CubeSmart (CUBE) 4 Aug 232023 Q2 Earnings call transcript

Company Profile

Participants

Josh Schutzer	Vice President of Finance
Chris Marr	President & Chief Executive Officer
Tim Martin	Chief Financial Officer
Todd Thomas	KeyBanc Capital Markets
Juan Sanabria	BMO Capital Markets
Michael Goldsmith	UBS
Samir Khanal	Evercore
Jeff Spector	Bank of America
Keegan Carl	Wolfe Research
Spenser Allaway	Green Street
Eric Luebchow	Wells Fargo
Hong Zhang	JPMorgan
Ki Bin Kim	Truist

Call transcript

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Operator

Good morning, and afternoon ladies and gentlemen, and welcome to the CubeSmart Second Quarter 2023 Earnings Call. At his time, all lines are in a listen-only mode.

Following the presentation, we will conduct a question-and-answer session. [Operator Instructions] Also note that the call is being recorded on Friday, August 4, 2023.

And I would like to turn the conference over to Josh Schutzer, Vice President of Finance. sir. ahead go Please

Josh Schutzer

Chief Good Call. Welcome include, Participants Chief Tim President Sylvie. Quarter Chris CubeSmart's XXXX and Martin, and Officer; Earnings on Executive Officer. morning you, to everyone. Second Marr, Financial Thank today's call

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

financial our section and earnings of company's website www.cubesmart.com. forward-looking is addition the supplemental actual to issued remarks evening, the involve differ risks, factors that results other cause The certain strategy regarding release, company's and earnings In available forward-looking will was these under which from yesterday and operating to data Relations statements statements. materially may include Investor at uncertainties that the

cause the X-K we The Commission, and company documents report our the to Risk actual Form the results company's from Securities XX-K. specifically on section filed to the morning the provided X-K this risks earnings could the differ files annual or and release in and with of furnishes factors Exchange Form with our with together forward-looking that filed materially statements Factors are Form

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

over I to will the now turn call Chris.

Chris Marr

and markets, believe market. We within differentiated our scale grow morning our self-storage as power Thank remain you, position demographic well the Josh for to the and call. Thanks We to continue high-quality good leader of our confident to top is joining the everyone. platform. positioned that CubeSmart in a portfolio our in

and drive strategy leading top to customer positions rooted strengthen unwavering strategy, flow service. to disciplined This in growing which technology enhancing have the our continuing we decade, superior executed is the Over our on in MSAs, state-of-the-art growth. investment positions cash to commitment our long-term XX our market us past

excellent to demand into continue the provide in our also backdrop We the demographics strong a future. believe inherent portfolio will

the of value highlight quarter second our platform. results Our differentiated

and during suburban provided beta and lower closed-in urban portfolio growth stability Our the quarter.

that household rapidly COVID-induced population existing inflow to were of the expected, slowdown market, high rising As rates. largely reliant markets sale in came down off mortgage home a due movement beta upon impacted significant and by were our their

York, is to In boroughs positive in growth us dominant favorable length XXXX our and most has helped our important This New stay in of to modestly for demand remaining which should market, XXXX above levels. is new the revenue combination elongated levels, slightly overall continue relative customers pricing pricing market. physical same-store of support occupancy with environment, drive trends

trends impactful environment, up, from Supporting anticipated. more a supply have these is favorable as than been Brooklyn lease in less headwinds stores the especially and

We market for will expect trends our balance York year. these to the benefit of the continue New from

Currently, in to evaluating dilutive our the available many opportunities market opportunities. continue in quality acquisition current to are approach growth the quality. be our would of be to portfolio inferior We disciplined of and

ability returns. result, As capital risk-adjusted being deploy we and to waiting realize are disciplined, a are attractive confident the in patient we to until

and we capital As be deploy there will opportunities seller buyer adjust, be expectations attractive ready. will and to

In to platform. stores ways, in meantime, the new other we grow adding continue to our

which new manager the have continue facilities During we robust brands to and to have added XXXX, management our self-storage XX of platform pipeline a third-party half new seeking choose. stores first to of future a Owners we many stores. from of

management culture, preferred operational us make and third-party provider. a winning platform Our differentiated expertise,

to our customer unwavering our and commitment XPM put CubeSmart, we that business to success attribute At outsized have in service. customer always the first, our we

relevant our owners to key button. of access during a state-of-the-art a For performance we at which quarter, example, out property our every our indicator rolled portal, their data click latest the version of to gives

year. guidance to the Turning for

rental season our As release, in sensitive. during the earnings been price demand noted has very

believe a we the what posture adopted balance year. and We guidance prudent realistic of have on the for is

for in stabilization year, backdrop an further a for next with increase positive encouraging out home there A into lead formation, sales. several in in XXXX. are existing continued mortgage to household signs self-storage could Looking rates, along

in raw materials homes of ongoing new chain of may of supply contributor. in positive self-storage will new and relief accelerate Continued cost delivery facilities a the be openings decline the the and

We to as historically. believe these are and conditions operating well-positioned done through market just CubeSmart's balance have platform sheet portfolio we navigate dynamic

and to continue of value We uniquely track performance differentiated record and well-positioned delivering to are our superior creation. extend excited focused from our assets

Thanks turn Financial Officer. now, for call Chief Tim our I'd like to And that. Martin, the over to

Tim Martin

us for taking to everyone Thanks join call. thank Chris, to today's the time and on you

contemplated. when quarter customers deceleration environment expected more The week-to-week. trends macro highs two would of That the the the is second combined saw have expectations led deceleration years. with new than there natural inconsistent uncertain pretty from with the off for to our price continuation an of optimistic Demand over but range sensitivity past of the

increase a X.X% $X.XX, quarter, as our of quarter driven represents of strong cycle. X.X% X.X% over of we last the growth the in by all increase in the quarter profile same-store NOI FFO which revenues second portfolio to Same-store per share for year. reported adjusted continues phases and demographic of For the a the support was X% performance same-store growth expenses, so throughout

against inflationary control environment. comps expense to bear and continue even fruit tough in initiatives an Our

growth see that We're second pickup that create to returns the to and bit external a There risk-adjusted opportunities target and on great overall markets little have the of in in have quarter many that sense remain enable disciplined value. with hard acquisitions. us make recent in our again that here opportunities to to as year. quiet high-quality shareholder this Chris weeks, at least find front but a we work sheet mentioned weren't starting were traded We expect on-balance

platform. continue XXXX. on stores front us XX We last XXX management years We've third-party that six add year-to-date. the added new to surpass managed number added stores here quarter, XX in again of pace the the On each in added and bringing over third-party to we stores to the we're to in

Our avoid as positioned floating to very rate near-term positions find opportunities course and to have schedule balance pressure a well sheet conservative pursue well of debt. modest to has we well-staggered very exposure us earnings and when us attractive them, maturity also we

Our rate. is maturity years. is debt debt average our fixed of X.X XX%

November no debt of and significant low maturities levels have times We leverage EBITDA. our until to X.X XXXX remain very at

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

coming power of our updated for reflects with where prior pricing summer rental with revenues. of are range we season Our positioned out lower consistent the half guidance guidance the same-store

for the this At call Thanks morning. again Sylvie, up some let's us questions. for time open this on the joining call

Operator

your question will from go Please Todd And Instructions] [Operator KeyBanc Capital Thomas be ahead. at sir. first you, Thank Markets.

Todd Thomas

thanks. Good Hi, morning.

First revenue ask about question, the I revised just same-store wanted to guidance.

modest that severe so the a you stable the for expected be deceleration realize little portfolio comfort and the You're to bit a segment more York the can less I deceleration at the City, the the portfolio back balance have far. back in little same-store embedded guess markets, assumes New other New XX% to guide which a of guidance year-to-date that more what's speak the year of half X.X% of you than but and City versus you're around gives some forecasting? particularly of that of is York than I peers in a here, reported rather half of is and your the the

Chris Marr

Hey, Todd, it's Chris.

we constructive. see what remarks, expect customers we I my year. in is still specifically levels New relates modestly that were We York, seeing to achieve to to where there at trends it as continue above the price mentioned we it opportunities new to As market last have are be opening for able

above where low positive see, the Again New We nature there. We've XXXX. seasonal continue I very to vacate I continue in seen that pure remain slightly less we're market, of of fourth will customer year. we are in that confident pretty a into have to trends quarter so were the household pretty tend that in the We and we've And the that's mover. of think York third rate market. obviously, to physical this constructive think occupancies a in unique seen

overall deceleration as we get of the some into I for out this I think third perhaps we portfolio, modest fourth But flattens fourth obviously, go we year. the and deceleration think into our portfolio as of the the quarter that quarter. as for continued balance

Todd Thomas

characterized uneven it been suspect the is maybe in you general How revenue and bit you I management and system's XX a for also information has patterns? system a years of volatile just to like are I and relying data purposes? that cycle How relative pricing lot use maybe this environment last And sounds the or these guess little of or all which I really the that guess and XX And on? different budgeting impact tools revenue your Okay. the the this as month-to-month. for management whether does

Chris Marr

Yeah.

It So frankly The has March. inconsistency. a we've in a historical I've four XXXX positively here been in used bit It the standards word consistent June. was an thing only July of was first days here of It inconsistent. has by odd August. seen the unusual an odd been

in noted year to today year. positive certainly we trends saw to down think little As the is gap release, basis the a July where into now last occupancy points. here to below quite we continued last gap the relative in That's August bit XXX I

just inconsistent. been very very, it's So

And very it perspective made science so data to to it forecast. your a question, from challenging direct to has

price trying real basis basis, that And on to finding a so, in sometimes models balance between changes pricing competitors same their and we week-to-week making as relative to and to are are. time your just you're we deal challenges with those are who the day-to-day market find a in

then made over as difficult then relative relates five to pre-XXXX any -- the has levels. what the it's XXXX been XXXX year and that So certainly to on the years would of the you that for say to COVID the at I answer one and of the and question due almost I answer back we of very of to But manage it years half last coming first to I'm were know half years, sure saw volume business. is XXXX and your "normal" think on XXXX short it supply not business side XXXX my abnormal in self-storage. obviously XX all the then being with time now just the spectacular

standards. dealing been fact the with with we've pretty it's of so historical So been couple by inconsistent think dealing a considering we've years it well and that this been for I

Todd Thomas

in demand? rates that cuts feel Okay. decreasing having your on driving price price dropping portfolio? Are by you to the you do impact a And positive cuts responding are competitor move-in

Chris Marr

Yeah.

industry of which as XXXX I think coming macro, occupancies. high again down XXXX that of demand an off just COVID-related historically spectacular and we're created

capture off So which And that the gives customer as those customer available as high to are we're there's price. more for choice. more a coming portfolio more at optionality as inventory. your more cubes historical an stores, tool, There is into result of then down customer industry, occupancies, one a one lever and

what our used to price produce board, accordingly. how what competitors, lever to we operator across pricing pressure put a the factor have it operator move operator, store And inventory be a the or then that large particular all how into they or choose varies. put our -- And within looks those on the that at the that we of choose data whether regional recommended small week. and see for a system our or store, day we in And market by our like, need we are available to that micro do how to points

here just So pretty working take the last to be your saw year into to you so. here couple up consideration. But there's I and mid-August And through weeks think year if take you we're availability trends I in of period more high you we the of for normalize question to just last see more a sharply do or relative last started everything a will level, where year. think case to as that then have

week here next think And easier forward so you comps the I or so. go as get after the

Todd Thomas

Okay. Thank you.

Operator

you. Thank

question Sanabria be Markets. at Juan go BMO from Please will Next ahead. Capital

Juan Sanabria

on second time. Hi. maybe just you quarter street and saw the the Thanks just for into Todd's off the July guys of rate guys throughout Can comment question? backing you trends

Chris Marr

look the down what just relative of quarter, year volume. relative was There pushing much June, quarter. And saw reality customers, That Yeah. basically didn't last in you to we a all where pretty is aggressively. a we more kind trends consistently the deviate stretch rental little percentage new were I in slowdown month-by-month that as year, was through last mean in for we the mid-teens. went to throughout if the rate a

Juan Sanabria

just on in Okay. same-store And a the then portfolio. question rents in-place

You had of decline. quarter straight sequential

rates, is leasing So that ECRIs, in-place rate curious any or the into just you'd the has for And trends diminution in the baked regards expected of back season? softer being that what's year the by guidance there peak half move-in in rents. impacted to same-store with given street average been

Chris Marr

from and balance terms try of to year work The take that the to being a perspective in continue lever try rentals. macro expectation for the will of to are pricing it using backwards sort folks back the we the see get the price and from is of and get that

And so an and is – adjustment guidance price again the be issue as in that our our release, noted to therefore range. continue expectation the in we will the

of year. As customers of compare then that and for we in to the noted mid-August last see sharp to on a think I continued last new you response sort did asking to rents then I for start balance year decline that year question, fairly the of in my prior about the as

between will where were August the to last So we this of December gap to narrowing year of rates where and from year. expect continue be some they

on move-in that portfolio. hasn't be the that you strong is strongly in our nature in had lower program you Again, ECRI And vacate of as disclosure last part the changed. rates. think rate metrics from is I impact ahead the we and of your saw biggest were year. pretty the unique continues The that question The to where of

So move-in outcomes of that the to is rates I for think be expect the in-place the year course do close gap balance throughout as driver gradually last the range to the we to rent of year. of going

Juan Sanabria

Thanks, guys.

Operator

you. Thank

Please Goldsmith go question be Next Michael will UBS. from at ahead.

Michael Goldsmith

opening my remarks new Thanks for more said that a customers. your question. in sensitivity taking for morning. but demand lot with the you Chris, there is price Good

that been So how for in promotions receptive – that being you out in? is or move when is price they're available. need-based you – a has type that's always requiring rate perception to how Our it that translating need that like that lower has to it it less and so they're is or and this customer? that like need the is order product been take playing how Is the a so you

guys? that is for you how So exactly out playing

Chris Marr

Yes.

of you've I got think things a couple to there unpack.

upon you think that and do the the out. of impact have depending pointed submarket, I need-based an market you as

definitely more stores, more suburban who think So because this relied customer, seasonal existing the seeing arrived exits the a I of situation. you're frozen in again, who have change, in outer impact home and in that August typically May of on household market

retailer some who you not or on can't – to not obviously I markets, in of impacting the temperatures above also brutally but the have the move in think XXX to customer storage move days. Southwest sound for choice a discount certainly a choice like degrees a XX to may days XX hot out marginal but consecutive

got playing to that's be activity. you're So industry. the that due I the you inventory more across Southwest think some coming have to seeing of fact overall, the down occupancies But into

to possessions. And of store so trying in believe to find need they more what a customer terms their has optionality they

in the overall degree to And marketplace. you're price to some reacting

at from And are competitive, is operators, moment. have them working the situation marketing and to And customers the the that's of don't at budgets kind your customers in going that situation than to price the which play going if those of so here smaller get you're definitely to be all get we're result more funnel top you of those we're dynamics in, in. because you're through share ourselves get are that the who

there's more that promotion are question, your definitely portfolio, in promotions that marketplace. for down those our in but then exist customers To competition

Michael Goldsmith

my positive been metrics decelerating XXXX, of Thanks Chris. greater lower the guess rates this and trends is for year. I catalysts turnover. about for detail all like you the talked on seeing follow-up operating the you've And housing potentially some

first through guidance back continued the through continues the the of and half kind that's and probably -- half. So,

pressures is XXXX seeing some what impact from on So of numbers the the that you're now?

Chris Marr

the I is of as time, the normalize those both you a in have our XXXX, that. occupancy increase utilization price -- business, just there's trends just any and deceleration or any output think you in saw in in XXXX where the rapid and case that

you the think last of I see half year, normalization. I so, that as said began is And back to where

year-over-year get more more comparisons And into eventually normal. become traditional as your XXXX, we

you health quite the So customer our in health see payment go it our see strong. of in in the I et auctions remains it just history, think of certainly length of cetera. stay. general and customer, We We to

have still So gives who you seems healthy. confidence that consumer to a you be pretty

to You on which have going of self-storage have market I headwind a certain things particularly the the general. in near-term do housing in think bit a in

there, paint normalization you for a self-storage a if the for so see normal can fairly comparisons, healthy you to consumer, start backdrop industry. think year-over-year constructive plus I a And plus XXXX more

Michael Goldsmith

much. Good very half. back in you luck Thank the

Chris Marr

you. Thank

Operator

will Khanal ahead. go Please Evercore. question at Next from be Samir

Samir Khanal

morning everyone. Good Hi.

on about expense Just have around drivers you the as personnel Tim, we looks the costs It talk year. a how know year? think we factor. next mean, the year. demand as may in been even Thanks. costs And about insurance lowered pressures do here follow-on into I Maybe like maybe that. personnel then, for side, and talk into for guide think marketing I the next the a, about

Tim Martin

as Samir. fruit we're some that largely discussed on think, still higher great Thanks although, providing prior we've It personnel to the tree staff customer up efficiencies even with stores in I side, there combine finding good and to to out still the as -- service. we Yeah. be higher some how opportunities continued gets that quarters in we more squeeze efficient and

great do. create this more perspective. on the front-half. to opportunities an the That's in insurance Marketing is the we of talked going in We've insurance certainly find from wildcard. expense back-half pressure always to than bit a When -- year pressure the past property about we spend the little

we a nothing new back, -- a the perspective, return tax estate from are. little drivers compelling this to tend thought entering From doing When than but would less where really dial we year. on a from we're we a bit the it find better that year spend opportunities have real overall

We've perspective have success than we with number estate had marginally better there being year-over-year tax would some growth from and bit starting little a like which some the shave year. the helped appeals real thought the a

Samir Khanal

in million figure then, is August. Thanks. that Maybe at to I'm talk you current it. about looks us external through like growth like time Got of opportunities you. to or mentioned. pipeline know that looks of million And kind your walk for the pipeline $XXX just I acquisitions. guide trying the what terms at it's for that $XXX just that what considering out, still

Tim Martin

on Yeah. traditional middle talked a private also, the they the in there's typical sellers Most believe peak-rates are sellers, summer. deals peak-occupancy we've The sell of their the prior that lot calls positioned to best certainly at and in that store acquisition seasonality market. of

when unusual not more in true stores to parts the year. that of if traditionally that's again And there to more is year. of other brought than market So this to mid-July for opportunities is through are kind seasonally late-August be coming when somebody is market

haven't to assets attracted a in to. compelling of of we whole that opportunities markets are this point we lot seen Up high-quality

those cost to So a that's present themselves. sense seeing from difficult our that wild to standpoint predict. makes will some opportunities of number at capital? relative we The So to are risk-adjusted very they of a return now trade card right is us

will the starting we're in the selling Not seller see the price we which we to So things sure us. will be interested market like that some them that to in at like.

transact to our year what ability So, of is. of here uncertainty in back a half lot the actually around the

for but buyer make We whether both return to to hard so it's a do seller. have that predict and sense that an will appetite at

Samir Khanal

Thank you.

Operator

will Citi. Rose Next be Smedes go from at Please question ahead.

Unidentified Analyst

[ph] on Hey, Mattie good for This is Smedes. morning.

Chris Marr

Yeah. morning. Good

Unidentified Analyst

could supply. supply wanted We've coming So new hearing Manhattan's been Side. about just that some there I West to be to ask

pockets supply if updated thoughts wondering markets just growth overall. generally. so any you're And other maybe seeing supply across more your And of on some just

Chris Marr

Sure.

all can So that muted overall you supply continues for to be surmise. more the reasons

of backdrop we the spectacular have years few You that experienced. normalizing operating is off an that

materials labor. chain and supply a it have as to You creating raw still issues relates

You have and that raw pressures abated. inflationary labor materials on not those have

forward hypothetical opportunities or seeing And number not pausing. that significant out a are you're of there being so moved

here on trends decline think constructive the broadly way New there. talked that So, on you're that I separately. couple York very and take think completion. no in Manhattan which very, working I'll remain that market for about I any supply. particular minimal seeing supply take And their I us continue, deals last question in change, very if going then the least. In while the market, at boroughs just quite In the overall In quarter think positive those to forward the I makes York of again, New a

little never of you and in different had a boroughs. in incentives bit Manhattan you there there had the a outer the that opportunity that beast the tax

those never those opportunity So beneficial the the zones least an Manhattan. impact of at storage difficult removal zones in or isn't more for in

you certainly So, seeing supply some Manhattan. in are

think Street XXXX. for for it's been or us worse have better I one frankly and here course over XXth store we the the the on well incredibly of performing

So that thrilled with XXXX. are we

couple thrilled some Manhattan. yes in are built in be we're at to being and new known on have that planning there talk of that Sorry, with in a seeing store. But been you stores least

So, that's operators on to in going some that some market. pressure other put

Unidentified Analyst

are an big you properties vacancy? seeing seems And what to Thanks. be box uptick increase in given in any conversion Great.

Chris Marr

terms somebody those out action folks to talk the of It's an through just There's of poor existing business a that to lot office and this use to in get not how in clawing and fighting awful scratching time of to they're lot their Yeah. concept. product. figure for try

And the from so et It's cetera. a have ability just floor conversation about and to loading always a the there's self-storage. challenging load area

Haven't talk. in particular seen of uptick lot action. any a So

Unidentified Analyst

Thank Great. you.

Operator

of go Next of question Jeff Please from will be Spector Bank ahead. America.

Jeff Spector

feel forecast, I and and uncertainty the early team about very guidance? and difficulties changed do June we you now the appreciate comments cut. this season you. I'm leasing guess disappointing of saw sure, out the I Thank of to latest blunt guess laid with some I negatives I comps. line to this trying know, and latest I about positives But peak it given Chris, bottom what's you you some tough about, think since comfortable we're How how just cetera? guess much be guess, really made you've and Great. to given are guidance especially was the finishing you the to et

Chris Marr

Jeff. question. Yeah. the Thanks, Appreciate

frankly about way years. that expectations perspective, in what et the of from has beginning So contemplated could back We a the year range customer inconsistent expectations the year, in a we envision year. demand established a balance out and a we pricing from of been perspective think inconsistent of very that scenarios the playing the cetera for the

We went picked I a through customer. It have very our sort year. the June, in a slow Things it July was very busiest here time of oddly of mentioned. as price-sensitive but up is

range the And contemplated had we end, those in so that of valid had of a we the that that establishing reach. terms at when of of clearly expected still out we and seemed which back and part what more in a in the top comfortable -- range February bottom expectations, was range end of still were robust looked still environment, we confidence

so the And first so we seven of for expectations the of can what far cut. the that months. lowered simply We the word use our we've prefer reality top to end seen dealing here we the with word use

Jeff Spector

existing. ECRI question there's impact believe having And you're to impact are no push Fair. Thank on street on confirm, saying potentially on earlier rates lower an on the I the ability again you. just clarify to to the

Chris Marr

customers market hasn't your recommended be the in market producing that push is rate and street in impacted. rate's our that are systems been time input current trending. at increases store to current where The to going that to the ability The existing

per pressure in And the year-over-year, at again, more look you so if some to were will that But seeing not we that well. half as back XXXX put want on it magnitude se. pressure of if the

percentage relative doesn't the much. So move that all

Jeff Spector

on customer you. about then again in And July talked price-sensitive the lowering Thank you more rate. -- to confirm

and higher. obviously, -- moved occupancy So has

customers working? is in on pulling with, Are are you pleased seeing competing? So into and you're results new you are how I just -- the guess it you August

Chris Marr

Yes.

increases the existing pleased competing whole like revenue been of felt through generate quite that been we're year. customers we've able we've backdrop with overall what in and the rate think I We've growth the terms to with in. to

And that day-to-day, rate question, trying what spot asking so, week-to-week to is. and everything you demand you're promotion to find and that an achieve trying between earlier to from sweet that the we're fine-tune

where of that continue in we path. getting in rest price. a that are the decent opportunities see continue were for July, there year the to demand down at We'll to Obviously, spot from

feel certainly oddly slow So April in kind year an say, really if inconsistencies all we quarter was March things balanced to and back of as have first up been the July. the out go more can there Again, and and then picked month really, nicely.

just it's been a very inconsistent year. So,

Jeff Spector

Thank you. Okay.

Operator

you. Thank

Next Securities. Cassandra will Cyber from be go question ahead. at Truist [ph] Please

Unidentified Analyst

standards? And need specifics you follow-up talk on to your Hi. to for meet could my external Could assets question. Thanks bit return are? more offer growth. quality A the taking your thresholds you what a little more your have what about

Tim Martin

in Pretty Good focus been the a answer Yes. on Thanks MSAs. Class call. the our as for strategy decade. has We for more consistent morning. than facilities what XX to top A

both are comes quality, of market snobbish assets. quality little so And bit we of quality to when it and a

expand and we competitive market And trying to footprint share, if opportunities not some are so market leading to our XX find of good share have MSAs. those in top

to folks of to sellers assets at weren't capital. things sense for we description So that we're that opportunities were year, fact And that finding find my complement for fit that the to be tags or price our in we able sale were many for last to that weren't that of cost that's earlier make half the our alluding that year-to-date convince us just existing footprint. versus comments assets -- trying to back

of little yield out. when clearly think from us attractive bit different. a assets an needs equity think you had relative cap The rates requirement those investment about the and cost from our certainly our about rate, if today been we are be the to rates interest so, gapped active And where capital, to and move interest them standpoint more has return for where to you were, buy

for see make gap a several quarters It talked at was versus of where other about being were were. to returns between here to about talking buyers And sense us we've and where in assets a where it sellers' we last opportunity that kind quarter attractive XX% we heads those XX% or been basis risk-adjusted invest a disconnect. having on an

of here to successful continue sense we the guarantees. So we what that to us. that types start our half we'll some at for but view how No will is of for opportunities that to Hard be, be is make price predict back year the say optimistic find we disciplined. those can

will complementary mindful grow of that We'll grow to won't strategy sake. we our value. to continue way in -- create a way is be that growth's a can in and We we for shareholder

Unidentified Analyst

Thank Great. Okay. you.

Tim Martin

Thanks.

Operator

Next be Keegan Research. go Please ahead. at question Wolfe Carl from will

Keegan Carl

for Thanks times, guys. Yes. the

So are a thing to that operators good mentioned challenging for more a navigate operating know for looking environment. it's third-party the I managers you pipeline. you it like mentioned seems

So I share you for one think what And of guess actually the do much can market how are gain? your balance expectations I'm you curious year? the two then

Chris Marr

great hey, question. So,

generate in stores year. the get we minus roughly have been when year full those XXX we we to per or I that's about numbers and we to the of for And end to think when around have historically. done type the So portfolio remarks to year what the would -- similar or as expect in mentioned his Tim plus assets of past you around be this additions I able managed think, third-party adding so think

you two I business is this about think you if drivers. that think what have you see

and brand-new store professional built the an gets assuming that interview that's development where you folks third-party to an to addition cycle have arrangement. developer they You platform. and for the the have store is looking have manage you a and a And bearing

to certainly come to continue pace we pipeline that continuing they that in stores the open have developments albeit obviously will general of somewhat And existing and that are we've -- the new operating tend The cycle. as into business with about slowing. move to program talked is supply

about operator. owner business for a if they're are that solid idea inclined bit be easy over operating frankly thinking to larger so less And little quite the is management very to a the of turning results and

more competitive more the those challenging it with a having I'll more it folks conversations market us. of thinking As start call about you get into you and to a see

be so grow And within will into in able given to next gives confidence happening nice and at some us be order to of the then allocate that year I fact distribution and continue think that continue through seeing to a it go balance in those our points capital to system. we're the make pace year of and we pipeline to our that we have good that very that as also don't get that this additive

Keegan Carl

one for you remind what maybe range? Can is your Super helpful here. in just of macroeconomic us guidance Tim And backdrop sort embedded color.

Tim Martin

does little broad XXXX. on it short-term on Yes. have XXXX. storage of the We be not fundamentals. a direct a bit environment more impact XXXX on in not of to has trying discussed at focused to performance because guidance we're It's relates whether as or predictive impact longer it soft Probably to than term landing providing the beginning macro that weren't environment really year of we that tends on an

the times in we conservative in over ago. this is perform. to to six weren't guidance took We're of be recession range the trying here we're were going which during the our we've think the will there view interest is next of XX say at a to months how there to this still to were call about as initial in underlying build trying multiple that whether a lot realistically end we many going assumptions We we those months think more And just range. we business rate than a So in be. talked hikes

Keegan Carl

Thanks the for guys. it. time, Got

Tim Martin

it. Appreciate

Operator

go Next question Please Spenser Green from ahead. Allaway Street. be will at

Spenser Allaway

rises but across little been note the market to in bifurcation did of how last ECRI questions, a just comment MSAs? ECRI some so highs different specifically on you there's magnitude that the the Thank of Not you. the come you Hi. the more beta Can down terms performance years. higher range of wide off two belabor those markets a of in

Chris Marr

not who variety it's increases based getting Yes. those pretty not it's that you. has at that of increases got is broad customers the Thank or are per because an then It the on range existing percentage Interesting to broad, question. right? in the overall between terms gapped of to this array personalized not range MSAs out within customers point that actually the much just customers of you've a delta all factors se. Because

Spenser Allaway

opportunities priority Okay. could Thank as portfolio in given terms anything redevelopment sidelines, that are to, or take list? in you. bit a a little thoughts the kind curious, acquisitions any slower? of it just as there's capital more, of, you kind are advantage guys in Just bit expansion of on And opportunities, the sitting then you little any allocation if just acquisition of think now your like I right relates regards to activity

Tim Martin

sense Yes. ground already returns be nice when comparing out, to They're they very parcel they pencil attractive because a When have -- you we it separate to tend up, the be to make really something about and think oftentimes opportunities. they land. tend doing on those

land -- fixed cost. base fairly a already it's your so And is

You already have it.

for those opportunities But say. There So, all of moving, are time, for reasons. they capital use I They're our those best at time, wouldn't we this look those not expansions. opportunities. for of the the are point needle some in

those can time would So we our it that of a sense footage, we that square on all footage on focused wish makes advantage taken add more it when square we opportunity time. had lot over them. where legacy find the are bigger add a to of opportunities for Certainly, portfolio opportunities complementary of have

that returns. West us have opportunities many XXXX. do some portfolio exploring embedded Storage opportunities does nice late have came in deep are with for improvements expansions that portfolio, acquisition some our in some The and We to some

of it's do but returns hundreds attractive. pretty that on opportunity, dollars are we opportunities -- the millions of not of find the Just

Spenser Allaway

guys. you, Thank Great. Okay.

Tim Martin

Thanks.

Operator

Next at be question go Fargo. from Please Luebchow will ahead. Wells Eric

Eric Luebchow

some think, versus Just to Thanks. Hi. customers? of stay of average roll trying Maybe record record sounds the some your still activity those on longer-tenured think you stay you the the move-out length at touch downs from today. rental It move-outs levels? or see, the some could typically Do levels. it at you that happening of for portfolio taking move-ins. Are Thanks in signs with can around the like of it's any of how questions dynamics that impact could

Chris Marr

Yes.

and greater in the of seasonally from pre-pandemic of about than length the obviously, stabilize So, a begun the two-year QX, year norms. historical mid-XX% well ahead is with the to range where The a in mid-XX% customers we definitely averages. ahead here, but of versus has were customers stay, bit certainly Down range.

from to reducing customer been would us call higher-quality Our metrics, length we the pricing has a terms on in kind stay that's usage, purposeful a of of attract while. helped of discount strategy focus a a what perspective, and for

the our our also more nature of longer I length lend use customers a to itself -- demographic again portfolio, stay. tends think case the the to higher of of

here XXXX, May half would year. lot June would of likely back from are of a a trends stay, inconsistent of the as we short then positive -- more after the seasonal of where certainly, could the relatively vacate get have customers think see lot seasonal highly you see I in a length impact who you where to a June, that into

times. had won't you see historic You perhaps that in that just see seen more normal -- we don't churn

Eric Luebchow

that Okay. Great. color. follow-up. one And Thanks just for

a maybe yesterday, that to haven't seen One normal XXXX. of since kind this year peers of really we storage alluded your

to drastically, downturn has summer perhaps, seasonal So of months as occupancy shouldn't say? it to. we're as Thank typically too, up see the degree out, it same move We're figure a much difficult later quite just suggest in the may Is does trying expect and as the you. not fact we seasonality accustomed spring to didn't year? in seasonal of if the we that just

Chris Marr

Yes.

to bit the portfolio, third quarter, a my lead activity the it's comment. of unusual seen The lack think, that things into answer, coming not seasonal inconsistencies which a may prior or more really throughout could kind of that challenging fact you to question given year, quantity in the out. have customers than fourth overall I vacate the to an could of of customer the smooth

you've So seasonal a could tell this think given It just fact that I year. to to seasonality. be place back traditional going the kind of, going the just be has of could got you in got far, unfortunately, taken into the range thus less more half I'm activity

Eric Luebchow

question. taking for the Thanks Great. Okay.

Operator

you. Thank

JPMorgan. from be will ahead. question Hong at Please Zhang Next go

Hong Zhang

Hi, expectations of you about more guys. leaning online talk your if year. was there's of to I naturally at customers, the the online acquire if remainder raise And toward and wondering, have are I a for imagine competition, little your will you peers advertising. more this point. to the cost bit

Chris Marr

need-based think attracting we customers Not necessarily getting a into a product you the them and big It's know. how as shift about in, portfolio.

store for that digital time And and and they self-identified of valuable customer so, need to a secure a search. process begin the period with possessions place that they safe a their generally

perspective, growth. that promotion a price it's and revenue from with to So drive along lever,

opportunities of revenue that. allocation in on discounts highest all maximization And on at of try so, conjunction that, drives balance look level certainly we capital a marketing do to look with look get get to of that the and from that very will to lever basis, store. customer price that We increased our that And at we business. that utilize at and data-driven an at we as attractive marketing ROIs are when aspects there to

try look area, promotion very where So, and and those day-to-day that's toggle week-to-week, much storage where I opportunities bid see operators in price another areas and much like cognizant may are actions think it the doing to of of at find to is we markets accordingly. dynamic. need can in of other take the It's produce whatever be like which to some maneuver, we and We returns. one operate we attractive market advantage again what we it in

certainly, means there of well that et we allocate we that obviously out spend of attraction We whether be social, that as other as use cetera, appropriate. customer good and can get -- also returns

what again, think think able and we revenue do being to from sense and we nimble that time do and to well data-driven being focus that drive customer. interesting and So, is I individual very of and an on each makes maximization it's we what move what ultimately

Hong Zhang

Thank it. you. Got

Operator

Next question Kim Truist. will Ki ahead. Please be go from Bin at

Ki Bin Kim

Thanks, good morning.

long how to for revenue. rates relates it question street first takes changes be same-store my in impacted So to the fully in

revenue before X% rates market my if off to start -- long from flat, minus into So, next start looking bleed how guess the are that you if Meaning, how we basically here are on when deceleration does much you assume even same-store rents forward, start does comps results? street year's flat X%, minus drift? if the out, in does street I rate get

Tim Martin

I I'm not with the... drift. sure, I'm do keep trying up get your to

Ki Bin Kim

thing that... is one Well,

Tim Martin

come stay. it exercise is about going of to Part down mathematical to thinking of lengths of the

impact. a so, customer shorter-term And going a longer-term shorter-tailed longer-term is going to a have a customer impact have to is

the excess think answer it's of I would the I well in length would take question that going your So stay to average to think. ultimate is, of

Ki Bin Kim

are today street your rates levels? versus where XXXX And Okay.

Chris Marr

hold -- XXs second. XXXX. teens XX low Versus greater than on High one

Ki Bin Kim

in to handy? same-store you just if is compare to your like of where sense trying to get what same-store a get revenue that have fall you that I'm Do XXXX, revenue the versus And could be number.

Chris Marr

here. Trying it revenue pull growth? to Same-store

Ki Bin Kim

same-store No, revenue versus XXXX. levels absolute here just

are XX%, then a at gap. same-store street up XX% maybe one up rates if there's is XX%, that So revenue can then assume

Just trying to that get sum.

Chris Marr

Bin. Ki handy, I Yes, have don't that

you a detail. and if of through off-line want of give I Josh better questions are some these work think call probably served minute Thanks. to this some

Ki Bin Kim

Okay. All Thank you. right.

Operator

remarks. further Thank registered. have proceed time we no questions Please at with And this closing you.

Chris Marr

delivering how ways from would to to All our historically, focus it continue generate everybody joining that how is and in incremental us as we capture been half you promise an we've as value what individual we control, in we we're look that we always things continue efficiently on can out in Certainly, and we're for this and first portfolio we keeping has sure our how that forward. we of XXXX. can going anticipate value under to focus can, will that maximize good you through at promise on very morning. make making do to interesting sure which Thank on on to We for Okay. continuing the focus control. and costs have, shareholders operating we customer controlling position what been that each

everybody, So, thank and to Take for you look us report speaking with very quarter results. we forward much joining care. after third our we

Operator

please time, sir. Once your conference you that ask today. you And again, at your attending. lines. you, does conclude this for Ladies gentlemen, this indeed and for disconnect we thank call Thank do

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