CubeSmart Q1 FY2025 earnings call

• Performance in the first quarter was strong with key metrics trending toward the higher end of expectations.
• Experienced solid top-of-funnel demand, with rental rates for new customers improving and existing customer health solid.
• Muted operating expense growth due to platform optimization while maintaining best-in-class customer service.
• Closed acquisition of joint venture partners' interest in a high-quality portfolio, expanding presence in NYC Boroughs, Chicago, and DC suburbs; supply-impacted markets showing stabilization/recovery.

Same-store revenue growth was down 0.4% over the prior year, an improvement from the 1.6% decline in the fourth quarter. Average occupancy for the same-store portfolio was 89.5% in the first quarter, a 50 basis point decrease from the prior quarter. Move-in rates in Q1 were down about 8% year-over-year, an improvement from the 10% decline in Q4. Same-store operating expenses grew 0.6% year-over-year, better than modeled. FFO per share was $0.64, $0.01 above the high end of guidance. The company closed on the acquisition of a joint venture portfolio, expanding presence in key markets.

• Base case for gradual improvement in operational metrics in 2025 without sharp re-acceleration.
• Maintained prior range for top-line growth, narrowed expense range slightly, improving FFO per share midpoint.
• 2Q FFO guide ranges from $0.63 to $0.65.

• Economic volatility impacting consumer decisions and storage demand.
• Uncertainty around interest rates and cost of capital affecting acquisition opportunities.
• Timing and volatility of operating expenses and marketing spend.

Q: Good morning, everybody. I guess maybe, Chris, you mentioned, you know, when I looked at the press release yesterday, you talked about solid demand, right? You kind of characterized the environment that way. Just maybe expand on that comment. Help us understand what the drivers are to demand at this time that you certainly saw in the first quarter?

A: So, the beauty of our business and why it's so resilient is that our customer can be everyone. And so, the drivers of demand in the quarter, given what's going on in the housing market, clearly that customer who is selling, buying a single-family home continues to not be at the levels that we would have experienced historically. And that's been the situation now for a few years. So, within that demand, it's the everyday life events plus our business customers who find us as a solution to whatever their need is for storing their possessions for a defined period of time. So, nothing new. It's just an incredibly resilient business with a very, very diverse customer base, with a very diverse set of needs. And as a result, you know, we've proven over time to be a very, very resilient business. And that's what's so great about self-storage.

Q: Yes. Good morning. I wanted to ask a couple of questions on the New York City market and DC. Both markets rebounded nicely. I was curious, is that more along the lines of the rebound you saw nationally in your portfolio? Or are there certain elements about New York City or DC that you think are more supportive that might have more sustainability going forward? Thank you.

A: Yeah, great question, Ki Bin. It's, as often in our business, a mixture of the two. The boroughs seeing very good performance that is led by the Bronx and Brooklyn. Both seeing, you know, kind of 5ish type percent same-store revenue growth. Very solid. Queens, you know, the submarkets, with the exception of Long Island City, doing well. Long Island City is going to face a pretty competitive supply situation here for a little bit, quite close to all of our stores in that market. And then the opposite when you get to the MSA is northern New Jersey, which is kind of flat in the first quarter. And it's still, you know, moving in a good direction with the supply impact, but has a ways to go. DC, I think, again, the suburbs continue to be quite strong, and the district, you know, itself is up close to 4% in the quarter, same-store revenue, and moving in a good direction. So, I would say, to kind of get more direct, a little bit better than what we're seeing nationally, we're seeing in New York City, Washington, and its suburbs, and Chicago. And I think, you know, those trends marginally will continue as we go throughout the year.