CUBE - Earnings call transcript Q4 2019

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Operator

Good day. And welcome to the CubeSmart Fourth Quarter 2019 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] Please note, this event is being recorded.

I would now like to turn the conference over to Josh Schutzer, Director of Financial Analysis. ahead. go Please

Josh Schutzer

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

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

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

company's GAAP financial the supplement www.cubesmart.com. on include and addition, posted found at remarks measures. the between non-GAAP quarter fourth In company's non-GAAP reference be A reconciliation to in measures can the website

Chris. call to the turn now over will I

Christopher Marr

the the markets. portfolio our of a our from internal program, in operations supply, the growth you. joint-ventures, utilization ongoing challenging successful both Thank spite and We raising morning. management generated Throughout by a third-party in non-stabilized new headwinds capital yesterday the equity debt the lease-up And good the our through expansion of year, funds impact caused we of growth of and continuously quarter reported operating environment. solid and of in

years. supply XXXX last delivered as will new the industry our several over transition, be of the absorbed a year

Our for future the for the current markets seeing expected the slowdown the supply data deliveries, XXXX outlook as deliveries. year supply of impact being markets in experienced positive, early peak new XX our solid top a to our are cycle in for future new remains points that

City, deliveries York and increasingly where off they in expect taper store. not through with CubeSmart New XXXX deliveries those In an to are we will directly compete expected existing submarkets

and in ongoing strengthening of and our factoring the U.S. marketing, our and this assuming economy, the about should begin in XXXX. same-store ahead, we pricing stabilize growth in latter as deceleration cautiously Looking in holds the and half as a revenue technology, no innovations current in to supply optimistic of gradual well downturn outlook our are fundamentals year

Martin I'll Tim now the through detail. walk turn to to more call Tim? in information our over

Timothy Martin

for thanks your call on And Chris. the interest everyone support. and to Thanks, continued

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

X.X%. revenues same to of For grew the X%, X.X%, grew NOI year, leading store expenses growth full

was our quarter a increase store was ending quarter for the growth XX fourth basis were year. expenses X.X% expense XX.X%. out large was last the XX.X%, in quarter overall XX year-over-year up the line and Same quarter this Property occupancy component at also Average occupancy up in over fourth points closing again in taxes with points basis up expectations. of

in annual quarter renewal casualty our back again in Our marketing May. following our costs and spend insurance increased were XX.X% up and the property

range. per We of reported $X.XX of share end adjusted FFO the guidance for the quarter, which as high at was our

a share per XXXX. year, of For X% a over was FFO $X.XX increase the our reported

We opportunities. external growth of pursuit our and remain active disciplined in

and for full that properties fourth XX the me, $XX.X year $XXX.X. purchase activity on acquisition XX – closed brought the quarter five our of we stores excuse During to point for

price the quarter, for completed we store sale in sales total a the Texas also one $X.X. of of During

quarter, party XXX stores the stores program. finished XXXX third fourth XX brand. the total to with our management year allowing On front and market the we our bringing new managed year position by added expand off to productive to stores, us We the enhance in our CubeSmart another ended XXX adding

shares on continue in our ratings. balance did conservative aftermarket BAAX quarter. program during equity the the issue credit fourth under funding BBB, that's manner sheet, On we consistent not to growth a with focus any We our our

of we For price year, million at $XXX.X raised proceeds, $XX.XX. of an average the selling shares

issuing debt accessed unsecured a October, year senior In markets public notes we with $XXX XX of million coupon. the X%

fourth the commitment XXX source income continues was demonstrate our primary of the during - hundred fund was second market in our of of year. to to issue total capital as utilizing deal bond fixed a issuance XXXX and to bond to million our Our bringing growth quarter the our new and

bond unsecured extended and our that you'll expanded our $XXX we earlier issuances, to In year to in revolver addition million. recall and ATM activity the XXXX

to year and All balance and the activity had liquidity. XXXX strong no gross combined, X.X weighted a ‘XX significant leverage our strengthened of this in position and us balance coverage years have rate year metrics very out sheet secured a of with maturing we of maturity only as to at in We average end, debt, years. closed we less X% further assets sheet than that our debt had floating X% and debt

dividend ratio our a annualized FFO December, an our dividend $X.XX increase an to on share per In XX.X%. payout announced dividend suggests increased a the on midpoint XXXX bringing our of of and we based the to basis quarterly X.X% guidance

evening. guidance last were our included release assumptions and earnings of related our in XXXX Details

rates. stores, Our impact our property from driven thanks assumes to and effective again guidance XXXX net in expected little pool overwhelmingly revenue by store same increased XX occupancy growth is by

in as compete of with new grownup deliveries source. and years Consistent consider and impact of forecasts delivered XXXX the that asset prior as are at level by will supply detailed a well our on store asset any with XXXX the our if impact XXXX, based approach competitive the

our same our approximately store Embedded new the compete for of in store same will at XXXX XX% expectations portfolio. that of impact is supply with

line trend from So supply. XXXX in in stores XX% that impacted XX% had XXXX we then to XX% of same again grew That in perspective recall XXXX. grew by a to you'll

to XXXX XX% see of lessening a for at we're new move So starting signs forward. we impact as from supply

still by new That XXX we than not range overall, by impacted rank XXX supply. impact basis But the on new individual revenue facing to stores a trade the new lower of the and obviously expect factors. based said, have of an competitive new that are are growth operating impacted fundamentals can supply many impact store felt, its to points group supply to the stores competition being

an of stores newly Our create meaningful and our the investments occupancy term share. But NAV and to stores stabilization. acquired drag expectations. development standpoint, developed short per lease in our believe make with line at pipeline and acquisitions our progress FFO growth up from course We those to continue non-stabilized will and a store in create

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

dilution up to stores added share our You'll in been compared less is leasing and per about pipeline. down $X.XX XXXX to has XXXX, are development as note that the

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

At time the for why open we this joining call us questions. call again on for Thanks this Sean, don't morning. the some up

Operator

Instructions] question go Please Thank will [Operator Bank from ahead. with come Our you. America Wu of first today Shirley Merrill Lynch.

Shirley Wu

out morning there. Good Hey.

Christopher Marr

morning. Good

Shirley Wu

first question on is the revenues. So

deceleration XX basis up were revenues core implies your next into guidance core your points [ph] XQ of in bps So sequentially. But year. quarter-over-quarter XXX

So continue line more whether other? or in what to terms deceleration demand number on to stabilization top the trying color and indicate I'm you're get with little seeing that a XQ just year-to-date one bit that what or indicates that XQ whether in on of happened

Timothy Martin

the at prior with It I'll the meetings discussing start at and Thanks as NAREIT on - about a rate. calls. spoke for is growth a question. with lot been line top we've - we the

And big being expectation on reality – here we growth development about there's we the get into you know, our a is line As deep and obviously on impact as and trough the rates growth into focus clear the is year-over-year. top cycle we're there and think at to reacceleration in point and where least in others you likely you to that grows in from see likely inflection portfolio fashion. get linear our not in a to it going see a sight a point get and

to it be fashion. to linear expect don't into We be rates the a growth in XXXX a linear –

little a bit. I bounce think around it'll

of early in see would you rates think back some could positive flatten in the our expectation then XXXX. impact out think see XXXX I we and is growth half I

Christopher Marr

perspective to perspective. operating been we've along this encouraging performance And from continues very is, and lines far Shirley, an your XXXX a question answer you what I was year it the think occupancy physical saying so from know the in second of positive be and

today, to sit XX here As our gap plus is in basis range. we point the last occupancy year

you good a year. all a continues what that ad So And a to - that seen we the we've industry its of for nauseam. supply is with we've talked part traditionally from new our kind given slower about demand challenges know, of have of however pricing seen be perspective

the occupancy beginnings busy both into that. go more we it's the for rental times to performance also is into but that or as can over on rental from another if perspective. to overall confidence so encouraging season, So in slower we encouraging you certainly month But as season an we sign head see got know, good the that some we've can we a have get that start horizon busy the performance, in pricing here before the with

Shirley Wu

Got makes it. That sense.

pivoting to expense the so side. And

quarter, little go expenses marketing your did a So this bit was surprising. which XX% up

marketing what as just well on for you're XXXX? So side, seeing as I curious the was as your expectations to

Christopher Marr

Sure.

a significant as we opportunities value have marketing across the our found industry, a industry, the vacancy consider very field the return would productively to to on playing amount industry we what of be in terms you've obviously it's competitive costs in generate spend customers. seen expenditure acceptable across to an growth We QX lifetime that of the of across significant So fill. and in

minus marketing, at head our can can overall more XXXX into - can expense aggressively that we customer provide Tim that would we in we we same expectations detail, in assuming again that store to embedded reasonable to a As deliver quarters continue of spend in expect saw and any in plus Tim could you here range and continue that kind that want next or couple the in and there? see through QX the you growth we additional on provide color be could XXXX. to cost of

Timothy Martin

I that's No, think right.

in in or not all the we've item minus quarter fourth where think did commentary is to expense my over that we would all XXXX, we growth, marketing the top XXXX. XXXX to the opportunities seen expect we bounce line that dissimilar overall again, and place the in to that line on levels on the based about In I find going plus it's what be.

fourth the as and and we would we I the highest up expect quarters bit comp be certainly fourth quarter enter quarter ’XX, a As the growth - from I a the in second here a - just the third bit and perspective be fourth comp expect balance rates little year. the to year, be we spend and as have will the quarters than to of spend marketing the the first ramped lower would little different of

Shirley Wu

Thanks time, it. Got your guys. for

Timothy Martin

you. Thank

Operator

will go Markets. question Capital Please from with Todd Our come KeyBanc Thomas next ahead.

Todd Thomas

Thanks. morning. Hi. Good

in year following with same the like sounds earlier it you first store I growth you models, to a expect little bit than rate improve it just in driven the higher growth expect Is occupancy question that or the on more that half see up guidance, second pressured? the half being guess more you in so the to deceleration second would half. be the First

Christopher Marr

all on side. opposite the It's

XXXX. what in and both growth think know, pricing XXXX I we strategies achieve bouncing everything the which a period pricing and out rates given of little are year That the some you its nature the part is makes effective bounce yet around of of is in the comp - around it's as bouncing the and - then rate, the how rate strategies bit. and to oftentimes creates determined plays be volatility the in what

Todd Thomas

to store just and you comments you the same can know, how overall I – can New sort And in on both into if improvements a forecast, Chicago see Chicago and of also little bit, just maybe that, expect know, you of in Okay. York but comment and know markets? those on New as you stabilization fit York appreciate I'm there Miami just saw those well. just City curious sequential terms you the continued you Miami

Christopher Marr

guidance overall individual with for expect York relative range everything – overall the the and look even in perform same just portfolio at really the So provided the for on would if Todd, line, we've XXXX pool. you boroughs collectively line if expectations of look we to you MSA, at to New store our the revenue

MSA pressure I be pressure is in portfolio the the in think a the little to likely bit for New suburbs. York more our

are be have So the the North in of the borough. built of in the of sort square largely and been for Long Jersey half that seeing removed about think the is seeing supply the – that's and available Island the legislation boroughs in supply, Westchester change fact opportunities and natural footage I stores to advantage taken opportunities the has on outgrowth

So folks Island. are into North moving Jersey out and Long

the in Miami, large know, the in our ‘XX better that New general York again higher towards saw be end in same markets the think the store early for expectations cycle than perform the in in I a will perhaps will think again whole. I early Dallas with Chicago, expectations. as ‘XX So, line you by supply Miami, think I same and know, speaking store portfolio of and you the generally -

Those particularly store same the in whole. expectations we a taken markets have terms expect supply, see to in that outperform would of California, to as yet

have again impact ballot And in of again on bigger supply see our here real would the a taxes of certainly it of and to impact who markets problem we the roll which estate we November operate know, split its many much the a be in lot in our impact portfolio there the we new barring limited continue in will. of in California. that we the expect I terms think to on peers for than and for lesser than you

Florida, XXXX. way and markets would all Naples continue seeing Miami those you California be think of in that impact I would I to supply markets of think more Tampa, will from the to a are and way in the material outperform know, you in some down outside would some underperform

Todd Thomas

Does one, helpful. the XXXX comment pipeline? from here in appetite can dilution just And guidance. $X.XX that's lease development last include additional in $X.XX any projects that one That's embedded for or to and creation in right. the of doing All on additional terms up the investments adding properties to you the of value

Christopher Marr

Yeah. The activity. to dilution does speculative in $X.XX $X.XX included not the contemplate guidance that's any

our basis. attractive looking our footprint And the appetite? so then e - are what adjusted to consistently risk second best We question, part a opportunities your is on grow for make investments of and

transaction that certainly some think from peers, what we stabilized would - you've the of our the I would market heard aggressive. pretty we broker echo in that is for

are stage are those amount accelerated interest have certainly likely that participated form despair, interest that seeing development so And going there's yields We're this tight. have be not but and an up. awfully and folks of stores continuing of distress or a in cycle to some early in tremendous of lease

they the risk attractive returns, to themselves extent them And opportunistic. opportunities to underwriting that and us we'll continue be present if on focused sense make at be those adjusted we’ll for

Timothy Martin

you about Washington New development willing would on this near we're take nothing we've to where out principally know, D.C. York, time. risk, you term on to radar And when Boston, pursuing that pencil been There's Todd, attractively just that, that think at add the

Todd Thomas

Okay. Thank you.

Timothy Martin

Thanks.

Operator

next question from Metz Our Capital come go BMO ahead. will Please Markets. with Jeremy

Jeremy Metz

quarter effective on if trended an Hey, you what trends you you're guys. in can and the so this, Good here Tim, did in I of rents say update or yet give they how XXXX? sorry seeing us missed far morning. sort and fourth

Timothy Martin

thanks question. going cough the for button. my I'm Jeremy, hit

that take on. Chris Let

Christopher Marr

have throughout year the the far, in those a here, the talked saw both in year. bit effective little Coast, with and seeing hoping what seen net this give Brooklyn, QX what what versus this Bronx it basically know you markets The bit you all in that about to been effective in Tim far in in you pressure same are little the West is and we a about less then haven't in on XXXX range struggling South and seeing, X.X% Austin, QX that green Boston, Florida, a in year. ‘XX basically mirroring the would down, coronavirus. a we're some ‘XX range bit so shoots we thus are seen rents supply, not seeing better in particularly overall And Chicago Positive we've Denver, rents in X% Dallas, negative. even of I know and Houston together than

Jeremy Metz

on reassessment That's this line helpful. a know obviously side expense pressure multi-year And caused you cycle, been meaningful on the particular, taxes in item. has that it's

know Is you Just we in kind of impact X% going increase embedded we does of here move where type another forward that XXXX? add kind you what's and as your how process that outlook know, beyond? in of it

Timothy Martin

Tim. Jeremy. Hey, It's

thinking line our same of real X.X%, store about think you estate here years in ‘XX trend over a about pool So ’XX, Texas tax the couple if grew X.X%. last for the expense, X.X%, ’XX,

on we've obviously increases. of been above so trend And inflationary a line

well is XXXX somewhere you're stores. for aware in expectation estate in for our X% range, in As real to is that range expectation for same the we're X% still our the for XXXX increase taxes

Jeremy Metz

better And see around? we a getting you as do look little it further

Timothy Martin

started, Yeah, to from interesting higher that our pressures know, while one the and when taxes coming asset values. a about levels, higher which and is back meetings before development are seeing because of peak values NOI, I growth fact we it's on decelerating the we're growth talk real from property in cycle NOI you of still lot the contributes the those estate questions that think

further also values. they're and moving, assessed authorities taxing ammunition also seeing they're cap rates, to You're for increase which if evidence tighter, compressing gives

the not what are assessed to assessment be estate careful – you about are talking go to challenge know, have So cap tax that those at wish - to and we're things, for, of going it's rates up try one value back taxes, down. to but going extent going we ammunition be reduced, and because question, going which you time it's know, to or the be talking why is about we're you real why get some

And real here two, say one, the believe get are of me even to that evidence taxes out, near that lot and there's maybe a lead see would back type so going would term increases. don't to near anything three by in I term inflationary I years to even estate that

that challenge years still you're hopefully challenging opportunities think increases some to over not couple assessed that probably for them look and on going I of aggressively we're next to - X% offset and to appeals. looking type mean at X% doesn't that that the values the doesn't being through successful

Christopher Marr

And obviously change because all the on game. excludes would California, this what's out going there obviously

Timothy Martin

That's right.

Jeremy Metz

just generally major markets me. this and point, is where Helpful. but as so Yeah. down your in a leaving really the this capital optionality question about versus Chris, not more invest saturated capital out we to and to in remains? markets secondary tapering and developers shifting on much your it's footprint opportunity supply perhaps how being where it looking And less of for think relative the impactful last clearly off, at comments market the shift as

Christopher Marr

that's the the North aren't Island is a about who have it's more above. of question. the of the may think great and When a about the challenging penciling think move It's Jersey more I all some a so out mix. and looking combination opportunities. I too bordering boroughs. they it's Long of that Yeah, very urban things my mean, by commentary opportunity of or nuanced Finding development, markets, started folks I there to think just in of sort you

on those supply markets in et at population who look “out Island towners” Jersey know folks have population, opportunities Long the and then and also North to growth look relative cetera who You are of data the you for

a to doesn't usually in that shift who you folks - they're focus who way. focus to Iowa. going will have usually don't Moines Des know, You deciding North Jersey from It operate

and they Now at secondary of starting - they exploring seeing not who experienced those there. third would and opportunities may supply to some look the are you that more markets, know for have those we're the think party are to the impact agnostic, market the starting program, markets I are

of they impact lot party are To be But because fair, own those into data that of than that portfolio opportunity trying or assess other very to we won't time our much. don't digging spend a third for that a stores us.

XX the there levels into from see think know, in I ‘XX you I economy the again, move markets MSA that should start and suspect U.S. to are would healthy. you some remains of ‘XX there would away be delivered the supply more - in So top being secondary and assuming the

Jeremy Metz

time. the for Thanks

Operator

will go Our Citi. Rose come Please Smedes next ahead. question from with

Smedes Rose

ask suburbs York actually is Hi. City the New your the you way roughly? New Thanks. - for the portfolio, versus I in wanted just to York what City define in percentage

Christopher Marr

or XX% NOI, From and come some stabilized City that we minus itself. year again from New the NOI will a have but York things and this of comes percentage of aren't online yet, plus

Smedes Rose

Okay. be of And sort rest of it surrounding areas? would the more

Christopher Marr

balance of is which The rest of the - it Island. the North Jersey MSA is Chester, West Long and yeah principally

Smedes Rose

for why in see it's outside you're this where city new weighted supply? seeing New you York guess would the all that's being I portfolio, line of the So really with because overall

Christopher Marr

seeing Jersey, themselves. are Westchester in a expected the impact new in supply than are in boroughs Long in are and we We of we just ’XX, greater Island terms of North XX deliveries seeing

Smedes Rose

there kind you terms have seen of then in in to ask peak the is change where Okay. just markets strategies of supply seeing pricing you're in just now, I want or discounts more how is And folks maybe you more - driven, markets… strategy lowering maybe to or about change occupancy maybe other way or in think maybe of the so versus it get asking sort any rates

Christopher Marr

really There in we the Yeah. thought schools two that are industry. of see

we although reductions know the multiple the in A off up. to go in. on seeing model pretty more generally lease in order rate really about XX% lease market in months with in early month the or it's the on even draconian type the But a actual that cut is concept you customer gain a months dramatic not first three free. which occupancy have rate folks for some are I'm talking coming free, You

And below balance reason is preferred of is street XX% between model sort which the just competitor properties XX% impossible the that other existing mathematically in a imagine or where move in somebody customer than rent difficult the switch It's path to and you're $XX impossible The relations model, who days at comes or and a market. to rate very ever healthier XX later it's XX asking customer get for you're get giving incentive. to and rate saying raising the to is other move bait to a them any ever just just and their at back our $XXX.

So a prefer would us that particular higher an we development. lease again, produce the up And to our continue of approach rents. investor going is effective for more term IRR at best tell on long gradual that all that's models to the

your to over pay try get a Now sell the a some into different to those get markets. theory the I a different that's months period I assets you if convince fool and opportunity have is market XX way for is I'm me view out cubes the of motivation to to buyer customers and play the [ph] your basically hoping But to customers some within XX may to back sort within question can greater operates in-place will want time. the which to then of

Smedes Rose

Thank you. Okay.

Christopher Marr

Thanks.

Operator

SunTrust. Our next from will with go Ki Please Kim come question Bin ahead.

Ki Bin Kim

Thanks.

being to tight. acquisition back the markets your going Just about comments

go peers your possibly international some You've Australia. or seen of markets Canada like into

about internally peers loans bridge do like your thinking or your investments. growth opportunities? think excellent guys you What You preferred are

Christopher Marr

opportunities looking domestically adjusted Ideally means, an is you the more today. have lower. a in opportunity Those to on relative other the traditional for we would at more at a know, attractive open it's of stabilized opportunity operating and risk an traditional, profile list in return, much be because awful find an challenging think any are risk store We us to if lot basis attractive first here on

lot lease Where bit of we'll of little has present three opportunities is for start may two of development of a next more which opportunity amount we tail present but years. tremendous hair here it of in not of it, some us in consolidation a up There's and seeing that on here. the XXXX, something out on getting lot opportunity end do will is opportunity. to cycle the coming a I It certainly in think the think a stage it of

Ki Bin Kim

Okay. response like And be a changes maybe they move And found noticed website versus price rent whether years? that's time reflected that more they customer. to letters to for your incremental behavior, things any just a in shopping for customer or you in have new previous that increase before

Christopher Marr

No significant all of been think we in many auctions, over you very in quarters? about change they see and defaults customer about metrics on we are behavior, have we know, rent when the do their last think How paying time. trends health, have - those been consistent

simply and et price we Certainly ability shift to see real shop is able the is desktop retail, customer mobile the quickly for in all to from sectors and real. cetera mobile that on a device be to

their I look a the to many used over to ring. within options, industry getting think The and customers to spending amount shopping quarters. three providers to shopping But with to at they're our more hasn't more product tend our customers shrinking. trade is maturing of product, That it. use our device that margin used goes at three on our then last time in general, our the industry's changed mobile gradual Typically comfortable more more are and just the how online and and just of

Ki Bin Kim

Thank Okay. you.

Christopher Marr

Thanks.

Operator

next from will Raymond ahead. Jonathan question with go come Please Our James. Hughes

Jonathan Hughes

good the year. Chris, next outlook on and Hey, thanks growth morning, in year the your revenue comments for

you slowing end? down on you end be that the to rate of that where revenue are X% do to today, to promotions rates street in revenue getting in as off gap said you burn think X.X% by your year by growth year existing growth it expect I tenants flattering outlook? largely Is deceleration

Christopher Marr

in face that I they at start turn I'll street right over point rates. across a for street rate little Not likely and and it now were customer to portfolio last are a with rate, all than come then place bit over what year. Again, asking higher to think this Jonathan, we're Tim. the clarification I'll would the

effective that And Tim just and number rates, when sort The was question whereas sort the concession, address I free at Internet along ask that… asked was of the you I'll of of any sort to nuances rent that any was had given net. that I with look that of

Timothy Martin

nuance because growth, a all the place components of individual revenue over guide to going Jon, the well. as bounce to From they're perspective the primarily don't we

bit So own perspective, be driving perspective basis tool is most system discounts property trying that'll the or unit by move revenue at time. pricing occupancy going on more going the little and all is is to at what’s the to to place over - the unit - effective volume property, going by a maximize pricing from a the depending to times a

so And be trend revenue line trends overall, to growth. likely in overall I what in think I - we is to described the similar

think likely so year-over-year And I half net flattens I the well. think back revenue overall that's rents effective the in of as year, the to in out growth as be trend

Jonathan Hughes

you rate just it. way tenants Got offset you ever stickier rates renewal increases, Have mentioned? to since a weaker are magnitude as at effective of the or than those frequency looked increasing existing seemingly

Timothy Martin

very that And focused we time. have that's something been long for a on

as would as are so ever. I echo And things sticky your statement that

appropriate out a ability can to impact a ago the way we increases time, to the And way volume maximizing were we negative. great appropriate impact that four customers they move at to rates sticky appropriate years believe - at that the doesn't that existing the in at so if systems the our from were in that maximize becomes achieve push

time. overall I a efficiencies degree, continue picture to we margin. But think to big pretty a to pretty we've the approach on try for long so been aggressive large I find standpoint, And from an think

Christopher Marr

class what or being lines existing and remove to the pass and a ways technology data out use sophisticated of along for to at have on use create lean some know, looking time base customers, more customer that hanging about and they back in And have for that the years I thinking industry recognized options, considered you varying who technology generally the be systems the to those how we rate we best about think existing may expense react, low fruit process. operating the test operators to from using now would how fat not when to and increases

the not fruit last sort is know over has of or - a we're hanging that that of us low several from just years there. know, a reality the been You who done certainly sophistication the perspective of of low ahead those is you and for lot curve fruit hanging that

Jonathan Hughes

pressure Any it. operators fees? you're one anecdotally of know heard just I've for seeing Are getting I you X% big due have X% revenues that the but third transition to Got And increased lowered address more any was a management these Okay. there. just competition me. then in party of management to from owners there market. by been that some the recently, to out change some to any maybe

Christopher Marr

what to I aggressive of scale feels - folks side more certainly in trying business would is third you and see you the party you that's you who are Well, build of see being some do. think if what which were management market on any appropriate type

And with the customers. costs majority provide to and on deal for a create economic pay We we value the them. CubeSmart I the for them that have value party that say have, the they is with are platform would provide that have for we we're hard to can overwhelming over third relative good they the those helping arrangement very pretty happy value XXX the worked relationships

Jonathan Hughes

right. the it All Thanks me. That's for time. for

Christopher Marr

Thanks.

Operator

Please Our Khanal with Evercore. will ahead. question next go Samir come from

Samir Khanal

seen Can on a lot but sequentially, do I color more expect provide some morning. good revenue stabilize also there. spending you guess, improvement Houston? Chris, to an market this year, that in you you're maybe

would be helpful. So color any

Christopher Marr

Sure.

know, new been variety other You been obviously things. also in the developments, weather markets by a has Texas impacted of Houston all like of by impacted

not significant still new So you're a XXXX, it's again expect over seeing XXXX supply we that being decline lease openings draconian delivered, So Houston in top very [ph] new MSA. would will five

So - that's not that's unexpected. not

still you're stores growing same and we expect we XXXX, What that do growth we stores overall only would a guidance flip relative Houston. but have Houston lot XX They is and see are relative not rents we are occupancy store positive are seeing to of leasing pressure. would expect that see XXXX an gradually net again to to better, getting in up, our In the occupancies in awful there's positive. effective pool,

lesser XXXX into Houston when know, going would combination actually think effective same XX in and store we where you you positive on in saw what will on in result impact net stores XXXX revenues than about expect we more think declines to our our And some and - XXXX a relative of some portfolio - rent some produce much occupancy more XXXX. we gains we in so for the saw

any downtown I that question for the different is hour into themselves long is are going really asking would think to like I've for we ability been you transform which urban question Miami, about have the term I cities than same see to XX not that Houston cities. the know,

went You they suburbs was I'm it accountants, were was and know where the to doctors it downtown and went were in traditionally the no there home during Houston left the Miami lawyers, you sorry day, who to doctors, lawyers areas work, evening. and the and in

a self-storage of an awful lot lot and development. development condo seeing vertical you're So lot a of

is suburbs live in up question dollar going pay in are rent. condo a options, to be. rents to transportation development the they XX that be does to that is in achieve it's at older need if to entertainment demographic someone demographic yields happy in want to their these possessions outside meet And the an to and their downtown want or going going the what for want and perfectly order demographic the plus to close be are a store So in - that to Houston leaving lower work they older who to who drive in stores there,

markets are in be years on particular of couple how may of over demographics customer going test two think change. next to cases interesting I those our the the

Samir Khanal

know up there? about just missing guidance guess run at higher G&A I than shifting to in rate I my QX, that. XX% quarterly was certainly gears for Tim, math sure Thanks make - it look you and want anything not I'm for when your here the it's

Timothy Martin

Yeah, and out teams build us much our X% of continuing to and I more by platform X%. grown or X% than X% is our up reflective somewhere think to it's our systems we've as

Samir Khanal

that. thanks Okay, for

Timothy Martin

Thanks.

Operator

come ahead. next from go Please Our Lumb will Ryan Green Advisors. with Street question

Ryan Lumb

Great.

the So mentioned. ad as up spending quarter in you ticked

of click a is ads ads paid inflation? of the number search. more And assume if or was price this of placed, volume online that a is if this I curious per inflation cost Just

Timothy Martin

heavily but towards Yeah, two, auction it's keyword. combination a of spend weighted more the for

would much what's think increase. - drove about are how the how So during long day those course majority we're how the the we budget the that we of willing to keywords of for pay and

Ryan Lumb

guidance - of next an in for the assumes are And year? driven so know, what drivers expense you ‘XX primarily growth expense for by assume or would midpoint there Okay. Is acceleration expense year. you the that marketing growth for

Timothy Martin

rates are to estate that's and then real to have the marketing XX% average. the that's talked expectation about estate on the range X% obviously Real expectations our tax then growth an in - know, we for seeing in earlier range XXXX throughout one biggest, you're type you we expense taxes, that know XX% X% you

Christopher Marr

as pressure know, point personnel well. with seeing some And is we're very then it where we're the hiring your last healthy, you pressure on is certainly very, economy - seeing and

Ryan Lumb

great. Okay, Thanks, guys.

Operator

Mueller Our will ahead. with come go next JPMorgan. Michael question from Please

Michael Mueller

to stabilized different cap very assuming looking talked about in whether low or looking fully yield an transactions, going Yeah, you're in rate XX you it the should of is about marketed but investments, contemplating properties immediate or where add. for at range, cap for thinking yield? are guidance you How the your acquisition a not to probably maybe stabilized low it's with value low we have hi. that? I'm something it's you're What going be guess, types rate I or that XXX,

Timothy Martin

call. likely we we impact answer guidance. And more question picture volume of provide an in not any is big The not our difficult. indicator activity and Thanks question acquisition the because speculative for the to very as is our a think that The year to from to are do present entering guidance FFO your welcome earnings it's we're standpoint, opportunities themselves. of the very, is reason the of where

targeting adjusted that's buy any, returns and worth of what of targeting necessarily type opportunities we If if any don't million we we'll We're not anything. won't attractive find do. $XXX acquisition. we We're particular find then risk attractive

depend to It's can question adjusted And we on answer. difficult to basis. so it's going what you attractive know, upon an really find risk

Michael Mueller

Got it.

front, development opened timeframe you a opening the on in are XXXX for then what the are XXXX? stabilize And in and projects Okay. that underwriting to

Christopher Marr

XX, first reason, they profile physical look For level open. at the year of would occupancy, which physical occupancy between XX we that the the the expect sometime we upon strong demand month depending time month given still in again more and of of sort

another rates that bringing first those rental where months about brought of after to in economic we are true Given and up stabilization. customers, market then for XX level

Michael Mueller

Got it.

was That Okay. it. Thank you.

Christopher Marr

Thanks so much.

Operator

I question-and-answer any and the This to over session. conference like President turn to closing concludes Mr. our remarks. Marr, Chris would CEO for back

Christopher Marr

the opportunities industry for and a and of bright I into look Obviously, team that busy Okay. Thank the our to take believe to customers, some we're certainly self-storage it's go, the that raring in how our We season for begun. cyclicality very with said entering the all our as you process future systems CubeSmart. and present And everyone to for of has forward terms business of but advantage we we it to our call. participating in year believe our has with themselves. encouraged will

forward you over speak we look appreciate will when call you. at you quarter We participating of certainly weeks, couple the today. we of the Thank So and you various many we next the industry to again first in report earnings. seeing to events

Operator

disconnect. Thank and This you conference. now may concludes today's attending for you

CubeSmart (CUBE) 21 Feb 202019 Q4 Earnings call transcript