CUBE - Earnings call transcript Q2 2024

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Operator

Thank you for standing by. My name is Christina, and I will be your conference operator today. At this time, I would like to welcome everyone to the CubeSmart Second Quarter 2024 Earnings Call. [Operator Instructions]

At this time, I'd like to turn the call over to Josh Schutzer, VP of Finance.

Joshua Schutzer

Christina. you, Thank everyone. Good morning,

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

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

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

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

Chris. the to call turn now over will I

Christopher Marr

earnings Josh. Thanks, you Thank for second Good morning. call. the all joining quarter

trends line largely in with for our quarter operating CubeSmart were Overall, expectations. the during

were Vacates last the increase in compared second quarter XXXX. of second of experienced flat portfolio Our the a to X.X% rentals to same-store the same-store portfolio year. quarter in

end year gaining XX% quarter. June quarter last Same-store the same-store ended in points rates the negative occupancy June year. during XXX compared X.X% prior ended pool that Asking to basis June, the down and XX.X%, of the roughly began to

August. in reach our early peak seasonal historically We

shifting macro with earlier the year, in that peaks economy, in aligns and have the now last in appears occurred years, few been peak the it this trends July, This the Over those consumer. housing and June. late

and were Virginia, all quarter. The York, Maryland, while and the Performance urban Northern of Chicago, York trends City, Columbia, boroughs our continue Coast the with see impact Arizona. markets on MSA New outperform stores. performers bit we New residual Virginia, we Westchester District supply the and to a the Atlanta Jersey Florida, DMV, across of key softness in still are of were Within by North Tucson, market the of as feeling to overall stronger of Island continue along Long metrics the West first consistent

our management remains sheet program continues excellent now Officer, and condition. I'd the Tim call Financial to Martin. like third-party Tim? over Our to balance to Chief our grow in turn

Timothy Martin

your taking for to everyone. Good Thanks join out minutes Chris. morning, of us. Thanks, day few a

continued surprises portfolio XXX with XX.X%. were grew middle in our big basis for of quarter same-store the year, occupancy our revenues average last the No in pressure by the property those right costs of timing as to timing bit a maintenance grew Same-store a on and of driven to operating related last relative as over X.X% Same-store compared to down second as X.X% repair expenses costs insurance to our points year, year. about expectations. last well results issue

$X.XX was which reported negative adjusted FFO of same-store per for So quarter, X.X% the the combined midpoint our of range. share X.X% as NOI and growth X.X% growth growth, yielded revenue expense guidance with we

total York From $XX.X for growth projects development cost a in external New perspective, two we an of million. opened

our continued disciplined external growth finding approach sheet. opportunities We to balance on

to our XXX quarter, end. management bringing XX us adding On platform, to the management at had we productive front, under third-party stores another stores quarter

opportunities really line with well X.Xx sheet access We're to external growth floating rate strong, remains to exposure. our debt-to-EBITDA effectively leverage of liquidity our Our and available capacity. no position and credit, support balance positioned

and same-store that the with earnings X.XX% as our some growth our for our year-to-date the XXXX us same-store second rental slightly and based were improved of results year. our along NOI. of of The in guide revenue, real as end which expense related expectations X.XX% taxes expenses Details our housing night. revenue ranges to We Taking through the negative this forward in year. performance high year. season, an on our expectation the estate half for Looking positive included to outlook initial guide our assumptions revenue of narrowed guidance market, last implied to narrowing in resulted for hasn't improved for We well materialized. growth the guidance current the release improvement

remarks. down same-store those of to FFO prepared for guidance share per joining to again this middle a And X% concludes at the on X% At from range a down then When you let's to range that call growth NOI, Cristina, call similar narrowing X% morning. growth. on the the that X% is result narrowing our open range us result. That as of a negative components this Thanks negative time, bring the questions. with revised for of very our to negative our

Operator

[Operator Instructions] first America. comes of question line Dennerlein Josh from the Bank Your from of

Again, your open. sure muted is not Josh, just on line end? to your make line's your

from the from next Spenser line Okay. your question next question. Advisors. the Street [Operator comes to move to going We're Green Allaway of on Instructions] And

Spenser Allaway

been Thanks be ECRIs XQ? to trended update you move-in any customer an for rates that have on additional where the color trending the rents Can if would you into could provide and great? move-in far on regards color have you thus And in sensitivity, how quarter. have during share

Christopher Marr

Spenser. Thanks, Sure.

July, gap year's where from basis ended July, to June. the out points last we rate moved about So in XXX

range. high negative XX% So

in be who existing have lengths to of the what years, the levels. we than existing saw at line from terms we than In or X increasing customers see activity write-offs, that We for pre-pandemic all levels. continue year, pre-COVID customer The be last slightly with receivables while this customer higher continues with and to base, auction of been point stay remain us at see, pretty all longer healthy.

customer about health of continue the our this in feel at to So existing base. point the positive year,

Operator

of Your next the comes ISI. Steve question Sakwa from from Evercore line

Sanket Agarwal

Steve. question Sanket We on had a growth. around for expense

lowered on expense less You for you are expense elaborate seeing side? growth. the pressure where on the you components Can guidance more different guys

Timothy Martin

Thanks Yes. for the question.

in So bit estate on which And a our revised item guidance, prepared part of is what that in performance the reflected has on I our year-to-date and the there. improved forward-looking tax item. remarks, it expense is changed is line mentioned real the is then

estate outlook additional our as our quite We of growth in range. have information us for that not states high be tax would to original guidance have three real large included bit we gives as of a a revised in

Operator

Your of next question Wolfe from Eric line comes Citigroup. from the

Nicholas Joseph

Eric. with here Joseph Nick It's

the the curious about following We're feeling Just at consumer? -- has in just softening Is ECRI there that accept any on there on So change hearing been customers' on willingness up if question. higher ECRIs? the all to you're ECRIs?

Christopher Marr

Yes, Eric, thanks for question. the

consumer, your this point, those customers But carefully the we have we increase. very, that close that have point discernible in to existing as certainly, the very pay terms to, increase. as in received are of So responded discernible that no change. we not Spenser's And seen it's to as receiving patterns existing at with well change on But rent something rate but attention very I watched where any customer looking question, metrics of behavioral we behavior post a that the to. at

Nicholas Joseph

That's helpful. obviously, to then just continues New maybe City, And on outperform. York

you think is this hoping sustainable? the just there out-performance So and could talk you're trends seeing about whether you

Christopher Marr

are just in across some the see So as deceleration would use and the Cube basis. of where on through of a Also given we a more customer. the smaller move discussed customers. long-term New blocks nice who small to around this to expect country. business tends Obviously, Customer that longer. again, tends year, to stay of a the we are, store market rents our in as Very we've resilient fundamentals combination amount York balance space regular who

in smallest they very carry obviously, that, softness the them business wish locker size, positive. up, be to But seen remove outside from is Cubes. switch see our to Cubes. it small-sized down of can if their consumer aggressive relates on possessions really competitors, we've to street That continues of the Manhattan certainly incredibly We pricing particularly York and New size literally and some in the as the those where,

supply not In revenue good, does see terms and of revenue some have quarter. the fact, of any of additional Bronx, going good have the since impact pretty has actually by residual the consumer supply which you seen behavior same-store trends on -- seen growth of second borough, the probably boy, same-store highest around posted some but quarter in demand boroughs Brooklyn, in we of where in mid-X growth in years, the X.X solid now kind

And little different then in Queens, again, of a bit a market.

space, Bronx. Staten a performer is a homes we the more little single-family more supply. seen kind Manhattan competitive, And good have continues a to supply. there, You some bit has presence behind of certainly be small then right little seen there, have has only Island,

XXth little We supply. of certainly, I is well, Manhattan the doing store on bit moment at there animal Street but one have different our a think a this given

is Island, move is that fine. go You New in ways a have Westchester Jersey, the feeling supply Westchester, the Long good stabilizing doing Long little New still Island Jersey impact, and into out to after

boroughs in So the that's and of MSA kind the New York a nutshell.

Operator

of line from UBS. question next comes your Michael And the Goldsmith from

Michael Goldsmith

are price-sensitive, seeing any has trended? blocking As changes with page the checkout? at how seemingly that, customer of more conversion And major or you final rates online of funnel new demand is to the top

Christopher Marr

the be centers. a in conversion or customer that Thanks, No funnel, Yes. online through our as Michael. in call the rate whether to change goes sales

constant So that X last fairly X or the have over seen quarters. be

February we demand sale where guidance end top-of-funnel that towards our levels, us today. bullish and in improvement We're of how the seeing more the demand expectations it's market I would a back have in the described in of for as of single-family them we home not driven thought perspective, From February. indicative about the are kind back think we again,

would of Conversely, the more have we're end. that us the combination bearish taken towards not seeing factors

a here a macro less over expect, particularly little bit bit little movement just in the navigates I less inquiries Florida corridor particularly in is So it that new The demand background the of of sort last top-of-funnel markets a soft. of along little and months. which you Coast challenging movement, creating out less West given as demand, to is Tampa would with that has couple the made combination called bit just supply Naples of

Michael Goldsmith

grew it. -- Can Got like it growth follow-up, pretty what's through seems And quarter? as income the quarter. what strong line? that and Tim, during the influenced in materially this a walk other And you

Timothy Martin

Michael. Thanks,

approach. property-related growth So Those been fees continuously income. additional fees. late of of our refine some convenience of We've fee as fee income across a administrative, generate a the couple we payment to include in structure drivers variety and other able our and categories

also our credits capture item. on line We solar that

And so the some of solar expanded of that benefits growth our reflects program.

item. things combination some that to So in it's line a growth nice that those leading of are

Michael Goldsmith

Did pretty an influence that the York that materially have market accelerated New quarter? in the of on kind because

Timothy Martin

bit a little it's across mean, portfolio. universal all that there, trends relative markets. I it made I changes have more Yes. a proportionate basis, The are impact the had guess, on across but we similar

Operator

from Your Zhang Hong next question comes from the of line JPMorgan.

Hong Zhang

expense And potentially -- you that more more inbound, why advertising are kept or to wondering category? what past kind relatively stable year So just was more spend for customers? your so. the thoughts of I not get you've on

Christopher Marr

the question. for Thanks Yes.

it lens depends upon through. think view that that the I So you spend

it our seasonally, a spend. it about are spend our also aggressive marketing as how fairly and think relates of do we percentage overall we you but revenues, to If as

In value in if higher similarly expect to will look to of just inflationary QX pretty that be that spend, from year said pull pure at will levels. see to be ultimately, of that. cost seen little it that And generate an ROI-based us to seen incremental is to customer pretty of marketing you when at uptick bit all We a obviously, And spend opportunity we've And a for move, terms QX, the the rentals But be significant a increase this we'll spend. than not decision. the at back I've little opportunity seasonal lifetime the year. times, uptick would when significant we've to to in tended is, below believe last get we that, the the year, Continue there, end up aggressive. along, when bit. just those I an need pockets, spend that in it's that case. we've

Hong Zhang

even for there's Got next more potentially to And year? been the street it. you Yes, of follow-up. cutting for rates to think break of rates for the to that's you that? the enough a higher lot my think something going Fed Or year. expectations Do end happen needs into do

Christopher Marr

Thanks for a great that's asking. question. Yes,

an So I good take taken camp that's say guess experience late for history points end some on place the may XX the And in if in this in of in to be that counting now feel to transactions. you of if now could a really that basis better be in we X, catalyst the this they're and June, and Certainly is selling assistance about ultimately, very year. for optimistic could maybe terms some XXXX. we the but fact, if in X -- optimistic would have could between mortgage There And home the normal rates? is get translate late believe year. transactions result, decline say buying and demand a for that into does folks true, in And a mortgage pent-up and rates as case to a firmly may single-family see drives what we there I lot is, a the be year setup home. place May a be

So expectations already. day that outlined. not on an certainly, our in today been counting has But interesting Tim obviously, that,

Operator

Fargo. the comes line from Luebchow question from next Eric Your of Wells

Eric Luebchow

talked a color Maybe about maybe is what I little calls the pretty it like? a narrowing transaction spread but you've the looks activity bid-ask quiet. industry in few wide bit, environment relatively on that little you said the could seems more a most past have like still know provide in

Where your look criteria? stabilized rates other material do dividends seeing and forms And how are M&A in the pipeline your underwriting cap for in fit does return what you that of today? assets pipeline, the capital absence think So like about you buybacks? between of

Timothy Martin

several something I with exciting to seen Eric, seems and here at spread. in but similar of as situation it what bid-ask very is like thanks find this a discussing seen we for and had share for, quarters been I the that have wish straight we've many the a question. new had narrowing point, ourselves we you,

year we We you -- than line. Seasonally, year. sector half the put together as the be transactions we're pursuing that books obviously, transacting have had our to of tend to back tend nothing much we've the levels off for across been weighted acquisitions their been. of to and higher occupancy got where finish results, in our But and sellers like sell some the saw to closer rates to in peak

is year a the an of bit half back of So still unknown.

at had lot spread, there several narrowed a different of and are looking a remains We actively been ago. opportunities, bit albeit ask from it where quarters

time this we're we yet. So not we're there quite as last it like on I were together feels but call, closer, talked here getting

So new. really nothing

forms And plus we been growth I growth dividend think is see consistent. same it cash the payout has As capital, flow. our about policy in think alternative -- would pretty appropriate. we minus relates to pretty about our mean, We we looked being time would ratio of over dividend or

had we do those. of I are more opportunities redevelopment them, attractive wish pursue we opportunities. most Our in but

are We There of working of They're opportunities area continue but us. acquisition nice out we're that necessarily handful things are years of Storage for of to on coming we a couple ago. focus it's moving, not have some West needle our a pursue. still an that that

-- we some or investment are -- for patient us. at things been are that and going later. So our here optimistic hopefully that remain great strategy returns than look to sooner And break that underwrite we've continue consistent for opportunities make patient that sense and loose to with are

Operator

Markets. question from next comes Juan BMO from Sanabria of the Capital Your line

Robin Haneland

is Juan. sitting here This Robin with

what guidance, the acceleration? drives implied FFO the On half back

Timothy Martin

share? second -- half per half share half FFO back versus meaning, per first FFO The

Robin Haneland

Yes.

Timothy Martin

the every the the is strength half second back of of seasonality Yes. our half. I year FFO in per of it's season in higher the than results in half almost our year business mean rental and typically share the front

norm seasonal is year pretty to a norm. and that's us, that no this So for exception

Robin Haneland

parity expect same-store do revised on Okay. you revenues, when street And to on now the hit And what's rates? assumption year-over-year?

Timothy Martin

sorry. I'm

So hit expect we on year-over-year to street street the parity? gap rate when rates and question,

Robin Haneland

the Yes. gap. Basically, close

Christopher Marr

Yes, thanks. Yes, I'll in. jump

this look the that again, at it specificity. to that when in seeing any So the I difficulty -- just question in market think in you with we're morning, certainly pinpointing volatility the goes

parity guidance, of would to at predict late kind track precision. that with that end going And see that difficult our incredibly the think sometime obviously is, to the given summer. table. towards we point, this That's the where at where high off beginning I as be everything I just of would we in we The year. think any we be continue to implied it's thought implied,

will to see XXXX, we point not Our in difficult is it When do we XXXX. this expectation it's parity see at in that that predict. incredibly

As indicative tell. on any of up mortgage set side, sort are soon too to backdrop if a nice for movements of said, today's but the could I relief XXXX, that

Operator

next of Your Instructions] from Todd KeyBanc. the comes [Operator question line Thomas from

Todd Thomas

Just me. a couple of for quick questions

I rental peak specifically? sense the of but than a I that June, sort it, prior speak end -- the what little how did Any that earlier And you of about First, on really in compares if think, Chris, you years. in season in year-over-year? towards that sorry occupancy bit said peaked missed and July then drove

Christopher Marr

Thanks, Todd.

of housing So to one I reasons to the market has and dearth of think back certainly there. transactions tie a the

see earlier it's housing of years again, think home just towards norms, Historically, end process. Occupancy July. July XX that a what little bit of than over think, you move was into slower pushing seasonality I that drag keep of been has last into the as the I we've market July. typically seen as XX.X%. the the And couple historical

Todd Thomas

Okay. look year-over-year? that like And what's

Christopher Marr

GAAP year, down it last XX of was to July X.X%.

Todd Thomas

to back of of the solar the just And the components some Okay. the Tim, wanted talked property fees, you then other some credits. about go That's income. there, to helpful. I

in your of income store, too. Is same the run fees your line? other about tenant all property I protection was that comments that that just regarding the that? Or through think consolidated some

Timothy Martin

The My in credits they to was that store, and of not same in is alluding fees comments our not were are tenant refer I same-store much. component. you focused that on tenants what the insurance The I mentioned, variety were solar the same-store insurance so fees. to,

Todd Thomas

it I'm contribution million And sequentially. the revenue quarter, line Got quarter. the growth Okay. was did in a for same curious increased really it. there store. growth this a big then It big the impact, same-store In about and just $X to that not have first

So had something about at run the to forward? happen quarter? heading general. Did adjustment an maintained expected Or think rate reflect also forward going year-over-year, rate moving in to a is decent be specific impact into the we on but rate the just growth And this third it and should that the in the run level quarter?

Timothy Martin

Yes.

changes of and blip that then made quarter to not going be I to second we return were think many back levels. the are that up prior onetime changes

seasonality Our couple should line there's But item should to expectation trends year-over-year, quarters. of that line over next is item some continued see be going it. line we that growth that outsized to that -- the item, in

Operator

the from comes of Your from next Lynch question Barclays. line Brendan

Brendan Lynch

mentioned season, peak the the versus June demand the about in peaking in prepared You remarks the August. traditional

you it approach? next If ECRI your this occur would street how rate expect inform were to to year, and

Christopher Marr

Thanks the for Yes. question.

then occupancy decline. when rent its seasonal peak sort And new concept have the that begin then and of you into that think customers. that then I that for do is rate translates does when primarily customer

occur. occupancy then both will year in That year, rate. about for into back drivers next seasonal to believe half that of of translates terms trends will and think do have absolutely, the we the that how that see that in we where inform of As it we the the

stores before it's budgets. to a here we fortunate I of our to But of So kind have into factor -- be we're terms have August, think, think in October how going information September, to again, for we more budgeting in would XXXX. dig it's about those

Brendan Lynch

going more helpful. resistance? And is That's this you're can something think customer fees to would that clients, on Okay. facing I be the then you A/B how much when are. And a imagine customers where that they're do pushing on aware maybe At a before that tested facing is you out do aggressive unit? become fill just question. they point for these of fees signing to are to customers be up relative what related kind

Timothy Martin

rental. that in it you administrative think fees an it a really relates of with again, they the variety to -- administrative pays when the from parcel and in customer And the when to and ties their about first I Yes, disclosed are things fee, really that as initially is fees part fee, -- think are disclosed ranging initial rent. increasingly the

it that gets promotion about you rate rental how fee, and discount, about of think stuff So goes in or that, together. administrative think any you with all type how mixed

be that For to of us, on different item. is available understand. very initial a a it for which it's reported happens and part disclosed But to line cost, all customer

late are consistent with The disclosed are relates category. payment take? increase it the to the rate all customer. From existing much on highly What other same that can else are to mean how the to the we time customers. as are Fees fees at new fees opportunities push that anything just and customer that's into fees for I visible fall rates or customers? how much can convenience to

optimization profitable And for constantly you're the line little found some bit through is under opportunities You're efficient, continued seeing to more revenue which more a those some on what of of we results. streams. refinement across be little those different bit items, all looking and a flow

Operator

from the Josh Your next question of Bank of comes America. line from Dennerlein

Joshua Dennerlein

move guess rates, foot customer I guess existing but it fine. in-place through just like occupied here. the the the evolution think in under from trying I'm they're seems I of to square rent like per seems pressure,

So of about we or kind here? of like metric any think this should how on goes and up just down gives -- from kind takes

Christopher Marr

be new thus what for that continue seeing overall this up. again, to see going experienced to we've rate line Yes, the customer you're go in the year. we to in that, with see absent And need Josh, for moving ultimately, far the industry, results

and competition and that fourth. health a drive to going are demand a Certainly, another drivers and and what's third are consumer market one. is again, combination So behavior is of forces Supply things.

rates a to, don't question back higher get having new trend a things when the from of it the you at in that you positive nice that. rate we of growth customers year-over-year back will to of revenue as also kind that the up. combination lead coming that that rate see of happen, for we've That asking customer growth. But then those you between but tends have that quite year. And will. of into again, And closing have four and of at for effect that to increases will XX-year new last and ball in been blend those crystal the new where again, the this current gap go moving will get existing factors had then the need to they ultimately on of refined, bit some point, customers get some to So a in then ultimately, self-storage base. had together combination work that four customer way to And

Operator

Marr. the Chris over turn no I'll back to call questions, [Operator Instructions] further With

Christopher Marr

look you. Thank report many for forward summer. fall, We you, we participating everyone, rest and we'll to seeing again enjoy everyone and speak third in to the for of early of the the Thanks, quarter when second this call. the Thank quarter. in you

Operator

call. does This you. conclude Thank today's conference

disconnect. a now great Have day. may You

CubeSmart (CUBE) 2 Aug 242024 Q2 Earnings call transcript