CubeSmart Q1 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Samir Khanal - Bank of America - Analyst : I guess maybe, Chris, you mentioned when I looked at the press release yesterday talked about solid demand, right? You kind of characterized the environment that way. Just maybe expand on that comment. Help us understand what the drivers are to demand at this time that you certainly saw in the first quarter?

Question: Samir Khanal - Bank of America - Analyst : Got it. And then I guess, Tim, I'm sorry if I missed this, but where was occupancy in April? I know you mentioned that being 89.7% in March.

Question: Samir Khanal - Bank of America - Analyst : And just as a follow-up, I know one of your peers have talked about maybe lowering rates in April to kind of get the higher occupancy. Is that something you had to do as well in your portfolio?

Question: Nick Kerr - Citi - Analyst : It's Nick Kerr on for Eric this morning. So I guess you mentioned the strong start to the year, but you're not adjusting guidance much given macro volatility. So I guess the question is, if we're in a less volatile environment like when you gave guidance initially, what would have changed would same-store revenue have gone up a little bit more, would core have gone up a little bit more? Just help us think through like what that would have looked like.

Question: Nick Kerr - Citi - Analyst : I guess the follow-up would be, what would you guys consider a good peak leasing season? Like how can we measure that?

Question: Nick Kerr - Citi - Analyst : Yeah, I guess, if we're sitting on the second quarter call right now and you say we had a good peak leasing season, what would that entail? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 02, 2025 / 3:00PM, CUBE.N - Q1 2025 CubeSmart Earnings Call

Question: Spenser Allaway - Green Street - Analyst : Thank you. Just as it relates to market level performance, some of your Texas markets seem to be under pressure in 1Q. Can you just talk about what drove the end of performance there? And kind of higher thinking about expectations moving forward for the rest of the year for those markets?

Question: Spenser Allaway - Green Street - Analyst : Okay. Great. That's really helpful color. And then just on the two developments in process. It seems as though those are trending well in terms of timing and then total anticipated cost. But I'm just curious if there has been any setbacks or surprises on input costs or labor just given the broader economic climate?

Question: Todd Thomas - KeyBanc Capital Markets - Analyst : Chris, Tim, you ran ahead of your budget in the first quarter, and I understand the conservatism just being it's early in the year and just given all of the uncertainty today, but the 2Q guide assumes a flat result at the midpoint relative to the first quarter, which I do not believe has really happened very often going back to 2005, the first year after the company IPO-ed. It sounds like you're seeing some seasonality, rents and occupancy are trending higher through April. So can you just discuss some of the puts and takes? What causes FFO to hold steady? And what's assumed at the lower end of the 2Q FFO guide of $0.63, that'd be down $0.01 sequentially.

Question: Todd Thomas - KeyBanc Capital Markets - Analyst : Okay, that's helpful. And then, Chris, you mentioned small business customer demand in one of your comments or responses. Are you seeing that demand pick up at all? And are there certain markets, in particular, where you have seen some evidence of that type of demand materializing a little bit more?

Question: Michael Griffin - Evercore ISI - Analyst : Obviously, a good job on the expense control this quarter. Just curious, particularly for the personnel expense going down year-over-year, mean is that more kind of proactive management of staffing at facilities? Is it wage related? How should we think about kind of that line item throughout the cadence of the year? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 02, 2025 / 3:00PM, CUBE.N - Q1 2025 CubeSmart Earnings Call

Question: Michael Griffin - Evercore ISI - Analyst : Great. That's helpful. And then just on the acquisition opportunity set. Obviously, you bought out your JV partner stake in a one venture in the first quarter. But as you look ahead, are there any opportunities maybe to buy out some of the other existing joint ventures, do wholly owned acquisitions makes sense right now? If you can give us a sense of that, that would be helpful.

Question: Ravi Vaidya - Mizuho Securities LLC - Analyst : I hope you guys are doing well. I just wanted to ask about your ECRI strategy right now, particularly as we're starting to see the second derivative and the number of fundamentals improved. Like how are you thinking about your ECRI rates? Are they still elevated right now? Or are you looking to bring them back down to maybe increase move-in rates? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 02, 2025 / 3:00PM, CUBE.N - Q1 2025 CubeSmart Earnings Call

Question: Daniel Tricarico - Scotiabank - Analyst : Looking to understand the sequential rate trends so far this year. How much are street rates maybe or you're moving rates up from the seasonal trough in late January, early February through April? And how does that compare to 2024 or a pre-COVID, quote-unquote, normal year?

Question: Daniel Tricarico - Scotiabank - Analyst : Great. I was looking for the latter part of that. So I appreciate it. And how does the 89.9% at the end of April compared to last year?

Question: Ki Bin Kim - Truist Securities - Analyst : Wanted to ask a couple of questions on the New York City market in DC. Both markets rebounded nicely. I was curious, is that more along the lines of the rebound you saw nationally in your portfolio? Or are there certain elements about New York Figure or DC that you think are more supportive that might have more sustainability going forward? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 02, 2025 / 3:00PM, CUBE.N - Q1 2025 CubeSmart Earnings Call

Question: Ki Bin Kim - Truist Securities - Analyst : And do you think the strength in DC has anything to do with DOGE or some of the government employee turnover?

Question: Michael Goldsmith - UBS - Analyst : It seems like you're seeing a really nice improvement in street rates in April, down 2% versus down 8% in the first quarter. Just trying to unpack that a little bit. Is that a reflection of the comparisons? Is that a reflection of different strategy? Is that just lowering rates kind of as low as it can be without driving incremental demand? Just trying to understand kind of like what is -- what are the factors driving that improvement there?

Question: Michael Goldsmith - UBS - Analyst : Got it. And just to follow up. You talked a little bit about some expense timing. Can you provide a little bit more color what's going on there? And I think in particular, you have referenced marketing, but if you can just clarify what moves where and if that's expected to come back later in the year, that would be helpful.

Question: Hong Zhang - JPMorgan - Analyst : I mean, it seems like the operating environment is still pretty mixed. I was just wondering if you're seeing more demand for the third-party management side from just operators looking to work with you?

Question: Hong Zhang - JPMorgan - Analyst : Got it. And I guess that's my follow-up. I understand self-storage business is relatively more recession-resilient than other property types. But I was just wondering what -- how you think the business would react if we really do enter recession later this year? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 02, 2025 / 3:00PM, CUBE.N - Q1 2025 CubeSmart Earnings Call

Question: Brendan Lynch - Barclays - Analyst : I think your marketing spend has mainly been for paid search, but you've also commented in the past testing other channels. Can you provide an update on that? And any color on the progress of those initiatives?

Question: Brendan Lynch - Barclays - Analyst : Great. That's helpful. And maybe just help us understand what leads to more kind of high-level brand recognition type marketing on buses or on satellite radio versus the much more targeted search-oriented spend?