venture		461
Changes in other operating accounts:
Other assets	(2,133)	(127)
Restricted cash	1,062	3,294
Accounts payable and accrued expenses	1,099	(2,418)
Other liabilities	1,189	801
Net cash provided by operating activities	65,311	52,595
Investing Activities
Acquisitions of storage facilities	(93,743)	(86,778)
Additions and improvements to storage facilities	(9,399)	(9,187)
Development costs	(17,557)
Cash distributions from real estate venture		633
Proceeds from sales of properties, net	10,993	22,662
Proceeds from notes receivable	5,192
Change in restricted cash	468	1,789
Net cash used in investing activities	(104,046)	(70,881)
Proceeds from:
Unsecured senior notes, net of discounts		249,638
Revolving credit facility	229,200	246,300
Unsecured term loans		100,000
Principal payments on:
Revolving credit facility	(164,200)	(246,300)
Mortgage loans and notes payable	(13,352)	(175,963)
Loan procurement costs	(2,141)	(2,019)
Settlement of hedge transaction		(195)
Proceeds from issuance of common shares, net	20,388
Exercise of stock options	1,278	972
Distributions paid to common shareholders	(29,258)	(19,643)
Distributions paid to preferred shareholders	(3,004)	(2,720)
Distributions paid to noncontrolling interests in Operating Partnership	(650)	(749)
Distributions paid to noncontrolling interests in subsidiaries		(2,308)
Net cash provided by financing activities	38,261	147,013
Change in cash and cash equivalents	(474)	128,727
Cash and cash equivalents at beginning of period	4,495	9,069
Cash and cash equivalents at end of period	4,021	137,796
Supplemental Cash Flow and Noncash Information
Cash paid for interest, net of interest capitalized	22,522	18,030
Supplemental disclosure of noncash activities:
Derivative valuation adjustment	8,371	(5,908)
Foreign currency translation adjustment	(231)	19
Mortgage loan assumption - acquisition of storage facility		$ 62,467

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CONSOLIDATED BALANCE SHEETS (LP cube) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
ASSETS
Storage facilities	$ 2,536,592	$ 2,443,022
Less: Accumulated depreciation	(386,924)	(353,315)
Storage facilities, net	2,149,668	2,089,707
Cash and cash equivalents	4,021	4,495
Restricted cash	4,540	6,070
Loan procurement costs, net of amortization	9,421	8,253
Other assets, net	30,072	41,794
Total assets	2,197,722	2,150,319
LIABILITIES AND CAPITAL
Unsecured senior notes	250,000	250,000
Revolving credit facility	110,000	45,000
Unsecured term loan	500,000	500,000
Mortgage loans and notes payable	214,453	228,759
Accounts payable, accrued expenses and other liabilities	54,241	60,708
Distributions payable	16,550	16,419
Deferred revenue	12,682	11,090
Security deposits	427	444
Total liabilities	1,158,353	1,112,420
Limited Partnership interest of third parties	36,446	47,990
Commitments and contingencies
Capital
Accumulated other comprehensive loss	(11,794)	(19,796)
Total liabilities and equity	2,197,722	2,150,319
CubeSmart, L.P. and Subsidiaries
ASSETS
Storage facilities	2,536,592	2,443,022
Less: Accumulated depreciation	(386,924)	(353,315)
Storage facilities, net	2,149,668	2,089,707
Cash and cash equivalents	4,021	4,495
Restricted cash	4,540	6,070
Loan procurement costs, net of amortization	9,421	8,253
Other assets, net	30,072	41,794
Total assets	2,197,722	2,150,319
LIABILITIES AND CAPITAL
Unsecured senior notes	250,000	250,000
Revolving credit facility	110,000	45,000
Unsecured term loan	500,000	500,000
Mortgage loans and notes payable	214,453	228,759
Accounts payable, accrued expenses and other liabilities	54,241	60,708
Distributions payable	16,550	16,419
Deferred revenue	12,682	11,090
Security deposits	427	444
Total liabilities	1,158,353	1,112,420
Limited Partnership interest of third parties	36,446	47,990
Commitments and contingencies
Capital
Operating Partner	1,014,602	1,009,587
Accumulated other comprehensive loss	(11,794)	(19,796)
Total CubeSmart L.P. capital	1,002,808	989,791
Noncontrolling interests in subsidiaries	115	118
Total capital	1,002,923	989,909
Total liabilities and equity	$ 2,197,722	$ 2,150,319

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RELATED PARTY TRANSACTIONS (Details) (Lease agreements with related parties, Operating Partnership, USD $)	6 Months Ended
	Jun. 30, 2013 acre	Jun. 30, 2012
Office space subject to lease
RELATED PARTY TRANSACTIONS
Aggregate amount of payments incurred under lease agreements	$ 300,000	$ 300,000
Area of corporate office (in acres)	50
The Parkview Building 6745 Engle Road; and 6751 Engle Road
RELATED PARTY TRANSACTIONS
Approximate Square Footage	21,900
Period of Extension Option	5 years
The Parkview Building 6745 Engle Road; and 6751 Engle Road | Minimum
RELATED PARTY TRANSACTIONS
Fixed rent per month	25,673
The Parkview Building 6745 Engle Road; and 6751 Engle Road | Maximum
RELATED PARTY TRANSACTIONS
Fixed rent per month	31,205
6745 Engle Road Suite 100
RELATED PARTY TRANSACTIONS
Approximate Square Footage	2,212
Period of Extension Option	5 years
6745 Engle Road Suite 100 | Minimum
RELATED PARTY TRANSACTIONS
Fixed rent per month	3,051
6745 Engle Road Suite 100 | Maximum
RELATED PARTY TRANSACTIONS
Fixed rent per month	3,709
6745 Engle Road Suite 110
RELATED PARTY TRANSACTIONS
Approximate Square Footage	1,731
Period of Extension Option	5 years
6745 Engle Road Suite 110 | Minimum
RELATED PARTY TRANSACTIONS
Fixed rent per month	2,387
6745 Engle Road Suite 110 | Maximum
RELATED PARTY TRANSACTIONS
Fixed rent per month	2,901
6751 Engle Road Suites C and D
RELATED PARTY TRANSACTIONS
Approximate Square Footage	3,000
Period of Extension Option	5 years
6751 Engle Road Suites C and D | Minimum
RELATED PARTY TRANSACTIONS
Fixed rent per month	3,137
6751 Engle Road Suites C and D | Maximum
RELATED PARTY TRANSACTIONS
Fixed rent per month	$ 3,771

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ORGANIZATION AND NATURE OF OPERATIONS (Details)	6 Months Ended
	Jun. 30, 2013 segment state
ORGANIZATION AND NATURE OF OPERATIONS
Number of states in which self-storage facilities are located	21
Number of reportable segments	1
Percentage of the entity's partnership interest in Operating Partnership	98.30%
Common stock, conversion ratio	1.00

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RELATED PARTY TRANSACTIONS

6 Months Ended

Jun. 30, 2013

RELATED PARTY TRANSACTIONS

RELATED PARTY TRANSACTIONS

12.  RELATED PARTY TRANSACTIONS

Corporate Office Leases

Subsequent to its entry into lease agreements with related parties for office space, the Operating Partnership entered into sublease agreements with various unrelated tenants for the related office space.  Each of these properties are part of Airport Executive Park, a 50-acre office and flex development located in Cleveland, Ohio, which is owned by former executives. Our independent Trustees approved the terms of, and entry into, each of the office lease agreements by the Operating Partnership.  The table below shows the office space subject to these lease agreements and certain key provisions, including the term of each lease agreement, the period for which the Operating Partnership may extend the term of each lease agreement, and the minimum and maximum rents payable per month during the term.

Office Space	Approximate Square Footage	Maturity Date	Period of Extension Option (1)	Fixed Minimum Rent Per Month		Fixed Maximum Rent Per Month
The Parkview Building — 6745 Engle Road; and 6751 Engle Road	21,900	12/31/2014	Five-year	$	25,673	$	31,205
6745 Engle Road — Suite 100	2,212	12/31/2014	Five-year	$	3,051	$	3,709
6745 Engle Road — Suite 110	1,731	12/31/2014	Five-year	$	2,387	$	2,901
6751 Engle Road — Suites C and D	3,000	12/31/2014	Five-year	$	3,137	$	3,771

(1) Our Operating Partnership may extend the lease agreement beyond the termination date by the period set forth in this column at prevailing market rates upon the same terms and conditions contained in each of the lease agreements.

In addition to monthly rent, the office lease agreements provide that our Operating Partnership reimburse for certain maintenance and improvements to the leased office space.  The aggregate amount of payments incurred under these lease agreements for each of the six months ended June 30, 2013 and 2012, was approximately $0.3 million.

Total future minimum rental payments due in accordance with the related party lease agreements and total future cash receipts due from our subtenants as of June 30, 2013 are as follows:

	Due to Related Party Amount		Due from Subtenant Amount
	(in thousands)
2013	$	250	$	157
2014	499		315
	$	749	$	472

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ACCUMULATED OTHER COMPREHENSIVE LOSS

6 Months Ended

Jun. 30, 2013

ACCUMULATED OTHER COMPREHENSIVE LOSS

ACCUMULATED OTHER COMPREHENSIVE LOSS

8.  ACCUMULATED OTHER COMPREHENSIVE LOSS

The following table summarizes the changes in accumulated other comprehensive loss by component for the six months ended June 30, 2013 (dollars in thousands):

	Unrealized loss on  interest rate swap			Unrealized loss on foreign currency translation		Total
Balance at December 31, 2012	$	(18,973)		$	(823)	$	(19,796)
Other comprehensive gain (loss) before reclassifications	5,196			(225)		4,971
Amounts reclassified from accumulated other comprehensive loss	3,031		(a)	-		3,031
Net current-period other comprehensive income (loss)	8,227			(225)		8,002
Balance at June 30, 2013	$	(10,746)		$	(1,048)	$	(11,794)

(a) See note 9 for additional information about the effects of the amounts reclassified.

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SUBSEQUENT EVENTS

6 Months Ended

Jun. 30, 2013

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS

15.  SUBSEQUENT EVENTS

Subsequent to June 30, 2013, the Company sold eight facilities in the Knoxville, TN area for an aggregate sales price of $25.0 million.

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DISCONTINUED OPERATIONS

6 Months Ended

Jun. 30, 2013

DISCONTINUED OPERATIONS

DISCONTINUED OPERATIONS

13.  DISCONTINUED OPERATIONS

For the three and six months ended June 30, 2013, discontinued operations relates to five properties that the Company sold during 2013.  Each of the sales during 2013 resulted in the recognition of a gain, which in the aggregate totaled $0.2 million. For the three and six months ended June 30, 2012, discontinued operations relates to five properties that the Company sold during 2013 and 26 properties that the Company sold during 2012.

The following table summarizes the revenue and expense information for the period the Company owned the properties classified as discontinued operations during the three and six months ended June 30, 2013 and 2012 (in thousands):

	Three months ended June 30,				Six months ended June 30,
	2013		2012		2013		2012
REVENUES
Rental income	$	-	$	2,706	$	389	$	5,497
Other property related income	5		347		78		643
Total revenues	5		3,053		467		6,140
OPERATING EXPENSES
Property operating expenses	13		1,469		234		2,812
Depreciation and amortization	-		617		57		1,297
Total operating expenses	13		2,086		291		4,109
OPERATING (LOSS) INCOME	(8)		967		176		2,031
(Loss) Income from discontinued operations	(8)		967		176		2,031
Gain on disposition of discontinued operations	-		6,206		228		6,206
(Loss) Income from discontinued operations	$	(8)	$	7,173	$	404	$	8,237

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Document and Entity Information	6 Months Ended
	Jun. 30, 2013	Aug. 07, 2013
Document and Entity Information
Entity Registrant Name	CubeSmart
Entity Central Index Key	0001298675
Document Type	10-Q
Document Period End Date	Jun. 30, 2013
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		135,120,940
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q2

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PRO FORMA FINANCIAL INFORMATION

6 Months Ended

Jun. 30, 2013

PRO FORMA FINANCIAL INFORMATION

PRO FORMA FINANCIAL INFORMATION

14.  PRO FORMA FINANCIAL INFORMATION

During the six months ended June 30, 2013 and 2012, the Company acquired ten self-storage facilities for an aggregate purchase price of approximately $94.4 million (see note 4) and 37 self-storage facilities for an aggregate purchase price of approximately $432.3 million, respectively.

The condensed consolidated pro forma financial information set forth below reflects adjustments to the Company’s historical financial data to give effect to each of the acquisitions and related financing activity (including the issuance of common shares) that occurred during 2013 and 2012 as if each had occurred as of January 1, 2012 and 2011, respectively.  The unaudited pro forma information presented below does not purport to represent what the Company’s actual results of operations would have been for the periods indicated, nor does it purport to represent the Company’s future results of operations.

The following table summarizes, on a pro forma basis, the Company’s consolidated results of operations for the six months ended June 30, 2013 and 2012 based on the assumptions described above: 

	Six Months Ended June 30,
	2013		2012
	(in thousands, except per share data)
Pro forma revenue	$	164,656	$	145,949
Pro forma net income (loss) from continuing operations	$	5,153	$	(7,718	)
Net income (loss) per common share from continuing operations
Basic and diluted - as reported	$	(0.01)	$	(0.10	)
Basic and diluted - as pro forma	$	0.04	$	(0.06	)

The following table summarizes the Company’s revenue and earnings related to the 2013 and 2012 acquisitions from the respective acquisition dates in the period they were acquired, included in the consolidated income statement for the three and six months ended June 30, 2013 and 2012:

	Three months ended June 30,				Six months ended June 30,
	2013		2012		2013		2012
	(in thousands)
Total revenue	$	755	$	2,832	$	788	$	3,672
Net loss	(582)		(1,741)		(634)		(2,110)