CUBE CubeSmart

Item 8.01 Other Events.

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As stated above, on October 21, 2020, the Operating Partnership entered into the Purchase Agreement with respect to the Storage Deluxe Acquisition for an aggregate purchase price of approximately $540 million. Consideration for the properties in the Storage Deluxe Acquisition will consist of approximately $201.7 million payable in cash, approximately $183.7 million payable in Class B Units, and the assumption of approximately $154.6 million of existing fixed-rate secured debt (the “Assumed Debt”). In connection with the execution of the Purchase Agreement, we have deposited $27.0 million in escrow as earnest money. This escrow amount (excluding interest thereon) will be credited towards payment of the purchase price at the closing of the initial tranche of the acquisition. We expect to finance the balance of the cash portion of the purchase price at closing through cash on hand and borrowings under our unsecured revolving credit facility. The Class B Units issuable as part of the purchase price will be valued at the greater of (x) the average share price per common share of CubeSmart’s common shares on the New York Stock Exchange during the 90 days prior to seven (7) days prior to closing of the initial tranche of the acquisition, and (y) the consensus net asset value of the Operating Partnership as reported by SNL (“Spot NAV”) as of seven (7) days prior to such closing. We are not an affiliate of Storage Deluxe or any of its affiliates, and the terms of the Storage Deluxe Acquisition were determined through arm’s-length negotiation.

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We expect to consummate the acquisition in two tranches during the fourth quarter of 2020. We anticipate closing on the purchase of six properties, with a purchase price of approximately $432 million, including the assumption of the Assumed Debt, immediately following completion of the loan assumption process. We also expect to consummate the closing on the remaining two properties, with a purchase price of approximately $108 million, during the fourth quarter of 2020.

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The consummation of the Storage Deluxe Acquisition is subject to satisfaction of certain conditions, primarily with respect to certain title requirements for the properties, receipt of estoppels from lessors related to the leases to be assigned, deliverables from the association and the board of managers with respect to a condominium property, consents to the assumption of the Assumed Debt by the lenders of such Assumed Debt and other customary closing conditions. We cannot assure you that we will be able to complete the Storage Deluxe Acquisition on the terms contemplated, or at all.

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We may elect to terminate the acquisition without penalty if consent of lenders to our assumption of the Assumed Debt has not been received by December 15, 2020. We may also elect to terminate the Purchase Agreement without penalty if certain title deficiencies are not remedied by the sellers. In the event that the sellers materially breach their obligations to consummate the Storage Deluxe Acquisition, we may either (i) terminate the Purchase Agreement, in which case we will be entitled to the return of the earnest money or (ii) specifically enforce the Purchase Agreement within 30 days of the breach. If the sellers breach any of their representations or