CubeSmart (CUBE) risk factors, FY2024 10-K

Risks Related to our Business and Operations

1. 01Adverse macroeconomic and business conditions may significantly and negatively affect our rental rates, occupancy levels and therefore our results of operations
2. 02Our financial performance is dependent upon economic and other conditions of the markets in which our stores are located
3. 03We face risks associated with property acquisitions
4. 04We will incur costs and will face integration challenges when we acquire or develop additional stores
5. 05The acquisition of new stores that lack operating history with us will make it more difficult to predict financial performance
6. 06Our development activities may be more costly or difficult to complete than we anticipate
7. 07We depend on external sources of capital that are outside of our control; the unavailability of capital from external sources could adversely affect our ability to acquire or develop stores, satisfy our debt obligations and/or make distributions to shareholders
8. 08If we are unable to promptly re-lease our cubes or if the rates upon such re-letting are significantly lower than expected, our business and results of operations would be adversely affected
9. 09Store ownership through joint ventures may limit our ability to act exclusively in our interest
10. 10We face significant competition for customers and acquisition and development opportunities
11. 11Potential losses may not be covered by insurance
12. 12Our insurance coverage may not comply with certain loan requirements
13. 13We are subject to risks from the consequences of climate change, including severe weather events, as well as the transition to a low-carbon economy and other steps taken to prevent or mitigate climate change
14. 14Potential liability for environmental contamination could result in substantial costs
15. 15Americans with Disabilities Act and applicable state accessibility act compliance may require unanticipated expenditures
16. 16We face system security risks as we depend upon automated processes and the internet, and breaches of, or failures in the performance of, our information technology systems could damage our reputation, cause us to incur substantial additional costs and subject us to litigation

Risks Related to the Real Estate Industry

1. 17Our performance and the value of our self-storage properties are subject to risks associated with our properties and with the real estate industry
2. 18Rental revenues are significantly influenced by demand for self-storage space generally, and a decrease in such demand would likely have a greater adverse effect on our rental revenues than if we owned a more diversified real estate portfolio
3. 19Because real estate is illiquid, we may not be able to sell properties when appropriate

Risks Related to our Qualification and Operation as a REIT

1. 20Failure to qualify as a REIT would subject us to U.S. federal income tax which would reduce the cash available for distribution to our shareholders
2. 21Failure of the Operating Partnership (or a subsidiary partnership or joint venture) to be treated as a partnership would have serious adverse consequences to our shareholders
3. 22To maintain our REIT status, we may be forced to borrow funds on a short-term basis during unfavorable market conditions
4. 23We will pay some taxes even if we qualify as a REIT, which will reduce the cash available for distribution to our shareholders
5. 24facts and circumstances related to that sale. We cannot guarantee that sales of our properties would not be prohibited transactions unless we comply with certain statutory safe-harbor provisions
6. 25We face possible federal, state and local tax audits
7. 26Legislative or regulatory tax changes related to REITs could materially and adversely affect our business
8. 27Dividends paid by REITs do not qualify for the reduced tax rates provided under current law
9. 28Partnership tax audit rules could have a material adverse effect on us

Risks Related to our Debt Financings

1. 29We face risks related to current debt maturities, including refinancing risk
2. 30As a result of our interest rate hedges, swap agreements and other, similar arrangements, we face counterparty risks
3. 31Financing our future growth plan or refinancing existing debt maturities could be impacted by negative capital market conditions
4. 32The terms and covenants relating to our indebtedness could adversely impact our financial performance
5. 33Our organizational documents contain no limitation on the amount of debt we may incur. As a result, we may become highly leveraged in the future

Risks Related to our Organization and Structure

1. 34We are dependent upon our senior management team whose continued service is not guaranteed
2. 35The loss of key personnel, including our on-site personnel, or difficulties we encounter in hiring, training and retaining personnel, including skilled field personnel, may adversely affect our rental revenues
3. 36Certain provisions of Maryland law could inhibit changes in control, which may discourage third parties from conducting a tender offer or seeking other change of control transactions that could involve a premium price for our shares or otherwise benefit our shareholders
4. 37We have opted out of these provisions of Maryland law. However, our Board may opt to make these provisions applicable to us at any time without shareholder notice or approval
5. 38Our shareholders have limited control to prevent us from making any changes to our investment and financing policies
6. 39Our rights and the rights of our shareholders to take action against our Trustees and officers are limited
7. 40Our declaration of trust permits our Board to issue preferred shares with terms that may discourage third parties from conducting a tender offer or seeking other change of control transactions that could involve a premium price for our shares or otherwise benefit our shareholders

Risks Related to our Securities

1. 41Additional issuances of equity securities may be dilutive to shareholders
2. 42Many factors could have an adverse effect on the market value of our securities
3. 43The market price of our common shares has been, and may continue to be, particularly volatile, and our shareholders may be unable to resell their shares at a profit
4. 44Many states and local jurisdictions are facing severe budgetary problems which may have an adverse impact on our business and financial results
5. 45We may incur impairment charges
6. 46Inflation, responses to high inflation and rising operating expenses could reduce our cash flow and funds available for future distributions
7. 47We cannot assure our ability to pay dividends in the future
8. 48We may become subject to litigation or threatened litigation which may divert management’s time and attention, require us to pay damages and expenses or restrict the operation of our business
9. 49Legislative actions and changes may cause our general and administrative costs and compliance costs to increase
10. 50Privacy concerns could result in regulatory changes that may harm our business
11. 51Terrorist attacks, active shooter incidents and other acts of violence or war may adversely impact our performance and may affect the markets on which our securities are traded
12. 52ESG issues may have an adverse effect on our business, financial condition and results of operations and damage our reputation
13. 53Further, different stakeholder groups have divergent views on ESG matters, and anti-ESG sentiment exists. This divergence of views increases the risk that any action or lack thereof with respect to ESG matters will be perceived negatively by at least some stakeholders
14. 54Failure to maintain effective internal control over financial reporting could have a material adverse effect on our business, results of operations, financial condition, and share price