CubeSmart Q4 FY2024 earnings call

• Chris Marr noted the fourth quarter of 2024 may have been an inflection point in decelerating same-store revenue growth, with same-store occupancy gap narrowing and new customer rental rents improving. The New York market continued to outperform. - Tim Martin reviewed fourth quarter results, talked about investment activity, and provided 2025 expectations, including FFO per share range of $2.50 to $2.59, same-store NOI midpoint down 3%, and considerations for expenses, external growth, and refinancing. - The company announced a 2% increase in quarterly dividend to an annualized $2.08 per share.

In the fourth quarter, same-store NOI declined 3.7%. Same-store revenue growth was negative 1.6% for the quarter, driven by pressure on asking rates and occupancy levels dropping 120 basis points. For the year, real estate taxes grew 5.7%. In the fourth quarter, the company closed on store acquisitions in Oregon for $22 million and an 85% interest in a 14-store portfolio in the Dallas MSA, and acquired the remaining 80% interest in the HBP4 joint venture. The HBP4 venture had acquired 28 stores from 2017 to 2021, and the acquisition was accretive and brought the portfolio on balance sheet free and clear of property-level debt.

• Same-store revenue guidance assumes fundamental operating environment similar to last two years with no material changes, with high end assuming inflection positive in back half of year and low end assuming current negative gaps maintain. - FFO per share expectation for 2025 is $2.50 to $2.59 range, midpoint $2.545, down about nine cents from 2024. - Same-store NOI midpoint expectation down 3%, with factors like lease-up properties, G&A expense growth, and refinancing bond maturity impacting, offset by external growth earnings accretion.

• Macro-economic and geopolitical uncertainty. - Real estate taxes being a wild card with difficult comps in previous years and unpredictability. - Property insurance pressure.

Q: Curious if you see other similar opportunities with existing partners today regarding the JV transaction.

A: No imminent opportunities for other joint ventures, but partner in HBP4 was looking for liquidity.

Q: Thinking about street rate war or competitors cutting street rate in 2025.

A: Concerned is not the right word, being cautious, last three months more constructive on rates but need to see consistency.

Q: Update on how move-in rents are trending as far into 1Q.

A: Move-in rents have improved, gone from fourth quarter average negative 10.3% to last week averaging negative 7.4%.

Q: Provide color on transaction market fuel mix.

A: Continues to be a lot of price discovery, mixed messaging from brokers, impact of interest rates on seller and buyer expectations.

Q: First quarter guidance sequential change.

A: Primarily same seasonal type of decline as usual, no other factors outside normal seasonality.

Q: Funding plans for HBP4 acquisition.

A: Raised significant portion of capital through ATM program, proceeds show up on revolver, will use free cash flow and raise capital opportunistically to manage leverage.

Q: Share repurchase authorization and mental calculus in terms of buybacks versus acquisitions.

A: Have authorized share repurchase program, but currently no significant disconnect in valuations to make it an attractive use of capital.

Q: New York market performance in 2025.

A: Continued optimism, boroughs perform well with no supply, North Jersey starting to close gap.

Q: Operating expenses in certain markets and ECRI levels in 2025.

A: Real estate tax increase in some markets was due to tough comp from good news last year, ECRI levels at midpoint assumed similar to 2024 with variations at extremes.

Q: Advertising spend and its impact.

A: Advertising spend lumpy quarter to quarter, driven by balance between rate and search, no impact on October or November weakness.

Q: Operational efficiency and property taxes.

A: Low-hanging fruit picked, property taxes hard to predict due to varying municipality assessments.

Q: First quarter FFO guidance and potential breakdown.

A: No detailed breakdown provided beyond what's already discussed on the call.

Q: Potential job changes in DC tied to Trump and impact on storage.

A: Unfortunate reality is potential positive impact on storage in DC due to job dislocation leading to need for self-storage products.