CUBE - Earnings call transcript Q4 2017

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Operator

Good morning, everyone, and welcome to the CubeSmart Fourth Quarter 2017 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please also note, today’s event is being recorded. At this time, I would like to turn the conference call over to Mr. Investor of Director Place, Relations. Charlie ahead. Sir, please go

Charlie Place

Financial time. Good Thank Executive and Malvern, sunny Eagles, call. you the Participants Chief everyone. XXXX call Tim fourth World Marr, you much, Jamie. if President first me hear include very on morning didn’t to Pennsylvania, earnings Officer; Officer. Philadelphia CubeSmart’s quarter from Champion, Hello, Welcome will home Chris today’s your of Chief and Martin,

Our Q&A will session. prepared be a remarks by followed

to was which Investor issued evening, In from actual the the factors addition forward-looking release to earnings strategy is differ are company’s the to Securities our and results Report statements operating under company’s The and other with data The that certain Form that forward-looking risks Relations filed yesterday together documents our may forward-looking the financial will www.cubesmart.com. could of materially X-K and factors this the and filed section X-K earnings that these materially earnings statements. Form supplemental of include Annual furnishes involve Form cause from XX-K. remarks files the regarding and our website risks, available actual Risk differ on specifically the with at section uncertainties provided morning, the in Exchange to Commission, Factors or results company’s with statements we cause release company and the

non-GAAP GAAP over company’s will supplement company’s I the can financial Chris. website the and between addition, remarks found In measures turn call www.cubesmart.com. reconciliation in non-GAAP include now at to the fourth A be reference on posted quarter to the measures.

Christopher Marr

Charlie. Okay. Thank you,

technical the difficulties. for apologies Our

asking our exceed share rates the quarter the FFO growth Average favorably reported The metrics stay with net during compared solid and higher of changes to elongated growth the monitor. same-store the the and X.X% with others our remains fourth operating compared XXXX. fourth occupancy single quarter revenue of markets quarter other certainly we of XXXX of higher to Our the physical levels of no extremely point capitalized a had same-store to we on solid XXXX Comparing XX.X% of the gloomy entered results in in outlook any length fourth quarter at many produced successful key markets of growth on We lower every same-store fourth year. reported year-over-year of markets most slightly of that was opportunity fourth and compared of discounting in conclusion. of sectors and we revenue growth. what our this than third fourth of XXXX health customer income top the XXXX. last Full-year of Six basis, positive to a that the achieved quarter per XX with high record XXXX. one quarter modestly brought quarter, significant

sheet and Our non assets continue approach our our and the targets. exceed We ventures. income in disciplined investment same-store assets also capital occupancy to development quarter both and on and allocate continue performed operating revenue well balance our prudently will remain net in during joint to

X.X% increase in As expected, this Over add to and additional period, in increased have of well the the to feet new average to three-year expected as still approximately impact below square still by XXXX XXXX. X% lease-up supply markets X.X%, an per X.X%. XXXX, will national from top in new properties capita XX is openings our from

manageable. trends new demonstrate strong supply about of markets demographic continuing supply annual leading So with and X% year, levels impact on an per of basis awareness short-term increasing to believe of to increase is the demand, in our we just

share our shaping to that, that who positions what stores term, in Financial focus looking getting for primary might the well REIT also while like it paycheck power first prices turn platform and up possibly focus the their metric to supply outlook XXXX, is and to and on is markets, been the in across much wage growth having our new and sheet, closing, store market impact levels labor quarter quantifying a our high-quality an time revenue like new seems has new not understandably light to that been Martin for results Tim competition presented. will operating We real the in follow one lease Now increasing platform to has sophisticated for I due Officer, self-storage. the who suggesting more direct how maximizing and lower be actually which of in have perhaps headwind of enough But yields, of experiencing much fairly operating believe focus impacting take tax balance additional of our XXXX customer now however, course, growth will. ours. continued a sophisticated demand our is a rates. over the our call Chief leasing opportunity Tim? it our a same- a on short in In XXXX, When certainly for new same-store remains expectations for for perspective and and treasury self-storage strong. volatile is supply extremely many supply seeing will XXXX. a growth, continue us portfolio, actual the That create at of short-term speaks revenues solid and up tight meaningful solid demand that stores to commentary the the XXXX of number in very we

Timothy Martin

and on interest thank and continued everyone call the Chris, support. you your for Thanks, to

CubeSmart. growth, a the on, revenue quarter As X% had performance included quarter. results year headline expense for fourth of of NOI across for successful Same-store results and our rather many growth X.X% touched growth fronts X.X% Chris yielding

our XXXX of opportunity the able For than the occupancy the expenses NOI We more would leading overall improve half. an first revenues same-store modestly we and of the half X.X% to X.X%. over with year full-year, started X.X% that in to growth grew back grew levels XXXX expectation be with

back, basis higher QX, from points XX occupancy QX. year-over-year levels average Looking in flat basis in in points QX, occupancy points we benefit the was basis higher XX that out just higher way and year-over-year received played QX, in as XX

course, estate to were light growth increasing expectations, the Of Same-store growth from drive effective and than at reported the the goal adjusted last range $X.XX the we we quarter of during same of we revenue that of which Chicago in bills and is a our better for were than the able bit X.X% in throughout and over rent quarter, year high-end which per growth provided the was of the came share expense meaningful our received as FFO the to X% in of new supply. maximize We as real Florida XXXX, estimates. represents is tax year. quarter lower pressure over for

remain For share pursuit was XXXX. the increase We in per external which of our reported XX.X% $X.XX, was a growth and year, over our active disciplined FFO opportunities.

purchase During the fourth $XX.X release under we were in closed properties which of the our disclosed contract two quarter, last on and million, for quarter.

$X.X a last Our third disclosed by acquisition for was newly million. formed JV property quarter acquired

acquired million. for four year, we $XX.X the For stores

$XX.X JV for acquired Chicago and $XX.X two During in our stores store million in Florida C/O, development Brooklyn. also one opened the in Beach, Delray million, one we at we and quarter, also

stores any For development JV stores pipeline million add fourth the and two to the $XXX.X three stores. invested projects year, two did quarter. at our stores, C/O, during development in not new wholly-owned we We newly opened development including

count XXX to to expand the into the an us our a Pittsburgh, third-party fourth enhance the off markets Saint the XXX front, to existing XXXX CubeSmart program. more brand the Store bringing total management adding our new year like during our XX% and On Seattle, finished grow as XX we year by position us we to our City, Those added year, market XPM markets in new allowed quarter, ended productive Kansas stores and incredibly with in Louis. allowing additions stores stores

On credit the sheet, in continue that’s balance manner ratings. BBB/BaaX growth our to a focus on funding with we consistent our conservative

a quarter we average selling of at first or shares million. share using were per $XX.X price the of an program, million our sales year, net over during time For proceeds X the at-the-market raising ATM equity in $XX.XX active

XXXX million $XXX well-positioned balance maturities sheet in maturities Our modest is with XXXX. of and in debt no

have XXXX XX%. were Details our dividend annualized of last included suggests night. of share per related midpoint on payout the And and in guidance an our fund neutral to raising utilizing our existing basis announced expected free our our the flow. without quarterly commitments we development an to capital guidance, our a of dividend two We leveraged increased an next based on XXXX ratio continue under cash $X.XX ability earnings December, dividend, years over assumptions the release In just to FFO any the our by to additional increase bringing XX% equity basis. on

occupancy Our little by effective overwhelmingly from around XXXX guidance Same-store rates. revenue same-store net property pool stores in and again, or XX by driven increased assumes is X%. expected growth impact

of compete Our on of approach expectations forecasts impact approximately the impact our will for is if new with store portfolio. detailed of level, competitive at XXXX in any, ground-up the same-store based stores. the are the XX% well XXXX compete same-store will that our as that consider Embedded delivered deliveries with our year and of XXXX, in the supply asset-by-asset a as and supply new impact

our creates stores, very But competitive our and to have and than can based year impacted will pleased create it competition number The So not range XX%. remain to supply. pipeline supply lower ring stores XXX we expect course, revenue overall, a the to that of XXX We we are new factors. stores But new impact on short-term, by accretion developed facing from of NAV meaningful the on XX% lease-up growth points drag newly is believe we of the impacted FFO with last share. our store the provided of in its stabilization. group the that many up per individual in basis development trade progress by new

$X.XX for dilution. Our impacted a this is FFO $X.XX XXXX negatively as share per by to of result guidance

not Our includes disposition impact are impact very but activity to speculative timing any or levels guidance the or date of contract, under acquisition we’ve to does include predict. as and of of the closed difficult have activity, acquisitions

comments, of XXXX all of business. our strong Chris’ across was echoing So aspects another year execution

our for impacted people, disciplined new and meaningfully on the focused external and supply balance our Our neutral added broad-based. many growth to our basis. remain is while And the sector portfolio high-quality throughout remain leveraged by demand and in believe of cycle. performance. capacity estate focused well platform on systems program. a operating in our deliver sheet management have demonstrate and markets, commitments our position us ability the executing to clearly all to parts real perform We strong the objectives third-party development We consumer market-leading self-storage to expanded remains our strategy continue being We fund we

this call for At this the So time, some thanks, why morning. questions. on again, for up open we call Jamie, the joining us don’t

Operator

we’ll BMO at Jeremy and Ladies with comes [Operator gentlemen, this your question Please go Metz Instructions] time, Capital Markets. question-and-answer session. from question. ahead from Our begin today first the

Jeremy Metz

Hey, at this is modest Chris, in terms to the primarily by X%, driven guys. rate X% the in slowing you’re the expecting of revenues, which point.

out, further helps if you level? in look it you give we you’re confidence stabilizing in this anything can that comment particular at sort As so, of that? of do seeing And today you you see kind

Christopher Marr

morning, Good Jeremy.

I as back period X%. time performance less revenue we recession, that’s right of that cycles, varying looking just same-store the XX sophistication, cetera. of again, look the think, et I around historic period great a growth – averaged through self-storage Obviously, over at years,

think next or as growth brand, next the XX, the that there within of think, the one would you sophistication, et varying should over sector should cycles of say, I be over certainly, and power increasing same-store expect cetera years, through look XX that So level I the out would X% revenue given self-storage the I better. sit at

think I new to supply short-term near-term, going impact us. the affect obviously, the of is in

signs we rates clip again as faster potentially able short-term growing than starting lease, we see inflation, of think, are just signs I our a that to sector behind given lodging, the our on nature of at grow look think, inflation. of maybe I would to out be should

your be possibly pinpoint XXXX inflation, achieve by think, the over our opportunity think to to little XXXX us signs higher aggressive growing but to able an certainly what to a I happen create what’s expect for specifically be would going or than of we rate. on to XXXX, not would certainly answer here think more I So And impacted in XXXX. I which could in be expectations long-term,

Jeremy Metz

little into tell out you you XXXX a here? view mean, stabilizes you then that And next as – to actually or gets had supply, is as look I supply if know it actually it’s you it have to year, at at point? mentioned do from early I you think from better this worse? don’t too Do a look where

Christopher Marr

But it of rolling in which next been year aren’t XXXX, not could in the could is on that the on does at today. have the of we view down growth this that I opened have, certainly stores based available particularly our that say of Certainly, radar our would best to data – see supply that in the people many yet stores land, in has that and and levels Our we same three-year could be XXXX conversations and that like, we shouldn’t point feel XXXX. take visibility, all markets, saw constructed clear.

Jeremy Metz

Chris. Thanks,

Operator

your Yulico comes question next Our ahead from with Nick question. UBS. Please go from

Trent Nathan Trujillo

question. the is morning. on This Trujillo Thanks good for Hi, Nick taking in. for Trent

you [ph] the from that about you know customer rate that versus up effective could bit you’re basis rent different maybe little increases same-store bit thinking managed and net to But talk follow-up make growth. level, about you’re embed to fourth to rent mentioning more changes Just about the XXX how discounting? a and occupancy quarter guidance same-store I the how assumption revenue deceleration existing topic points little you’re maybe a thinking about any components on revenue,

Timothy Martin

system those The Tim. revenue – individual on variables. market revenue conditions, growth our the Hey, will is it’s based using components management revenue of of and any maximize to designed are vary

our is are tend impacted not XX%. components. year we that different What now new individually stores to was So about of XXXX, on XX% expect of guide last supply, course, we by where those is focus nor it to that

in gain components individual first fact the XXXX average down of did occupancy the I revenue all physical relevant, XX throughout in drivers, although So not quarter. points to on touched flat fourth quarter, from weighing comments our my that on to – ability that the basis

very looking little, at benefit expect any, moving occupancy physical if occupancy in And over so forward, XXXX we from XXXX.

revenue get top come – the to And growth that entirely to line so we’re effective net going going in growth the rate is on the from rate.

Christopher Marr

And Chris. this is

little about XQ a XX XXXX, to in point compared we identical XXXX on XXXX. with compared discounts do what color it percentage reduction The rent we to had XQ XX X.X% of an That was at point QX, basis Just that consistent to XQ basis discounting. as saw in was further a reduction at seen X.X%.

our are again, talked discounting be helped much And to those So to we as wouldn’t about the sequentially. XXXX. quarter, Again, that we squeeze able expect last more historic for of lows portfolio. out line in

Trent Nathan Trujillo

Okay, we’re the fair detail. any since helpful to is you Very, how quarter, been very that that enough. trending to far through have as provide halfway things first And so year-to-date? can roughly there have indication

Christopher Marr

consistent trending Tim been that process articulated. has Year-to-date very Yes. the with ground-up

XX, occupancies higher around the we Our to pool the we have new basically were – on been points in what like, XXXX. same are running compared at basis than of XX XX XXXX store where days first,

our pool. with to levels we remains and our rates on have XXXX rental pretty discounting to far have XXXX seen that thus would in comparing this growth continue We positive consistent

to market So continues good. be

bad have happened tend it clear some had certain had where markets, But back those to things a they Friday up. or to when have luck on or either we’ve need a frigid in weather We snow, Saturday. be temperatures again, has customers a come and with

Timothy Martin

so either, that’s to that They move positive. it’s also when cold tend don’t out humorously

Trent Nathan Trujillo

for Good very point. much Well, thank the you color.

Christopher Marr

you. Thank

Operator

Bin Our Kim comes SunTrust. next from with your Ki go question from question. Please

Ki Bin Kim

product you a on guidance. all better X.X% a versus conservative, But maybe gave little due How same-store given you detail for management spring seasonal is just bridge on a it a in a where you the much you being know. Thanks help the can Thanks. revenue to yet, the bit it not we’re really do little season of guidance. leasing it don’t it’s that so and ground-up the gap

So you much guidance? how wiggle I’m room how trying just in is much understand to have – your

Christopher Marr

leasing in without year every the as upcoming process, think be pricing Ki rates as time I an same competitive is Bin, always approach the ground-up going how So, year. this the where We sit there asset-by-asset throughout part and what the visibility consistent And as about we are to here take limited summer we’ve levels are as mid-February to exactly we a visibility visibility going have visibility. we challenge for in to do to done. be the a year, without to main season, in mentioned, at of without of consumer to actions, us it XX-day business, lease demand we

have I all can track is approach consistent that outcomes And that think, see I months. XX.X taken a we tell we nearly potential providing coming range years. that a the of record for all it’s a over that for we next the XX have you guidance encapsulates

Ki Bin Kim

And street in what rates were the January/February?

Timothy Martin

Street X% running similar day rates over XXXX. in a and X% somewhere basically between

Ki Bin Kim

X% most come growth. I you look it, on past the of rate the down so said January/February would wrong And year the Where at flattish in rates rates will that eventually maybe growth of, same-store come call positive XXXX that little that from rental or have It rental assessment? your But X%. to on indicate over level. would I street maybe if would towards

Timothy Martin

follow I’m again? I not assessment. me sure Tell your

Ki Bin Kim

that that to X% same-store Street zero rate X.X% rates Well, the news of are flow-through increase revenue towards time. X%, benefit getting year I would from over your some X%, is from should program, but time, last your you’re to X% to the type same-store is somewhat positive. not still of so or kind mean, might revenue indicate X% still It zero over go existing to good customer

think So lever there? or do a am I that’s ingredient missing correct, you or

Timothy Martin

And think, – time. think, of it’s I over there long fluctuate. rates I Street period I think, a are

your pricing way the relatively rates in own your of results are would indicative Street a manner assuming the works. can fluctuate volatile think that survey survey I suggest

range We to best have provided is we performance the our reflects what expectation be guidance in that for think going XXXX. our

Ki Bin Kim

Okay. Thank you, guys.

Christopher Marr

you. Thank

Operator

of with from comes Please your question Bank go question. next from ahead Our America. [indiscernible]

Juan Sanabria

Hi, this is Juan Sanabria.

Just on in be trajectory of expected that, in a tailwind basis XXXX? the throughout XXXX that first-half the as what’s through guidance, concession of you point saw that XX should XXXX? the we assuming same-store the growth And of second-half lower carries

Christopher Marr

less Consistent Chris. then QX the think as base we nature with Hey, you go through, and start throughout off. certainly visibility described I’ll way it’s go year. has as about increasingly into more given have Tim Juan, the the the our of process we we visibility customer this, and

not than this occupancy opportunity the expect here certainly So, expect would XX or we different going year, points that basis at again, range The Last that discounting, we would sitting increase year. of course to your plus will point. to expect we minus in is the the XX over how go would Street would this of second-half the of sort rates And as we increase. your be the in given year than nature business of the again, operates, the year. revenue through year, higher growth the of same-store first-half would we to expect as

Juan Sanabria

going do But XXXX second-half saw a to that first-half environment are higher the saying, lower that just tailwind carryforward whole, in higher? you second-half just year-over-year you a Okay. into trend a was you versus benefit concessions basis point or XX in concessions of the as generally first-half like supply expect the XXXX, to that’s to XXXX

Christopher Marr

Yes.

the of that is, because what think trend – lower increase. either stated, Tim change record probability fact they are lower tomorrow, stay would they concessions to managing, flat a us, has our affective than I an is lows rent. expectation our continuing to again today as expectation we’re that for saying in as that can we But or that have for

will and is asking liberal concession asking to we with rent, our be answer to right right also then so little meaningfully that’s the And the lower is grow maximize the approach to If if maximize that’s tomorrow revenue. will and provide rents tomorrow take we then no action answer revenue. a concessions, the to more take

Juan Sanabria

them offer are strategy expect? Street tend to last they advantage and upfront some take kind you on seeing maybe than And maybe they opportunity any put would they than on that to customers of start anticipate a that higher concession flexibility stay starting rate that the there, of pricing will fact the longer that longer and when

Christopher Marr

right Consistent years, things with over the way we last in at mix come we’re all many have those yes, business the analyzed the looking as into consideration that revenue. of our maximizes pricing

Juan Sanabria

quick a now of a stay just you ticked And the on up said length Okay. follow-up What’s it that. bit? average

Christopher Marr

in of around months. fourth right length XX average The stay was the quarter

Juan Sanabria

Thank you.

Christopher Marr

Thanks.

Operator

next Our question from Please Citi. go Rose ahead from Smedes question. comes with your

Smedes Rose

just that across uptick, pressure a you it specifically markets ask you side a to on estate seeing can in uptick there wanted that as or item. driver real real that the out on I specifically of Are you call or you significant taxes line taxes, significant any Board? expecting expense the Thank where just is you’re a generally mentioned estate

Timothy Martin

particular, as of for our work there not Hey, it same in we next as of additional for Texas Smedes, of the see this outside answered exact the year, exact same probably it’s there’s the in every because and couple And work with years. all like XXXX, every the consultant Tim. but question single do there’s In and across our pressure is still way but like only potential markets. that suggests sounds Florida. all We the I pressure broad the It’s pressure particular, – answer in we additional feel most Illinois, single Chicago, well year.

as so expenses quarter fourth bit, we we quarter. a our the XXXX those results came were – And in little helped indicated fourth

than bills creates in a we bit lower leading So were higher. tougher increases expecting, a XXXX ultimately, tax might XXXX, little be percentage little that little to bit bit comp a in came which

X%. almost the on a experienced item it, three X.X% past years over So growth X%, that line or four high call from to we’ve

growth I across for here X% or to for four of pretty past probably the three believe, X% but of couple see next not CubeSmart, the sector years, indicative probably the is And you’ll again only so over that type what years.

Smedes Rose

how just Could saw, the I the of impact maybe sort the same-store at Okay. from overall over lingering in year? mean, you it’s And that quarter. hurricane activity. market of in just or the impact you talk that high then And fourth NOI looking you the growth Houston, play think might out about pretty course

Christopher Marr

Chris. it’s Hey,

yesterday through pretty the last customers XXX continues year. well occupancy, XXX space. percent points rents having longer to gradually Houston, basis no for plus hold asking a But So X-ish the up to need over are

just that slow us. That seen vacate the a expect conditions already those we’d they So think, determine the weather for as be for who where the there of have customers need a that a no Florida, contrast service majority that would overwhelming have to bit product. longer left of ultimately I we’ve a with we provided the result

Smedes Rose

just you Okay. and this. rates for one your touched at point spread, guess, me, And then a final the of what between rent across asking your – I just portfolio? is this kind the What’s in-place on

Christopher Marr

Yes.

we – street. at and customers today, current more are little customers bit are street about between below than rates rates a at whose take you look of current got customers are those XX-XX half where above who Well, we’ve whose our it’s If a rates. are almost

Smedes Rose

Okay.

Okay, thank you.

Operator

from Thomas ahead from comes question question. with Please go next KeyBanc Our Todd your Capital Markets.

Todd Thomas

thanks. Hi, morning. Good

pricing new First of impacted management specifically ahead? portfolio kind with question, does in versus XXXX the How XX% XX% model, think revenue of system being you that The year. Tim. the from as impact change last development and

Timothy Martin

much. Fly, to Eagles I – bit So, a a was first Todd, question but I consider whether too thought just that thought going little be was playing Fly, like I was your that

Miller’s back Eagle. reverted an Like we to Steve Fly So

answer for of we that I’m But that how have stores certainly So new process, have question, your stores first ground-up look properties ring question. look we to forecast budget and in on their don’t differently your competitive new competition. we than that the within XX% trade the what’s budget we disappointed at how at

We trailing compete process for look those to data. build new like the stores stores all we develop just that they expectations against into supply look when do performed, So, at ground-up the how we at have and stores.

to to the inputs answer. different get So

Todd Thomas

quarter of look quarter, around almost guidance. I’m X.XX% Okay. back just you’re the thinking the you of to comments I the if from to of this the to XXXX, And forecast in some that trajectory And maybe raised whether But below And too for than you the gauge December challenging a could quarter bit there. maybe But about out perhaps? I’m you a the little to in into trying talk at but sort the you then and anticipated, breaking I’m last of then, was October, talk November I’m it said full-year fourth also more midpoint performance what point revenue the X.XX%. growth saw just the on reading much. with quarter your through in the you just about halfway maybe came about you X.XX% back-half December growth itself X.XX% happened in and little curious,

Christopher Marr

date Hey, back-half Yes. of us. call and a December that points, November basis light will a expected. say we have on December few the certainly and we how rental as Within Chris. bit perform, the it’s would the Todd, would volume from at probably little of a in I came perspective, we’re was for little optimistic more

with in pattern just the of think, our weather to good way a that again, commentary, back my think, the December. had deal do I I previous worked markets to in

those portion of January. back a customers So saw in we come

So of on just to bit think, timing those when it a I rent. was customers elected

Todd Thomas

seen that of Okay. And some far? recovered you January in have so

Christopher Marr

is We’ve equal the But February Some January. in to first as of be all snow with weather continues it, yes. of out had in came some here the all solid. in well in bad of January pretty well weekends part markets our some areas in

Todd Thomas

you acquisitions, properties you in acquired the rate cap provide And the can wholly-owned for lastly, the Okay. that on a quarter? just

Christopher Marr

Sure. right in are around in stage couple The that came assets a we of the of X.X%. their of – bought where the assets during they lease-up, the mixture quarter are but

Todd Thomas

you. Thank Okay.

Operator

B. with your question next question. Our comes Please FBR. David from ahead from Riley go Corak

David Corak

Hey, good morning, guys.

like? your in spread? – your yields seen sticking movement to kind what going has assumptions the made bid-ask in the for or have looking any with stabilized And cap as to changes development or rates rates deals, on change a been any a end second, change Just of then are you any cap up there you material have any

Christopher Marr

David. Hey,

rate the in last that’s any cap haven’t with cap environment, On quarters. rates pretty of the seen consistent change and couple we really

acquisitive, secondary have capital tertiary I funds variety in of had raised. in think a they the particularly less and as little reads private been being space, the markets aggressive are fairly into a deploying the move bit that you’ve seen and

So I cap relatively rates combination kept that unchanged. think has

continue it as would way moves some filter while on to rates, on through. takes treasuries we we upward expect forward. their rates, see a I see Certainly, pressure move ultimately one pressure cap think, to in for if to

service development are placed actual expectations. side flow, the or if exceeded has you under cash overall performance, stores that On those even for look construction, our those in we that our just have at

move forward, to haven’t we would those our very again, have we the expectations better adjusted that performed have little on we based bit anticipated. stores and a cautiously continue fact As than underwrite

David Corak

And a total that kind I including York if this on of total in from have but book coming updated, have MSA stabilized everything lease-up New boroughs in and on NOI you of basis? still don’t ground, out of know based what stem the and number Okay. you percentage today, the will

Christopher Marr

to New there out as grow in that XX% NOI Ultimately, stores York which are continue to certainly somewhere we I is to when don’t other that markets add finished, and in would we finish markets, in going contribution the everything expect range. XX% the you stores we City, consider going if to be that in is other

David Corak

Okay, great. Thanks, guys.

Christopher Marr

Thanks.

Operator

Hoglund Please George from your with from question. comes Jefferies. question ahead go next Our

George Hoglund

Hey, guys.

XXXX? look the same-store greatest at by here. questions where NOI and growth both when would XXXX of to relative couple variances One, negatively in positively expect market, you a you Just

Christopher Marr

Yes.

on see of George, to much the it’s an burden taxes. tough, because that on So related going where we’re to is NOI, usual

would market would the NOI. greatest greatest pressure that the possibilities Tim the taxes, we So have downward expect about on on spoke that have

that’s there’s at I out think, when other you being going markets, market one the particular pop not an outlier. look as to

George Hoglund

Okay. of taxes? And I also that coming maybe on then or so maybe guidance from basically be greatest of NOI the outperforming towards kind in your your of or beat would same-store possibility infer high-end

Timothy Martin

I on on X% beat potentially X% taxes mean, there’s of it’s think, I revenues. a on range to expense course, side. the

an than certainly on revenue range as less are the expense extent that, the to side. side the there able It’s visibility There’s on at of opportunity so just that many come the And on in items revenue bit little we higher-end the a on well. to side.

George Hoglund

then Okay. And last one. just one

the in impact, of more more portfolio? pushing I consistent with or we’ve anecdotally of management that’s NOI been of in in And secondary your markets. Is generation secondary primary something at market, markets revenue you’re seeing looking secondary speaking versus that kind aggressive from broadly having better guess, an just kind what so hearing where

Christopher Marr

And think to portfolio, between we us tertiary. a the that I at necessarily our frame non-supply and there’s markets. look is to evident the we or than more No, secondary bifurcation would markets primary, supply that when obviously say,

George Hoglund

All right. guys. Thanks,

Christopher Marr

Thanks.

Operator

open. [indiscernible] next Our it mute. your with is Jackson, And Wells question question. on possible line ahead your comes from Is Jackson from phone Please go Fargo. your is

Unidentified Analyst

I of guys total then percent was a I stores? of thinking that? manage given it then Yes, Can revenue? mute the taking those of some How you on it hit guess, me around as the percentage that first management I account the Sorry, do you for your I economics put off, what button remind on. Is flat but And growth, it charge of platform. fee? revenue now does a recent or third-party and

Christopher Marr

with lease-up store the the the consistent that that’s with contractual way and that percentage first of relationship model, an have a a several on years. contracts revenues owner with So floor overwhelmingly question, structured to the last the of the it’s been a is for part extent brand-new

information supplemental our a our management is range few following guidance with I expectation and which – of we more think best in of it on was some put fees. package inputs the practices were we one

table refer revenue I we a contribution of that would with in expect I management as fee included which you a terms getting of So what supplemental, sense help gross to the expectations. think in XXXX will to our

Timothy Martin

And property specifically, management $XX fees the range table million that’s XXXX in in is million that of to the in an $XX included expectation range.

total a our that revenues. of X% percentage a of revenues, north us puts bit just As our little total of

come generated to third-party management. from expect We fees from

Unidentified Analyst

then C/O And how and say, year those stores, you. compared that Thank on it. a how’s there is trending the Got ago? lease-up to,

Christopher Marr

that and flow to for cash purpose then openings, performance, been cut particularly stores see has we that few superior expectations. on overall were the if the our our built we chase our continue to you that acquired on also So have to development us on

continue little going in product each store overall, stores, But the lease-up than a our our C/O in individual see as at said to to opening good in its market market. we individual looking each the we and they or continue demand the Specifically, expectations add bit own has better idiosyncrasies. for continue remarks solid

Unidentified Analyst

you. Great. Thank

Operator

Please Our go question with from question. from ahead comes next Baird. your Milligan R.J.

Richard Milligan

on where the you if But of on follow-up the have versus the guys guys. do fourth was end fourth morning, quarter? Smedes’ question not wanted this. to Houston, occupancy Houston sure beginning I of you good quarter have Hey, at

Christopher Marr

Houston occupancy the the fourth at the versus the quarter end beginning quarter. of fourth of

Timothy Martin

that. for look I’ll RJ,

can If have that, I if see you me another question. another if you a ask you find have let – while question,

Richard Milligan

Great. Yes, sure.

incremental markets XXXX, about the that is most with properties be your can going your to to you competing be talk supply that XX% concentrated of in going in? For what’s top are new

Christopher Marr

quite expect been impactful, those more been would as talking new about about is in it that for supply. terms in talking Yes, we’ve you a markets of while we’ve that

the So New Dallas, Miami York D.C., in in California Washington impactful impact in in Boroughs Atlanta. and Boston. less more

South in I there. to Phoenix, seem Houston, bit We think a North little supply have Philadelphia, we’ve in actually in more a markets. the fairly seemingly stabilized bit and Jersey Austin, stable stabilized

Timothy Martin

quarter XX.X% Hey, XX.X%. same-stores RJ, the at the our ended on question, and of Houston in Houston the ended third physical occupancy at year

Richard Milligan

My that, for And thanks last – my last Tim. question question… Okay.

Timothy Martin

Sure.

Richard Milligan

be new will than XXXX it year would to XX%, that given …if of with XXXX XX%. Would number be saw in likely be last lease-up? in that your fair guys the properties XXXX to higher deliveries is still XX% competing supply, expected assume be you

Timothy Martin

in right? will deliveries XXXX, really Well, XXXX XXXX the in So to and number. deliveries looking XX% both, our XXXX included contribute at we’re XX%, in be

we when be XXXX. from at So and do from that XXXX, XXXX year looking calculation now, a we’ll deliveries

So both populations. will be the delivers in XXXX

our done. going goes have out, into what to it’s to to – in far So done question markets opening visibility think get and XX% the I XXXX, given to difficult approvals we down look it his like remarks think pretty do really in up is, or the comments, overall Chris’ it’s just the get deliveries are takes in the time many of construction

and absolutely delivered today You in XXXX. start have it project a could

that, visibility our we So year. went last we it’s impacted from What this year XX% perfect think stores is hard that. to XX% into to of have do though

it I XX% to up up think, we won’t it as XX%. saw is our from from down the be this that, whether XX% going up goes or or down XX%, from the move year as far expectation

be would frame fuzzy expect between your that’s because boy, on to XX%, and the is that one. guess, could say, to here as we somewhere big that crystal it sit XX% So today. But we a awfully ball

Richard Milligan

Gotcha.

is is, question XXXX greater than real the to and XXXX be going that… So

Christopher Marr

early a the that. that’s too think, right to little question, bit I it’s call and yes,

Richard Milligan

significant, a Gotcha. it And in those bit there new was is, What’s of don’t supply, bit California my push a that couple to in if but wasn’t any there. markets? last was – in then some color was extra a little little rate? there inability noticeable question just know, markets there. of a Is it of or decel just of I

Christopher Marr

Chris. it’s RJ, Hey, Yes.

many, you’re starting just of many think, of the above significantly I average see rate growth. years to weight

SKUs we there. out seeing really magnitude bit may new growth at the a have not all. But in any of supply of we’re magnitude cumulative gotten terms and our far little there over rate too so And the

Richard Milligan

Thanks, Excellent. guys.

Christopher Marr

Thanks.

Operator

your go comes from next question Rob Our question. from with Simone Evercore Please ahead ISI.

Robert Simone

for the most Hey, side been of have taking the good and morning. Thanks operational questions question answered. on guys, my

bit. the So little on financing wanted I just focus side a to

Your plans attributable year? this guidance and expected. guess, your rates rising how much little of higher could interest expense financing would we is maybe than then that about is I change you on have year maybe the a for talk to maybe

Christopher Marr

Sure.

on sheet variable We the the So underlying to to that for the exposure curve, it’s XX% we the of XX% not have and guidance a assumptions end is forth. lot debt the short our of certainly moving balance put parts in the – of rate.

there’s those are – expectation And rates that certainly an that move. so going to the short-term

borrowings our have a hedged currently of also in We term loan portion that hedge. that is

You projections not model would that versus that hedge may impact expectations. off midyear, your so burns something perhaps your or in be our could model that have may

Robert Simone

year? the later this Got term But plans plan obviously, of contingent it. any costs? And would as the you about in to mean, talk effectively, kind it borrow you against market fund potentially could to I your line on maybe is out development be conditions.

Timothy Martin

Yes.

the Our five, six, over years is seven debt finance the our stack. like to past capital portion on pretty straightforward playbook of how we

say, allows two would think think some and end million, paths stack growth mass. as on rate developments to – a of allows half that $XXX fund we use that external utilize, our million adequately to to likely we would can start on to eligible $XXX We maturity again, the an as one that out to the the sized us about opportunistic XX-year as size. that issuance path which term really up that we have about of an the bond us go we line index debt. fix point be credit use of to art and the at at look get and One We of we’re to as front to grow, amount critical we

which where to is But is that direction. more the be that attractive more would to seven-year is the the And times, get loan in that a component look at market. allow are And our There basis elongate or likely other term relative years the is market above few been a and in the one in other attractive to – secured is the five where cycle, to – our the which that loan at the alternative bank maturity term. much get over term most us on used past objectives. times times very The at to that of XX-year to keep has bond five, our years. certainly that last average There to than term look term market market. can we’ve on been type bond volatile are the attractive continue pretty

a we’re maturity able the currently more the to strategically us. to out Being to I than stack a think, little is bit end six. important of the move

able the on us ideally bond So to to turn longer-term a market basis. be for that be would out there

Robert Simone

I Tim. it. Thanks, appreciate Great.

Timothy Martin

Thanks. Sure.

Operator

go from with Ki Kim follow-up from is follow-up? Bin question SunTrust. your next a And our ahead Please

Ki Bin Kim

Thanks.

that same-store revenue this quick of we by potential markets a market. being category on If one growth the Just falls City, about should XX% market? your of impacted supply. market for How York this think in the new New largest

Timothy Martin

So the XX% it’s of to of stores. be clear, the XX% not Ki markets, XX% Bin, is

Ki Bin Kim

Yes.

Timothy Martin

like – of don’t I front our I that’s XX% XX% by a of our that in believe New more same-stores York our New – the more have those like the And I stores think, number is same-stores But it’s in of impacted of York, me. number in supplies. are

market. market, more the in York more New that in weighted to that heavily within of are lot stores a relative that on basis So a that obviously it’s XX% it’s

I’m So the what sorry. your question? of second part was

Ki Bin Kim

York, points worse? it’s if XX% that So growth – of it maybe something something falloff basis different be stores stores, type in better is or is or about less that expect, is there XXX New you New to for those of said, where York reasonable City, like would

Timothy Martin

to burrows going going you’re fall are think, that within have the to fall that going I to stores that are individual – range. below

specific You’re I that. was delivered and it’s some above a it’s and now, asset impacted it’s of – and going that sudden, the in that’s not by going stores have have all of XX to store ring, I XXXX enjoy and the new one a of two, store in that competitive benefit store impact If its if than really have in a that a having they’re store a asset in by trade XXXX I going have that fall to that’s in different competitive a market. to much

in just are so difficult four caution expect believe against providing the important. do asset basis really boroughs, really, by what that’s overgeneralizing that specifically think numbers to it’s by asset from even store And we why about provide. We that on – look to we impact the apart So those another, stores store to even in up that generalize. a roll the of we’re which be we that one and very it’s some you numbers to overall in to miles

Ki Bin Kim

Thank right. All you. Okay.

Christopher Marr

Thanks.

Operator

the call Marr ladies the have this question-and-answer turn of any end for to time, today’s closing At And reached like back we Chris I’d and conference remarks. session. gentlemen, to over

Christopher Marr

call. Thank you in our year-end much very for XXXX participating

our The we you with confident provides as business us sheet that are tell, great flexibility. and remain think, have can in balance I we plan.

our commitments. As no capital to raise fund equity need mentioned, known Tim to additional

and an variety a supply capital forms of deploy to will be on access continue again, great internal how that of in and a to ventures. we balance perspective, From different have growth capital, both and judicious we We sheet is reality.

a expectation would is consistent and our for objective to to have maximize objective will continue assets has us. us to year objective. outperform of quality that platform, opportunity and is our we how is to with on a relative That the again, presented Our frankly, basis talked XXXX, – people and ago. always been it our continue to will be about continue for create a very the we And opportunity our believe

you upcoming Have participating, So to thank for you forward at call. great XXXX speaking with day. or we on look conferences, a our and conference very quarter first much

Operator

the Ladies and presentation. We has attending concluded. today’s now do you for conference thank gentlemen,

your You disconnect lines. may now

CubeSmart (CUBE) 16 Feb 182017 Q4 Earnings call transcript