CubeSmart Q4 2024 Earnings Call Transcript

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

Question: Daniel Tricarico - Scotiabank - Analyst : I want to ask about the JV transaction. Curious if you see other, similar opportunities with existing partners today. What were the motivating factors from your partners in the, HVP4 to sell and, also are there NOI upside opportunities still for these assets? I know it's, a relatively young portfolio, so curious if there's, maybe more juice to squeeze there.

Question: Daniel Tricarico - Scotiabank - Analyst : Could you like quickly share the the cap rate to get to or the initial yield, to get the acquisition to be a creative in year one? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 28, 2025 / 4:00PM, CUBE.N - Q4 2024 CubeSmart Earnings Call

Question: Michael Goldsmith - UBS - Analyst : In the initial remarks you talked a little bit about like the lack of an obvious catalyst for the year, which I think is baked into your guidance. So can you just talk a little bit about like what you're looking for, what's the is it just housing, is it more than that, just trying to get a better understanding of what you're looking for that that could help jumpstart the demand and, accelerate.

Question: Michael Goldsmith - UBS - Analyst : And as a follow up, you did talk about how the fourth quarter may have been marked an inflection point and the seller rating in terms of revenue growth. So is that reflected in like. Are you expecting things for revenue to accelerate through 2025 and then also how I think you still have an easy comparison and other revenue in the first quarter and it gets a little bit more difficult so forth. How might that impact the the same sort of revenue growth.

Question: Michael Goldsmith - UBS - Analyst : Good luck in 2025.

Question: Jeffrey Spector - Bank of America - Analyst : And Chris, as always, appreciate the transparency around the current conditions and your thoughts. I guess to ask about, thinking about street rate, are you concerned? In '25 just based on the current conditions that we could see another street freight war, or because we're past the bottom, let's say you talked about, an inflection point in Dal, are you less worried about that that street rate war, I say war, but bottom line, competitors cutting street rates to bring in new customers in 25.

Question: Jeffrey Spector - Bank of America - Analyst : And my follow-up question then is again just thinking about the mindset when you decided to put out this guidance and, share your thoughts. Has anything happened, anything that's happened in recent weeks, whether it was signposts of housing softness or you see the administration and and some of their policies and changes, you talked about the uncertainty. I mean, you'd have to argue, right, there's more uncertainty today than a couple of months ago. Did anything recently Change your viewer or or form your view to come out more cautious today, or this is how you've really been thinking the last couple of months.

Question: Spenser Glimcher - Green Street Advisors - Analyst : Thank you. Sorry if I missed this Chris, but did you provide an update on how moving rents are trending as one you?

Question: Spenser Glimcher - Green Street Advisors - Analyst : Okay, great. Thanks. Sorry about that. And then can you provide some color on what you're seeing just more broadly in the transaction market just in terms of field mix, whether they're portfolios or more one-off stabilized versus unstabilized, I know you guys have been more active recently, but just curious what you're seeing even if things haven't gotten across the finish line.

Question: Todd Thomas - KeyBanc Capital Markets - Analyst : Hi, thanks. Good morning. Chris, maybe Tim, thanks for the updated, and recent, trends and moving rents. Can you provide an occupancy update as well as of, today? And then, Chris, it's a little hard to tell from your comments, but it sounds like you're encouraged so far year-to-date, performance through February, it sounds like it's running slightly ahead of. The guidance midpoint, but that you're not ready to extrapolate that throughout the peak season and bounce of the year is that the right read? Is that what you're, sort of seeing so far year-to-date?

Question: Todd Thomas - KeyBanc Capital Markets - Analyst : Okay, that's helpful. And then I wanted to ask about the first quarter guidance, the sequential change in one from 4Q, based on that guidance, it seems a little outsized $0.68 this quarter to $0.62 at the midpoint. So high single digit, almost a 10% sequential decline, and that's despite the investments completed in the fourth quarter and early this year. I'm just wondering if there's. Anything else to consider in moving from 4 to 12 besides the normal seasonality that you typically experience.

Question: Todd Thomas - KeyBanc Capital Markets - Analyst : Okay, if I could sneak one last one in, Tim, what do you have assumed in the guidance that's that 300 million in November maturity, the 4% coupon? What, what's assumed that guidance in terms of timing, and rate?

Question: Juan Sanabria - BMO Capital Markets - Analyst : Hi, good morning. Just hoping you could talk a little bit further about the confidence in bottoming and kind of seems to revenue declines, moderating it because if I look at, I take your point that occupancy is improved year-to-date, but if we just look at the fourth quarter, the decline in average in place rates. Seem to kind of GAAP out again in the fourth quarter. So is that kind of A one-off and we should expect that to to close as well as we go through 25 or just any commentary on on that particular. I would be helpful.

Question: Juan Sanabria - BMO Capital Markets - Analyst : Thanks and then for my follow up, looks like the third party property management fee income is expected to be up about 4% in 25. Just curious on the assumptions underlying that because I'm assuming you're going to lose some fee income by buying out a couple of the JBs in the fourth quarter and what you've done here to daycare.

Question: Juan Sanabria - BMO Capital Markets - Analyst : Thanks if I can just be a little greedy, can you just clarify the funding plans for the HPV4 acquisition and that they've completed year-to-date.

Question: Juan Sanabria - BMO Capital Markets - Analyst : Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 28, 2025 / 4:00PM, CUBE.N - Q4 2024 CubeSmart Earnings Call

Question: Ki Bin Kim - Truist - Analyst : Hey, good morning. This is Kevin. So going back to your guidance, I was wondering if I can ask it in a different way. What typically happens to rates, from the winter period to the spring leasing season, the increase, and I guess what's in your, what's embedded in guidance, and maybe you can put it in perspective like what happened last year. Thank you.

Question: Ki Bin Kim - Truist - Analyst : Yeah, well, I think the challenge is when we look at it from a year to year standpoint, I sometimes it's due to cos that's why I was asking, if you expected rates to increase. And normally 15%, is it in 25, 10%, which is why I was asking about the consequential seasonality in your midpoint.

Question: Ki Bin Kim - Truist - Analyst : Okay, great. And can you remind us, do you have a share repurchase authorization live, and I guess your implied cap today is around 6%. I'm compared to some of the deals that you bought recently. So how do you, I guess what's the mental calculus in terms of buybacks versus something like the HDP, acquisition.

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

Question: Eric Luebchow - Wells Fargo - Analyst : Hi, thanks for taking the question. Could you guys maybe touch up on the New York market a little bit? I know that's continued to grow, above the portfolio average, although, the growth rate has decelerated a bit. I know you've had, some pockets of supply in certain, regions within the MSA. So how are you thinking about that market this year in terms of, moving rate, in terms of occupancy, how we should think about, that throughout 2025?

Question: Mike Mueller - JPMorgan - Analyst : Yeah, hi, two quick ones. The first, looking at operating expenses in markets like Atlanta, Austin, Chicago, where they were up 30 %to 50%. How much of that was the tax costs that you were talking about versus something else going on? And then the second question is, do you think ECRI levels and 25 will be similar to 24?

Question: Eric Wolfe - Citi - Analyst : Hey, thanks. I think your advertising spend was down pretty significantly from last year in the fourth quarter versus up a good bit in the 3rd quarter. Can you just talk about what drove those those decisions and maybe the different approach, if you will, and whether that might have caused some of the weakness in October or November.

Question: Eric Wolfe - Citi - Analyst : That it, that's helpful. And then within your same store revenue guidance, can you maybe just tell us what you're factoring in for, other property related income? I think it contributed like 40 basis points, to 2024. So I was just curious if that was sort of sustainable and repeatable in in 2025. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 28, 2025 / 4:00PM, CUBE.N - Q4 2024 CubeSmart Earnings Call

Question: Eric Wolfe - Citi - Analyst : Yeah, no, that makes that makes sense. Thank you.

Question: Jon Petersen - Jefferies - Analyst : Oh great, thanks. Maybe if I could just pick a little bit at the, your operating expenses. So, I'm going back and just looking at the past few years, I think some of the pressure that you've had on property taxes and property insurance have been At least somewhat offset by lower personnel expense, but it kind of looks like we're back to a normal inflation growth level there. I'm just, I guess the broader question I'm getting at is there any more operational efficiencies that we should think about that can be squeezed out of the op X line in the business, or is this more tied to inflation going forward?

Question: Jon Petersen - Jefferies - Analyst : Okay. And then on the property taxes, I know every jurisdiction is a little bit different, but what would you say the delay is there because I would think that asset values probably haven't increased as much in the past couple of years as they did before. So I guess what's the tail on that being a pressure point. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 28, 2025 / 4:00PM, CUBE.N - Q4 2024 CubeSmart Earnings Call

Question: Jon Petersen - Jefferies - Analyst : Yeah, that's fair.

Question: Ki Bin Kim - Truist - Analyst : Thanks for allowing me back. Just a couple of quick follow-ups, given that you already provided oneQ SFO guidance, I was curious if you can provide what SAM why it could look like in the first quarter.

Question: Michael Goldsmith - UBS - Analyst : Think.

Question: Ki Bin Kim - Truist - Analyst : And. Yeah, you're welcome. And then just going back to like the potential job changes or turmoil in DC type like Trump, do and cost cutting, there's obviously a lot of different factors if those cost cuts, lead to lower inflation and lower treasury. I mean, there's a lot of different factors, but I was curious, job cuts in a local MSA with a bad economy is probably backward storage, but do you have some early thoughts on Potential job cuts in DC, but with a better economy, broader economy, could that be even a potential net positive for storage in DC? Yeah.

Question: Ki Bin Kim - Truist - Analyst : Okay, great. Thank you guys.