CubeSmart Q3 2024 Earnings Call Transcript

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

Question: Jeffrey Spector - BofA Securities, Inc. - Analyst : Great, thank you. First question for Chris. Chris, there's a nice healthy debate on the very, I guess, exact conditions today and forward thoughts on finishing out the year into '25, into '25 peak leasing season. We've heard on other calls, stabilization, some saying maybe even expecting some improvement. I feel like you always called as it is. I mean what do you think the state of the state is as we finish '24 and head into '25?

Question: Jeffrey Spector - BofA Securities, Inc. - Analyst :

Question: Michael Goldsmith - UBS Securities LLC - Analyst : Good morning. Thanks a lot for taking my question. Chris, I'd like to dissect kind of your opening remarks about maximizing opportunities in a competitive environment. So starting about maximizing opportunities, it looks like you stepped on the advertising lever -- advertising marketing lever a little bit. But can you just talk about how you think about investing in price and marketing versus rate in this environment? And how that -- how you're looking to be positioned kind of heading into kind of the slower season?

Question: Michael Goldsmith - UBS Securities LLC - Analyst : I appreciate the color, Chris. And then as my follow-up, the second half of your opening statement was on the competitive environment. Are you seeing any of the competition start to fade a little bit? Has it stepped up? I'm just trying to get a sense of what you're trying to manage through. Thanks.

Question: Michael Goldsmith - UBS Securities LLC - Analyst : Thank you very much. Good luck in the fourth quarter.

Question: Juan Sanabria - BMO Capital Markets - Analyst : Hi. Just piggybacking on the comments on a prior question. Where -- have you seen any deterioration in customer behavior or changes in the quality of the customer, if you discount versus not? Or if there's differences within the kind of discounting, whether it's one month free or kind of well below street rate? Just curious on what you're seeing in terms of who you're getting and how long they stay depending on what you offer them upfront.

Question: Juan Sanabria - BMO Capital Markets - Analyst : Great. And then just a comment or a question on guidance, you tightened FFO a little bit but left the same-store unchanged. Is there any comfort level within the ranges with 10 months out of the year done on same-store revenue or NOI specifically at this point?

Question: Juan Sanabria - BMO Capital Markets - Analyst : Okay. Just to recap kind of the ending commentary, the low end seems like it's off the table, it's more the mid and the high end then.

Question: Spenser Glimcher - Green Street - Analyst : You mentioned in the press release that the transaction markets become more constructive. Can you just provide some additional color here and maybe particularly on the types of opportunities you're seeing?

Question: Spenser Glimcher - Green Street - Analyst : Okay. That's helpful. And I know I think that industry participants were talking about a bid-ask spread in like the 10% range. I won't speak for you guys. But just curious like if you're saying it's -- there's been a little bit of compression there, can you provide a range or are you able to quantify maybe what you're seeing in today's environment in terms of that bid-ask spread?

Question: Daniel Tricarico - Scotia Capital (USA) Inc. - Analyst : Chris, your comments a few answers ago, housing market being even worse this year, but guidance unchanged. The resiliency of the business, is that a testament to the ECRI program? And if so, can you just talk to that and how you'd see that evolving in an environment where maybe movement rates start to improve? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 01, 2024 / 3:00PM, CUBE.N - Q3 2024 CubeSmart Earnings Call

Question: Daniel Tricarico - Scotia Capital (USA) Inc. - Analyst : Good. Thank you for that. And just a follow-up, promotional dollars being up a little bit, but just curious -- and I know there's puts and takes there, but where was the Q3 and October move-in rate year-over-year gap? I think it was 11-- down 11 in Q2.

Question: Nicholas Joseph - Citigroup, Inc. - Analyst : Thanks. It's Nick Joseph here with Eric. I just want to go back to your comments on the New York area. I know it saw a sequential decline and its outperformance shrunk versus the broader portfolio. So curious to get your expectations for that market going forward? And if tougher comps could weigh on it next year?

Question: Nicholas Joseph - Citigroup, Inc. - Analyst : Thanks. That's helpful. And then of the $29 million of other property income, how much of that is administrative and late charges versus insurance income and solar credits?

Question: Nicholas Joseph - Citigroup, Inc. - Analyst : Okay. Okay. Are there any -- does solar run through there?

Question: Todd Thomas - KeyBanc Capital Markets, Inc. - Analyst : H, thanks. Good morning. I just wanted to follow up on the questions around the guidance. So you maintained the same-store forecast, you narrowed the FFO range a bit, but the fourth quarter guidance FFO range is a little wider at $0.67 to $0.70. So $0.03 range with just two months left. I think you generally had a $0.02 range. Is that just the week-to-week volatility that you're seeing and an indication that uncertainty is at real high levels, higher than it's been? Or is there something else specific that we should be thinking about from an FFO standpoint as we make our way through the end 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. NOVEMBER 01, 2024 / 3:00PM, CUBE.N - Q3 2024 CubeSmart Earnings Call

Question: Todd Thomas - KeyBanc Capital Markets, Inc. - Analyst : Okay. And sorry if I missed it, but can you comment on October occupancy, where that stands and what that looks like on a year-over-year basis?

Question: Omotayo Okusanya - Deutsche Bank AG - Analyst : Yes, good morning, everyone. I just was hoping you could talk a little bit about kind of what average ECRI increases were in 3Q as well as the street rates, kind of how much they are down year-over-year on average for the quarter and also as the quarter progressed what was happening with those two metrics?

Question: Ki Bin Kim - Truist Securities, Inc. - Analyst : Thanks. Good morning. Can you just talk about the impact of supply on your portfolio, how that's shaping out in '24? And as we think about next year, how that might look? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 01, 2024 / 3:00PM, CUBE.N - Q3 2024 CubeSmart Earnings Call

Question: Ki Bin Kim - Truist Securities, Inc. - Analyst : Okay. And maybe I can ask that in a different way. If you look at the new construction start activity, that might be likely in a kind of similar thinking, what does that look like? So if we have to kind of look out a few years, trying to get a sense of how low that can go?

Question: Ki Bin Kim - Truist Securities, Inc. - Analyst : Okay, thank you.

Question: Michael Mueller - JPMorgan Chase & Co. - Analyst : Hi. Just a quick one. On the two acquisitions that you announced, can you talk about how well occupied the properties are and the going in expected yields? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 01, 2024 / 3:00PM, CUBE.N - Q3 2024 CubeSmart Earnings Call

Question: Eric Luebchow - Wells Fargo Securities - Analyst : Hi. Thanks for the question. I know you answered several questions about the acquisition market, but maybe you could talk about what you're kind of seeing in the pipeline? Is it more of the kind of single asset deals that you've executed on over the last year? Or are there some larger portfolio deals that you see in your funnel as well?

Question: Eric Luebchow - Wells Fargo Securities - Analyst : Fair enough. And just to piggyback on that, I mean, you did raise a little bit of equity in the quarter. So just thinking as you think about the potential for external growth to pick up, like how are you thinking about funding that from a leverage perspective, maybe tapping the market if you see opportunities to issue equity? Just any comments there would be helpful. Thanks. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 01, 2024 / 3:00PM, CUBE.N - Q3 2024 CubeSmart Earnings Call

Question: Brendan Lynch - Barclays - Analyst : Very good morning. Thanks for taking my questions. You mentioned the New York Metro is particularly strong. So I'm curious on the 30% occupancy of the two stores that delivered last quarter, how that compares to your expectations and how it compares to past new development lease-up trends?

Question: Brendan Lynch - Barclays - Analyst : And maybe a follow-up there. What is your appetite for new development starts versus other potential uses of capital?