CUBE - Earnings call transcript Q4 2018

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Operator

Good morning, and welcome to the CubeSmart Fourth Quarter 2018 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]. is event today’s note, being recorded. Please this conference call at time, I the turn to like over would And to Mr. Charles Relations. Place, Investor Director of please Sir, ahead. go

Charles Place

Malvern, Officer; fourth Jamie. morning include Participants Chris you, everyone. and Pennsylvania. Martin, call sunny Welcome Chief Chief President Executive Officer. Thank on today’s to Tim XXXX quarter Hello, CubeSmart’s Marr, earnings and call. from Good Financial

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

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

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

Timothy Martin

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

year performance expenses headline the quarter. results X.X% growth results included CubeSmart. fronts X.X% growth rounded for many quarter for across fourth and X.X% out NOI of revenue another yielding of growth, successful Our Same-store

the a estate property last a the appeals. timing, indicated of X% taxes very this of successful year, timing had growth tax quarter fourth adjusted, spent when the at high-end per budget range over the and spent of based relative last on FFO the it our of of in year. reported year. share, Marketing were was result, the full-year flat when quarter, last which essentially against by when provided up driven we this which advertising maintenance expenses were as for of residual X.X% growth in from we handful year-over-year. quarter-ending same comps were same-store We to basis X.X%. a to from expenses expense was year-over-year, expenses. taxes, particular, relative Both fourth further occupancy gains year-over-year we quarter occupancy those for Same-store Hurricanes increase decrease. as to on were achieved while down compared with XXXX the to the basis XX of XX fourth XX.X%, For is those revenues quarter, points growth the a and again, overall Harvey occupancy our basis fourth expectations. in Irma. XX.X% Average in a grew point was distance due the contributor in quarter line from as $X.XX up and tough by this grew the large quarter, costs largely occupancy Repair And in X.X%, quarter of the leading Property NOI improved impacted to real benefit tough year X.X%, in represents was the by quarter comp we we QX, measures full-year, also

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

our San activity million. purchase properties million. closed on we full-year deal That Diego $XX.X C/O to quarter, and acquisition in for $XXX.X final the fourth brought the of closed on During in we million four the pipeline for $XXX.X

balance completed of fixed share. proceeds income That allowing the expand time sales revolver. balance our coupon net XXX in sheet, offering market. a our term ended issuer XXXX, the also million were stores growth our to the XXX our We appreciate XXXX expire under per borrowings we a at Arizona senior $XXX price we was million to X.XXX%. quarter, market proceeds received managed adding management stores at-the-market manageable. third-party On investor million in the debt bringing ratings. January, we XXXX committed total of the stores our of notes, front, price to program funding position credit our in loan the by we total fourth sale the in to from new productive to $XX.XX we bond another our and conservative repay year of brand. us manner stores, And CubeSmart bond a a and We unsecured we are on the XX raising XXXX effectively in for BaaX program. our the on enhance focus very maturities maturities early using in to two a quarter, being of our base We our the use XXXX BBB, regular reduce off active consistent the year to In fourth to equity with finished with our deal over set XX-year remain million. continue of very $XX.X completed We and from $XXX quarter addresses and the the that sales of During and support an $XX.X added average with

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

recently and But, the impact our stores, by of in drag by as create will is net stores with and our the are on Consistent in stages create will in those up stores. can individual lease-up. progress on little well the share. supply we we XXXX property guidance will in our as have and overwhelmingly our FFO assumes the prior stores. expected portfolio. many impacted range and non-stabilized new at The XX stores XXXX have factors. delivered same-store from at its approximately supply a again of as years, revenue the revenue group new our meaningful store-facing detailed that impact compete pleased supply to XX% have competition to with Same-store of XX% in our impact a increased well last XXXX, that Embedded an from XXXX XXXX. growth acquired rate. overall, Our of of That’s XX% back impact up with as early been store development XXXX investments impacted deliveries short-term, expectations pool stabilization. to lower our that new for course, lease-up per competitive to roundup developed from by of with accretion are that We expect believe in stores that year pipeline acquisitions new NAV newly very of of same-store XXX remain asset-by-asset compete the and level, store We effective based forecasts than occupancy not impact the growth new if approach consider XXX is driven competitive points any, But by same-store trade supply. basis based the in

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

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

we As to and we of so recognizing supply. XXXX forward impact the clearly, reporting new look are do wrap up XXXX,

While speaks that well the center joining supply estate believe validate our continue strength performance new Thanks, perform people the the platform. and the to sector are results believe stores of team. and late we’re to the morning. ability our of very headwinds call our development the for and our a for high-quality us storage daily facing near-term the we front are operating of and firmly real well we new stages cycle, on again, for We face of of our believe supply, this focus product’s in strength of portfolio and the in this

some let Now, color call the me to turn on Chris over quarter. the for additional

Christopher Marr

Tim. Thanks,

our quarter fourth new As a you well which markets very very caps face of solid in held in the supply. up significant a year note,

believe the those are rely new be heavily absorb demographics As demand solid population strong supply not our October. and is thoughts We impacted we how for new our supply our earnings by the that more lease-up. resilient. generally We on in stores shift the market believe and growth XXXX to expectations do reflect to being XXXX, very to characterized outlook self-storage our relative call by will from concluded comments on remains on will unchanged delivered that markets and that to thus continue the

originally than will and developers recent have pace more projected. likely the However, market lease-up rents would at deliveries the certainly, lower slower at a

future of year. about are remain We million which third-party up In management our $XX we from bullish in summary, million our generated revenues prior in on program, the XXXX, $XX optimistic opportunities.

program XXXX asset in validation strength sales offering, in proceeds Our third-party balance our result maximize turn no At of our focused of over near-term our growing continue the to our sheet along to of to recent while prudently equity operating a our point, significant believe questions. the would and is we bond maturities. our this and team we in successful program with platform, potential at-the-market management with growth investment our and the We platform. existing a call the like on for people technology assets, invest is our from

Operator

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

Jeremy Metz

here Hey, good obviously, new the you’ll challenges XXXX. morning. from Chris, facing supply in mentioned that be you

can XXXX? to that suggest here, that the starts And the anything supply a just you you will hit broad further into sector? are then ground from if you into crystal comment that your deliveries seeing your further the on at Just looking on are for level, in here expected actually ball that XXXX? How slow overall compared

Christopher Marr

Thanks, Jeremy.

really in from as – three-year fundamentally said, XX rolling nothing, certainly XXXX as talked the of delivered changed top markets So be in would has we expect our on think on what end quarter. we We in expectation at basis our third XXXX. – than to I in the a saw more I deliveries

in will XXXX. impact the as XXXX the than on it be greater articulated, portfolio, same-store being So Tim was in felt

you when the had look at certainly what at we we top markets early consistent about the supply pretty quarter our think, in with look new when I by XX, in ago, that talked impacted markets cycle. themes been a are

our So about We you XXXX in think at then a in significant in deliveries coming drop in what on for for of about we a just to out think what see can Markets market Dallas and significant being very markets the XXXX Raleigh, you in radar for those a pretty a and of call market off deliveries very decline like in on like saw see new example. Denver projected – you of XXXX amount if top look markets we top do see what off you a saw levels into XXXX steady XXXX. of consistent I’ll and like saw deliveries. levels When of XXXX. Miami increase we significant continue XXXX that going Chicago, – like on Nashville, supply have

seems where plus pretty you at It of cost feels that be yields, market-by-market. XXXX, it’s looking I So shortage us in think compressed that you rental to minus message in to you going these cost seen a of supply, at into markets look of still XXXX, is land, look it rates or of a overall when at have are peak deliveries. look labor out construction, like terms consistent

in the impact market to same-store that take of the and is on say, the coming in supply. some the there then metrics that same-store surprised and should of actual delivered our being until supply think those been I your the I have in the to on metrics levels stabilization. one deceleration there’s And of levels last that the peak several then quantity of beyond from no as of forecasts again, terms reach think have impact supply for years, growth question the supply you extent continues be XXXX, based into the the impact more you

over about we’ve the quarters. So largely I couple think, same remains of talked message the from the last what

Jeremy Metz

switching effective trend and quarter rents rate in far in gears the increases so existing just February? And those and the in terms your rents, net That’s of helpful. Street holding fourth did rents, customer where in January

Timothy Martin

those question, it three Hey, different of with quarter, an really and fourth in Jeremy, of for really on. for many, to it’s that the And those focus buckets seen Street we because markets, have are the need And Street quarter, Miami, operate question. to have you markets from those that it’s and in have tail – asking the XX.X% like fourth the the rates hours it’s been size X% many markets range. complicated on Tim. Charlotte, that supply, new we you you an a had in Thanks the pressure markets year-over-year portfolio under on – Street a the would the tail is Austin, of that have rates. the markets Obviously, in impact in, would seen the markets Nashville, perspective. down can pressure XX% rates from most focus are most Denver, rate all

focus then is the markets Florida of XX% other you In the impacts rates. the you’ve levels If to like that the asking part those X% Houston, that had in to remaining new third in operating growth up on the who Las markets here bucket supply, Vegas, you’re of different including quarter somewhat markets, Tucson, unique markets, much environment. of Hurricanes And fourth of year. a Philadelphia, minimal seen last Western and made saw

had you of a of demand levels outsized hurricane. and rates, occupancy year that result think about you had the as you in markets, pretty so fourth strong of those high quarter last And given came the the

a XX%. in comps you Street look those are when rates. So and markets, to those at And X% very difficult from year-over-year, year-over-year you’re comparison rates Street down

really complicated to think over times depending really it the than be. all would factors. like So a I it’s much question it’s more on at those place some But

here XXXX, As we same. the into think about of going first part the trended much where that’s it’s

Jeremy Metz

if effective you – were rents think, portfolio at blend But effective around rents quarter? X% missed like – that last that. And just into I those are if sorry, overall, a I you level,

Christopher Marr

Okay.

at X% the you’re blend and month I in between together all and think if you it’s look flat. recent that down X%, of and more about QX January, then

Jeremy Metz

question All last right. And me. for

spread are market said terms in mean, hitting buffers how terms many increases, your In in relative rate of you to your – maybe of existing put customer I the place customers or of impacting growth what here that’s percentage of the deceleration customers of those differently, beyond supply getting just the expecting increases? is of And are that something impact? moderating and some you’re therefore, overall also rent

Christopher Marr

So for a at have customers XX% of with of December, been our over end the year. us about

you’ve year. us been to so then the with over And extent a for

to average for one rate two continued least multiple have at seen had more so elongate. they’ve than years, with increase. of us increases. XX% seen rate The You’ve those of been stay length

over vacates which particularly stay. markets been in is overall, a think, ability I we’ve the then seen, longer same-store So quarters of and that’s in What on to our rate And more actually been to has activity length the of overall has I fewer to length longer of we’ve growth think gradual positive contributed such of that that’s a population. increases to contributed overall revenues. a urban seen the couple a to slightly our component larger stay, then last pass

has that us positive So quarters. actually slight been in to recent a

Timothy Martin

add that, on to And then just to Jeremy.

to the You get REITs. that different across answers public questions

much has to it’s will for amount typical base and a rate pass to customer we systems rarely they – or not is more rate up period increase box. not increase. of gets a Some us their black based portions with get a other versus have the opening as are how not rate factors increase. been they on vary along the for that time, increase to pass not somebody I of of have if the do for talked the along But our But us have us heard I where increases certain about customer Street

Jeremy Metz

Thanks. appreciate. I

Christopher Marr

Thanks, Jeremy.

Operator

Wu your next from America from Lynch. Our question go with question. comes Please Shirley Merrill ahead of Bank

Shirley Wu

the taking for thanks time. guys, Hey,

about So New we a can talk little bit. York

You guys of X.X%. growth have revenue

and latest overall? performing supply what’s story on market So that how the the is

Christopher Marr

on So like Jersey market back think, the of includes comments relying which again, Austin Denver to supply. New York my would Greater MSA, continues. population the you as and And like Long again, North in, the to growth, I example, New market York think absorb a I a obviously or call, Island, not we’re beginning on for see

I hung it’s there So think, actually pretty well. in

Our outlook supply for is the impact of unchanged.

supply certainly we our New see continue all to think stores but impact. our I that guidance Brooklyn. expect for our York I think overall So And in Greater in in factors particular to for stores,

little XXXX I encouraging. have think, the bit that’s than less impact we was so a expected, in would

we particular, I bounces that perform think I I in new as well, to make the having more continues from the back in, on comment early the the it quite Bronx, be think that, from by the experienced of the is would other coming to supply. as And impact supply boroughs also a out supply going impact generated managed, at being look new whether wane it or owned is us, bit. the

we’re towards in So to the coming is perform which that us, positive competing tend heavily bit for bit stores, little a new more actually as supply non-Cube brand we in weighted a is branded a against market. better XXXX another when

Shirley Wu

That makes sense. it. Got

be to able or could – talk maybe Street you January? So XQ even those in in rates you to would boroughs

Christopher Marr

Yes.

and XX, X% when XX the the where down look prior Brooklyn X% up Queens in Bronx, quarter. the overall, rate, in at it’s Brooklyn but Queens in basis occupancy quarter I is up and about X%, and up over points. between think, in Bronx, were was we we again, the – it

So we’re the getting customers.

asking Staten rate has of then pretty And with some that largely as a competition continues there was growth by lower years We’re little many, many Island single-digit. aggressive be bit high Street occupancy unaffected rates. for been just offsetting growth and it to

Shirley Wu

Great. Thanks.

So one question from me.

are signs terms In market, distress seeing? the lately? transaction you been And what of more selling have of there

Christopher Marr

little still hasn’t takes you the project, time distress point signs about been I a that’s likely that until in cycle. of a loan bit period of to a really development when the due. think, it There think you comes early get selling, When too

assets, more seeing certainly new that’s trend. on activity non-stabilized not We’re a

weighted in markets is we’re the in is So, investment what focused teams that stabilized stage to on. across at that heavily asset than of our opportunities least something comes more desk most lease-up some

Shirley Wu

the Great. Thanks for color, guys.

Christopher Marr

Thanks.

Operator

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

Todd Thomas

Hi, thanks. Yes. morning. Good

Just in of XXXX. terms little a What does the forecast to dig occupancy bit year? that in same-store on the throughout assume revenue for

Christopher Marr

never we Todd, question. answer that

be You know mentioned to XXXX. revenue guide my We components. I tell we expectation. opening the materially different in that. overall is what to expect in to do in would don’t not guide did we than you that occupancies I We XXXX individual an remarks that,

into on components, certainly getting net a much of rate as growth. effective going without bucket. specifics to So revenue it’s driver That’s be more primary the be to heavily the going weighted to

Todd Thomas

terms All of maybe revenue in and Miami? what also right. the York for And you you’re then growth New forecasting then, can share

Christopher Marr

We don’t market-by-market on provide a basis. revenue guidance

of the same-store X.X% overall Our year. to is, revenue expectation for X.X% growth

Todd Thomas

saw a little wondering you to if a markets was is just recovery Okay. mentioned like this you’ve And then rebound seen maybe bit see that, early? some you’re there, Houston, signs of beginning in general, in Denver, I in Dallas, Texas still Chicago, you – or

Christopher Marr

– delivered Houston, your I think supply is supply in seems it of to terms is wane. continue in being supply. of on effect impact There’s performance where more the Certainly, is the lagging early. to be it’s there Dallas, to to the same-store where the you’re see metrics. going XXXX. growth like starting in Again, Yes, a going

most over that growth suspect would you’re expectation. see at lower-end the going XXXX. XXXX to same-store That’s I so the of our Texas overall And markets, for revenue of

Todd Thomas

to maximum think, of just talk that which bit will $X.XX, about your little and Okay. whether if sort lease-up you dilution from heading impact be the $X.XX dilution lease-up about a year? that little at $X.XX you could curious cumulative the up XXXX, trend to perhaps the or I to year heavier And And the think you just is you was of midpoint be expect about XXXX, properties, from expect development bit properties, as in I throughout of lease-up? how from a the flow-through into lastly,

Timothy Martin

Yes.

for what’s I to with as think So the would The and XXXX. that today in are peak, that the throughout and unknown, to would in they us where to of guidance, as that and sit our lease-up through stabilization. investment will as closer get suggest XXXX be because get $X.XX closer and of they get course, you that about it here $X.XX, takes XXXX our the here embedded course projects activity embedded into is continue open

add So Shirley’s extent not that mentioned we’re that the to answer than most we’re my acquiring. question, of were that on focused assets. as to the we non-stabilized seeing through I – in And acquisition more projects markets on likely to are in in more opportunities

that XXXX caution change based – only to that to throughout our answer course of suggesting my will the investment activity where year our on the us. takes peak the activity is subject be So

Todd Thomas

right. All Thank Okay. you.

Christopher Marr

Thanks.

Operator

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

Ki Bin Kim

guys. Hey,

of a want a couple just wrap of questions couple I follow-up on to earlier. So up

XX% XXXX said maybe XXXX. higher? On you peak assets Does said be of will or be imply at XXXX you least be even delivery also will the new of supply, new should impacted. be that your will for impact year about the But XX% that

Christopher Marr

Boy, you’re work the it XXXX guidance. now to of XXXX a took guidance, for lot repair looking

I call. a XXXX XXXX early think think then going bit relative deliveries I do too a focus than I degree XXXX, those stores be but high number is, any point to starting that of early supply deliveries, a you’re that would to the XXXX would to impacted is too with different would from that on then in way confidence. it’s by in standpoint, make and of little it think that directional to materially

Ki Bin Kim

that had looking stores city that aspect the counted is impacted new meaningful in But is how look you deep of one city and And deliveries. versus supply. supply had X% XXXX those how you supplies, do new if deep number that think supply impact supply are in X% aspect in as at How meaning, that XXXX? that of about at a cities, is the Right. new that maybe at a same looking by

Christopher Marr

Yes. expect What’s component stores color in performance the the to growth the trail by over non-supply the supply, we impacted interesting stores our to impacted by XX% impacted last are supply. provide two that underperform, of is is non-supply by will, changed was basis then what question that of other I impacted But from stores are not varying only on tried provided expectation – that impacted of that to stores if much same-story I the range have really And also impacted hasn’t supply stores to or you years. that in XXX the the points. XXX by those

where get despite So coming from is a completely impacted I fact maybe the you deeper that by even supply suggesting get store that, suggest cycle. in impacted the that that you’re by more would that’s supplies

Ki Bin Kim

Right.

Christopher Marr

stores ground to consistent what we past are years impacted two assumptions supply our fairly What – year-and-a-half our same those over the that’s what’s and we that seen budgeting and performance suggest what of to supply in thus the would have and detailed that relative it in far expect forecasting up impacted by XXXX,, here would remained the suggest. not and has to be the

Ki Bin Kim

equal, same-store you increases? does else from rates, terms growth Street all the And what so generate the just flat your Okay. flat you occupancy, assumed revenue customer that if of inherent would guidance, portfolio rate existing in revenue

Timothy Martin

Yes, that don’t share, but not really have to component zero. it’s

somewhere and X%. probably it’s X% between think, I

Ki Bin Kim

X% your XX% are move surprising, customers out growth you the XX% at would – into that, I – from take that actually you little people missing X%, X%. think the if your call be account would Am a it, would that’s then something? Actually, least think inherent increase, because of getting, you and – to

Timothy Martin

Well, same thing last happened except for year. the

Ki Bin Kim

Right.

thanks. Okay,

Timothy Martin

right. Bin. Ki All Thanks,

Operator

Advisors. with question. from Please your Street Eric comes Our ahead next question Green from go Frankel

Eric Frankel

Thank you.

couple a platform-related Just question. of

excluding settlement. G&A First, higher in about be XX% what than your or guidance legal XXXX, to looks occurred so the

you settlement and on some maybe So increase legal just color on the provide that also then can itself?

Timothy Martin

ex that consistent Sure, The the a charge happy legal in are of excess support increase has count our to our our platform out continued XX%. grown investments and to. G&A far – in store building with

stores certainly, continue it So scalable – sheet, a as additional that But stores managed add platform. the certainly and to a growth to and people systems necessitates balance in is XXX invest platform. on we need it is and

estimate are it to of the are to selling charge claims in was suit, proceedings. we foreclosures consumer that self-storage charge, state our case fourth related a that represents the brought protection-related wrongful ourselves legal is These various the in class during find of as accrued and of associated costs which that. of involved matters The with ranging associated legal As loss business. result with to one best to relates in cases occasionally, a that, we such consumer-facing liability all action that related we the have things a matter cases from ADA quarter million specific doing to $X.X

one-time be to it expense. non-recurring expect We a

Eric Frankel

it property third-party but including XX math, understand JVs third-party managed I management. for our stores, like nine added then net And to is guys store looks is to addition related you Okay. only only – the stores.

can correct? it. caused that’s second, And is confirm you. attrition? if what Yes. first, the you Thank then if so, that So that’s

Christopher Marr

Yes.

call talked portfolio think we that plus we had prior have or me. the a on of I front at that two. don’t right platform in I We that of prior. the quarter accurate, those maybe one leaving XPM math in XX have But minus assets, math were of that about or or end And XX stores the quarter discussed stores platform. our left XX that, last I think, is October. our

buyers platform that the the platform. We ultimate to So the they’re have that that to of primary self-managed. driver the of consistently leave when was left stores stores sold

obviously our well come stores size here off years, the of the platform scale in stores on platform. So platform. that dramatically of that of excess over platform the the We’ve the we’ve the couple leave as the are XPM and increased past and the additions been fortunate the

Eric Frankel

quarter with then Okay, you didn’t of left that big third-party customers pricing space? And the the portfolio quarter. your to that in any thanks. managed sort third-party management, seeing stores pressure after entering fourth that, realize are third in I just related public just

Christopher Marr

the I was Recent another It nine, providers. management to competitive business prior group third-party think eight, – remains entering managed you show, competitive. different trade business. there’s the XX see third-party

from it it years. exponentially doesn’t several to more competitive so for been nine going And XX, make has

Eric Frankel

Okay. Thank you.

Christopher Marr

Thanks.

Operator

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

Smedes Rose

having on seem wanted third-party from independents I to in part larger platform, a see faster as an expect larger industry – going be forward? challenging. being – would Hi, you is increase management getting to words you seen who other would the more in Have just a to are capacity tough? that given of or are uptick interested conditions that something grow thanks. who little a In platform, ask conditions

Christopher Marr

Yes.

I think a it’s question. good

that I already. unique point. over owner-by-owner, think time And to seen going decision we’ve it’s be a

more relative marketing get – becomes It to apparent business and that very that operating independently I owners certainly, better I and recognize strong. causes more to starts when start are conditions they a become as that who don’t is apparent think, having platform more are is a sophisticated difficult, more things operating think, not recognize underperformance. fundamentals

think the flow. on cash contributions platform like to to do results focusing that add about up growth revenue management thinking and put are sophisticated ours I that and companies quarter-after-quarter

Others more high-powered performing the realize times, apparent. properties that hands their perform even it platforms. while become good. under well, times And I recognize think of could the of one are that better when they they

yes. I guess, And so say, I on I think margin, the would

grow a to has the think, that been cycle. been the certainly been platform that other has thing helpful the I development has driver

So to are still being are the early the here – stages in being months. still adding to stores of delivered the the we’ve lease-up, or past more majority delivered XX new than of are of XX majority stores stores that more – of platform been over the

Timothy Martin

new and existing stores the In of XXXX, developments. and the operating XX% were were additions open balance

Smedes Rose

does that I reflect properties into pretty to properties I you looks the geographically, pool lot base store about by, then increased so. New York Is dozen that same-store And like wanted pool? same a or your you, it of rolling broad guess, Okay. or your a ask

Timothy Martin

Yes.

spread broadly they’re – it’s out. think I

representative of would particular market. but me, I grab can to them heavily think, I I’ll have if don’t in they it, see it’s weighted of be our but portfolio. I any generally front not

Smedes Rose

Okay.

Christopher Marr

– the I Smedes. head of my top – sorry, I I’m think think off

think the the my of off XX top York the four New of head, I MSA. are in

Smedes Rose

now lease-up a Okay. you understood bit And year from it I or expected? last Is about of more is time initially the dilution in stretching But lease-up year, sure did just it. this than wanted then out little you you expected you I a in – more the have to make than reflection properties to lease-up. had properties talked further

Christopher Marr

having It’s the result of more.

are opened, the of lease-up. we that have we have we early are stabilized being balance we’re many buying stages been that And and very that of in stores stores stores more development acquired of on the them while have So have our then lease-up. in not assets, them sheet many

driven more is increase in stores that that dilution the opened. by have So additional

fourth final quarter, the in our instance, on in we closed that store pipeline C/O Diego. San of – the For

then added of on and were group that of to assets the that early other sheet lease-up another we that’s the of in some So stages lease-up. bought stores story is balance

Smedes Rose

you. Thank Okay.

Christopher Marr

Thanks,

Operator

question. from from ahead Todd question comes next your Our Wells go with Please Fargo. Stender

Todd Stender

to management Hi. percentage it, just Not any? management, on competitive, fees, you dead beat versus, a now years ago, stay basis a guess, I horse, to charging if two what call are just but back third-party to

Christopher Marr

that of I direct the negotiation The Chris, But opening the market, overall based the passed always that in take unchanged. is around related stores to are Those obviously are for being an has minimum the to the pass-through framework the many of costs et would owner. as any business some is the brand-new, been of somewhat for over perspective, of marketing, a are consistent from Hey, that store stores components the very individual percentage offered service change. cetera. that sales the through management, years. there’s center, on to Todd, from business – the revenues economics I a it’s over costs say mean, last service quantity owner, components for with individual that of no market for

Todd Stender

now that? guys reach Google spend, And to is social at are media? your budget right then Thank switching looking XXXX? just gears evaluating channels for prospects ad Okay. you. what you’re you other your spend And what via ad to How

Timothy Martin

Okay.

guide be exact provide majority the overwhelming the we an continue guidance of don’t going to expect Search amount the again, to we how same. of and spend aren’t and to to that dollar components spend individual that Google the competitors growth expense So certainly intend of our we much Google. is our on But

And we explore to to selectively those digital we other of many types opportunities different invest dollars, we to customers return invest. give a that and attract testings. to consulate opportunities as good continue find medium in marketing continue us We on

Christopher Marr

lot ours. certainly that the player. dominant are try big other our it’s think, player search a I of their away focus of digital have to exploring Todd, in given time a outside of and a we paid to without of say But marketing doubt, general search avenues they the position, have to or from spend risk dominant diversify safe and

Todd Stender

Thank you.

Christopher Marr

Thanks.

Operator

from from next ahead Our go Please question with comes Tayo question. your Okusanya Jefferies.

Tayo Okusanya

mark-to-market it, the of that what is? happened then of – Good you you course kind to the little Again, bit Could about when the And quarter, like talk kind someone could of rents over morning. kind kind Yes. could in-place relative fourth portfolio? in, was what like also number? that mark-to-market the year, a that of in moves in of talk with about the

Christopher Marr

the for Thanks Yes. question.

important So be that to going of that asked our point question. it is internally the question to of it the is folks which what heavily rent is time some churn on roll – gap focus question down referred to of really dependent you year is your is back-half or upon on,

think at lowest. when January seasonally, you And of or at is the typically summer in the course are the I its year about end that demand asking so months. in you lowest, the mean, you’re or sit the because February, at their where of in throughout that’s rates is where year the time point

basis on relative to highest. rates a Your their your own portfolio at are

and And rental six this a you of the higher-priced come summer lot a in customers of of comes the And customers your between months months. those the during activity disproportionate who year. are six-and-a-half median the you about summer so vacating of – when a months, have time amount stay that length think are in

that now in depressed that customers rental peak seasonally you and going So at leave came you’re price are to have in the coming who the to rates. customers compare them at

time number widest us of year for this in its were So July, time that the XX% then is be consistently would always gap if that about this been historically the is year question to where This exception. at flat. no at in and year XX% that is was you a ask it of range. And to

leaving would years. you’re year each no would be several seen to cases, about where in your those trends And have has this customers asking. we So past of been the different over past flat than

Tayo Okusanya

So adjusting hasn’t for any haven’t seasonality, it gotten you – worse? seen

Timothy Martin

any a what it’s that have bit Well, be to in that overall but little Street not the little I not churn a been gotten way. rates. a about a little bit it are worse, bit all mean, rates we going down a as than year’s being is overall If asking asking lower, of little than wider talk result in different material than negative in would would number last rates bit

Tayo Okusanya

Thank helpful. you. That’s Okay.

Christopher Marr

Thanks. Sure.

Operator

from Street is go from next Please follow-up Advisors. ahead with Frankel Our a question Green Eric your follow-up?

Ryan Lumb

outside mentioned of ad like in quarter spend, how been of down. industry there Can of flat. you your Yes, for the question looks in on on I you’re the opening or to when kind issue keep But growth in it full-year ad Lumb. a spend? has the why in timing lid on Todd’s Ryan is spend fourth following-up peers be on many was spend Cube a XXXX, effectively to able for ad This just Thanks. expand sort marketing are seeing remarks, that know you of

Christopher Marr

comment Yes. I on saying others or what doing. are can’t

I growing. reality paid faster paid The cost growing think it’s of of than that combination search inflation. a the search is is

to as square of that And around to the how New cost we York, the managed in offset that self-storage the are in we some and making of daily XX% are efficiency of able the then spend. it given the footage determinations owned between drive market with in our We’re of largest fact model our significant boroughs, a of subway within are ride looking communities. have we CubeSmart, that in they in everyday search on their because who amount In by do have they or – an for walk that, a advantage. we when specifically market customers organic see or

like efficiencies is relative of of to us utilize certainly dollars and have expensive part the it think those of in to is New helping a that change quarter-by-quarter. marketing it see traffic drive market is will York. we I So part Part who large opportunities benefit it is to and don’t less where it additional organic

caution XXXX there So interpret XXXX. I the over similar I over to or to you going – certainly that in wouldn’t not would growth is be XXXX XXXX to

out able we’ve getting increasingly I think difficult. – more are that expect we those efficiencies would to been that ring

it may grow. you I vary, so suspect see that in item that line growth would XXXX. And see think continue in Quarter-by-quarter, XXXX over but to number would overall, we’ll I

Ryan Lumb

helpful That’s color. Thanks.

Operator

turn any time, to call I’m conference I’d remarks. additional Chris gentlemen, showing and no this questions. closing the over back ladies at for And to like Marr

Christopher Marr

very to a Okay, wrap with XXXX. thank successful you. very, Again, pleased

our thought spring how I summer activity the of we’ve at that the on play think, given a a months, to will out. it our particularly and consistent the been in we’ve Obviously, of XXXX the typical how about business fact occurs significant beginning of look moving the ahead. is year, challenge nature and amount

that will be I and those. being industry, of think we, against a delivering done our suspect don’t I nice expectations XXXX different. in have on any job the realistic

much. call. seeing first end our quarter. We all you our in industry if events. Thank appreciate we very company. so the today’s for many not, upcoming look of And we to at interest you to you at of you will forward the Thank speak And

Operator

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

your You disconnect lines. now may

CubeSmart (CUBE) 22 Feb 192018 Q4 Earnings call transcript