Diamond Hill Capital, an investment management company, released its “Mid Strategy” fourth-quarter 2025 investor letter. A copy of the letter can be downloaded here. The fourth quarter posted another period of favorable gains for equity markets, with small and large cap positions being stronger performers, returning 2.19% and 2.41%. While the mid-cap range was a relative laggard, with the Russell Mid Cap Index returning 0.16%. The Strategy returned 3.65% (net) in Q4, compared to 0.16% return for the Russell ...

CubeSmart (NYSE:CUBE) is included among the 14 Quality Stocks with Highest Dividends. Scotiabank Raises CubeSmart (CUBE) Price Target, Awaits JV Activity for Upside On March 13, Scotiabank analyst Viktor Fediv raised the firm’s price recommendation on CubeSmart (NYSE:CUBE) to $42 from $39. It maintained a Sector Perform rating on the shares. The analyst noted that CubeSmart will need to complete more joint venture transactions and provide clearer details on its future expansion plans before turning more ...

Group 1 - The analyst has over a decade of experience researching various industries, including commodities like oil, natural gas, gold, and copper, as well as technology companies such as Google and Nokia [1] - The analyst has transitioned from writing a blog to creating a value investing-focused YouTube channel, where extensive research on hundreds of companies has been conducted [1] - The analyst expresses a particular interest in covering metals and mining stocks, while also being comfortable with sectors like consumer discretionary/staples, REITs, and utilities [1]

Core Insights - The article discusses the current positioning of High Yield Landlord in anticipation of a shift in the REIT market, emphasizing the potential for rewarding investments in the long run despite recent poor performance [1] - REITs, specifically VNQ, have experienced one of their worst five-year stretches, leading to a perception of them as poor investments due to recency bias [1] Company Overview - Leonberg Capital, led by Jussi Askola, is a value-oriented investment boutique that provides consulting services on REIT investing to hedge funds, family offices, and private equity firms [2] - The investment group High Yield Landlord offers features such as multiple portfolios, buy/sell alerts, and direct access to analysts for real-time investment insights [2]

Core Viewpoint - RBC Capital raised its price target for CubeSmart (CUBE) to $46 from $43, maintaining an Outperform rating, citing potential recovery in the self-storage sector as new supply declines [1] Group 1: Company Performance - During Q4 2025 earnings call, CEO Christopher Marr indicated that business fundamentals are stabilizing and CubeSmart is positioning for growth, with improved operating performance reflected in financial results [2] - Move-in rates increased by 2.8% year over year in Q4 2025, indicating steady sequential improvement throughout the year [2] Group 2: Occupancy Trends - By the end of January, occupancy improved to 88.7%, although it remains 40 basis points below January 2025 levels; the shortfall was 70 basis points at year-end [3] - Only 19% of CubeSmart's same-store portfolio is expected to face pressure from new supply in 2026, marking the lowest exposure level since 2017 [3] - The impact from new development is easing, with a growing share of new supply now falling within a three-year rolling impact window tied to projects completed two or three years earlier [3] Group 3: Company Overview - CubeSmart operates as a self-administered and self-managed real estate investment trust, providing climate-controlled storage space for residential and commercial customers [4]

Core Viewpoint - CubeSmart is entering 2026 with improving operating trends after a stabilization year in 2025, showing positive move-in rates and narrowing occupancy gaps [5][7]. Occupancy and Move-in Rates - As of January 2026, occupancy was reported at 88.7%, which is 40 basis points lower than January 2025 but improved from a 70-basis-point gap at year-end [1][7]. - Year-over-year quarterly move-in rates improved from -10% in Q4 2024 to -8.3% in Q1 2025, -4% in Q2, and turned positive at +2.5% in Q3 and +2.8% in Q4 2025 [2]. Financial Performance - Q4 results showed same-store revenue was nearly flat at -0.1%, while same-store NOI declined by 1.1%, with adjusted FFO per share at $0.64 [6][9]. - Management projects 2026 FFO per share to be between $2.52 and $2.60, with a same-store pool increasing by 16 stores [15]. Capital Allocation and Balance Sheet - CubeSmart launched a $250 million joint venture with CBRE and expanded its share repurchase authorization, with approximately $475 million remaining [7][12]. - The company generates about $100 million in annual free cash flow to support buybacks, while facing challenges in finding accretive on-balance sheet acquisitions due to valuation gaps [10][13]. Market Dynamics - The company noted that only 19% of its same-store portfolio is projected to be impacted by new supply in 2026, the lowest percentage since 2017 [16]. - New York is expected to be a top-performing market for CubeSmart in 2026, driven by recovering supply dynamics and positive trends in boroughs like Brooklyn and Queens [19]. Regulatory Environment - CubeSmart is aware of a lawsuit from New York City's Department of Consumer and Worker Protection regarding alleged predatory practices and is monitoring developments to ensure compliance [20]. Outlook and Seasonal Trends - The company reported a solid start to January and February 2026, despite challenging weather, and is preparing for the industry's busy seasonal period [21].

Company Overview - As of December 31, 2025, the company owned 662 self-storage properties with approximately 48.4 million rentable square feet, an increase from 631 properties and 45.8 million square feet in 2024[205]. - The company managed 862 stores for third parties, bringing the total number of stores owned and/or managed to 1,524 across 39 states[205]. - The company focuses on maximizing internal growth opportunities while selectively pursuing targeted acquisitions and developments of self-storage properties[209]. Revenue and Occupancy - The company's stores in New York, Florida, Texas, and California contributed approximately 17%, 14%, 11%, and 10% respectively to total revenues for the year ended December 31, 2025[212]. - Revenues increased from $1.066 billion for the year ended December 31, 2024 to $1.123 billion for the year ended December 31, 2025, an increase of $56.9 million, or 5.3%[231]. - The total portfolio's net operating income (NOI) for the year ended December 31, 2025 was $771.7 million, compared to $748.5 million for the year ended December 31, 2024, an increase of $23.2 million, or 3.1%[230]. - The period end occupancy rate decreased from 89.3% for the year ended December 31, 2024 to 88.6% for the year ended December 31, 2025[230]. - The realized annual rent per occupied square foot was $22.73 for the year ended December 31, 2025, compared to $22.71 for the year ended December 31, 2024[230]. Expenses and Financial Performance - Property operating expenses increased from $317.8 million for the year ended December 31, 2024 to $351.4 million for the year ended December 31, 2025, an increase of $33.7 million, or 10.6%[232]. - Depreciation and amortization increased from $205.7 million for the year ended December 31, 2024 to $258.2 million for the year ended December 31, 2025, an increase of $52.4 million, or 25.5%[233]. - General and administrative expenses increased from $59.7 million for the year ended December 31, 2024 to $64.7 million for the year ended December 31, 2025, an increase of $5.0 million, or 8.4%[234]. - Interest expense on loans increased from $90.8 million for the year ended December 31, 2024 to $114.1 million for the year ended December 31, 2025, an increase of $23.3 million, or 25.6%[235]. - Net income attributable to the company's common shareholders decreased from $391.2 million for the year ended December 31, 2024 to $333.8 million for the year ended December 31, 2025, a decrease of $57.4 million, or 14.7%[230]. - FFO attributable to the Company's common shareholders and third-party OP unitholders was $590.2 million in 2025, down from $600.8 million in 2024, a decrease of 1.0%[246]. - Net cash provided by operating activities decreased by $22.6 million, from $631.1 million in 2024 to $608.5 million in 2025[248]. Cash Flow and Financing Activities - Net cash used in investing activities increased significantly by $397.4 million, from $174.0 million in 2024 to $571.3 million in 2025, primarily due to the acquisition of an 80% ownership interest in 191 IV CUBE LLC[249]. - Net cash used in financing activities decreased by $283.1 million, from $387.7 million in 2024 to $104.6 million in 2025, mainly due to increased net borrowings on the revolving credit facility[250]. - As of December 31, 2025, the Company had approximately $5.8 million in available cash and cash equivalents, with $470.5 million available for borrowings under the Revolver[259]. - The Company issued $450.0 million in unsecured senior notes on August 20, 2025, with a 5.125% interest rate, to repay outstanding indebtedness and for working capital[260]. - The effective interest rate on the Revolver as of December 31, 2025, was 4.90%[265]. Debt and Equity Management - The average outstanding debt balance increased from $2.96 billion during the year ended December 31, 2024 to $3.37 billion during the year ended December 31, 2025[235]. - As of December 31, 2025, total mortgage loans and notes payable, net, amounted to $98.9 million, a decrease of $107.1 million from $205.9 million in 2024[272]. - Unsecured senior notes, net rose by $144.5 million from $2.78 billion in 2024 to $2.93 billion in 2025, attributed to the issuance of 2035 Notes[273]. - The revolving credit facility increased by $378.8 million to $378.8 million in 2025, primarily for debt repayment and property acquisitions[274]. - The company repurchased 0.9 million common shares at an average price of $35.84 per share during 2025, with 2.1 million shares remaining available for repurchase[271]. - The company replaced its equity distribution program, increasing the number of common shares available for sale by 10 million, totaling 13.5 million shares available as of December 31, 2025[268]. - The company had not sold any common shares under the new equity distribution program as of December 31, 2025[268]. Investment and Economic Sensitivity - The company experienced seasonal fluctuations in occupancy levels, typically higher during summer months due to increased moving activity[207]. - The company's operating results are sensitive to changes in economic conditions affecting consumer spending, which could impact growth and profitability[208]. - The company’s net investment in unconsolidated real estate ventures was greater than its underlying equity in the net assets of these ventures by $30.1 million as of December 31, 2025[224]. - The investment in real estate ventures at equity decreased by $17.9 million from $91.97 million in 2024 to $74.03 million in 2025[273]. - If market interest rates on variable-rate debt increase by 100 basis points, annual interest expense would increase by approximately $3.8 million[281]. - A 100 basis point increase in market interest rates would decrease the fair value of fixed-rate mortgage debt and unsecured senior notes by approximately $116.6 million[282]. - There were no impairment losses recognized for long-lived assets during the years ended December 31, 2025, 2024, and 2023[220].

Financial Data and Key Metrics Changes - Same-store revenue growth for Q4 2025 was nearly flat at -0.1%, indicating stabilization in trends [11] - Funds from Operations (FFO) per share for the quarter was reported at $0.64, with a 1.9% increase in quarterly dividend to an annualized $2.12 per share, representing a 5.3% dividend yield [12] - Same-store expenses grew by 2.9% during Q4, influenced by real estate taxes and property insurance, offset by increases in marketing and repairs [11][12] Business Line Data and Key Metrics Changes - The occupancy gap improved to 88.7% by the end of January 2026, narrowing from year-end 2025, with positive move-in rates continuing into early 2026 [8][9] - Over 75% of the top 25 markets experienced revenue growth acceleration from Q3 to Q4 2025, with core urban markets in the Northeast and Midwest outperforming [9] Market Data and Key Metrics Changes - Only 19% of same-store assets are projected to face new supply impacts in 2026, the lowest percentage since 2017, indicating a declining competitive supply environment [10][17] - The company noted that demand patterns have stabilized, with consistent move-in rates improving from -10% in Q4 2024 to +2.8% in Q4 2025 [7][9] Company Strategy and Development Direction - The company is focused on capital allocation strategies, including a new joint venture with CBRE IM for $250 million to invest in high-growth markets [13] - The management team emphasizes maintaining a high-quality portfolio and is prepared to address challenges while maximizing opportunities through 2026 [10] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about returning to growth in 2026, citing improved operating fundamentals and a more constructive environment for demand [5][9] - The company anticipates gradual improvement in financial results, with expectations for FFO per share in 2026 ranging from $2.52 to $2.60 [16][17] Other Important Information - The company executed share repurchases during Q4 2025, with an expanded authorization allowing for approximately $475 million in capacity based on current valuations [15] - The balance sheet remains strong, with leverage at 4.8x net debt to EBITDA, and plans to potentially access the bond market in 2026 [16] Q&A Session Summary Question: Supply impact on revenue - Management clarified that the 19% of stores impacted by supply in 2026 refers to those competing against new deliveries from 2024 to 2026, indicating a lessening headwind compared to previous years [21][23] Question: Lawsuit in New York - Management acknowledged awareness of the lawsuit regarding predatory practices and emphasized compliance and customer experience focus [25] Question: Operating expenses outlook - Management noted that real estate taxes and weather-related costs are significant drivers of expected expense growth in 2026 [30] Question: Move-in rates assumptions - Management indicated that while they do not guide specific components, they expect steady improvement in occupancy and revenue growth throughout 2026 [36] Question: New York market performance - Management expects New York to continue being a top-performing market in 2026, driven by recovery from supply headwinds and strong demand trends [44] Question: Share buybacks versus acquisitions - Management discussed the balance between share repurchases and potential acquisitions, emphasizing the need for compelling opportunities to drive shareholder value [48][78] Question: Dispositions and asset management - Management indicated a fluid discussion regarding asset dispositions, focusing on maintaining portfolio quality while exploring joint venture opportunities [70]

Financial Data and Key Metrics Changes - The same-store revenue growth for Q4 2025 was negative 0.1%, indicating stabilization compared to previous quarters [11] - Funds from Operations (FFO) per share for the quarter was reported at $0.64, with a 1.9% increase in the quarterly dividend to an annualized $2.12 per share, representing a 5.3% dividend yield [12] - The leverage ratio ended the year at 4.8x net debt to EBITDA, indicating a strong balance sheet [16] Business Line Data and Key Metrics Changes - The occupancy gap improved to 88.7% by the end of January 2026, narrowing from year-end 2025 [8] - Move-in rates showed significant improvement, turning positive at +2.8% in Q4 2025, compared to -10% in Q4 2024 [7] - Over 75% of the top 25 markets experienced revenue growth acceleration from Q3 to Q4 2025 [9] Market Data and Key Metrics Changes - Core urban markets in the Northeast and Midwest outperformed, while supply-impacted markets in the Sun Belt and West Coast began to show improvement [5][9] - Only 19% of same-store assets are projected to face new supply impacts in 2026, the lowest percentage since 2017 [10] Company Strategy and Development Direction - The company aims to return to growth in 2026, focusing on stabilizing fundamentals and improving operating metrics [5] - A new joint venture with CBRE IM was announced, with a $250 million mandate to invest in high-growth markets [13] - The company is considering share repurchases as a strategic option to enhance shareholder value amid disconnected public and private market valuations [15][48] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about returning to historical revenue growth levels, expecting gradual improvement throughout 2026 [9][39] - The company is focused on expense controls, having led the sector in the lowest expense growth over the past several years [18] - Management acknowledged the potential impact of economic conditions, including layoffs, on demand for self-storage services, but emphasized the resilience of the business model [56][99] Other Important Information - The company executed share repurchases during Q4 2025, with an expanded authorization allowing for approximately $475 million in capacity [15] - The company is exploring opportunities to sell or contribute assets to joint ventures to fund additional share repurchases if valuation gaps persist [16][70] Q&A Session Summary Question: How does the company view supply impacts? - The company assesses supply impacts over a three-year rolling period, with 19% of stores impacted in 2026, reflecting deliveries from 2024 to 2026 [21][23] Question: How is the company responding to the lawsuit in New York? - The company is monitoring the situation and remains focused on compliance and providing optimal customer experiences [25] Question: What is driving the higher operating expenses outlook? - Key drivers include real estate taxes and weather-related costs, with personnel costs expected to rise slightly above inflation [30] Question: What is the outlook for move-in rates? - Management expects steady improvement in move-in rates, with a focus on maximizing revenue from existing customers [36][62] Question: How does the company view its portfolio and potential dispositions? - The company is open to trading assets to enhance portfolio quality and may consider joint ventures for non-core assets [69][70]

Financial Data and Key Metrics Changes - The company reported same-store revenue growth of negative 0.1% for the fourth quarter, indicating stabilization compared to previous quarters [10] - Funds from Operations (FFO) per share was reported at $0.64 for the quarter, with a 1.9% increase in the quarterly dividend to an annualized $2.12 per share, representing a 5.3% dividend yield [11] - Leverage ended the year at 4.8x net debt to EBITDA, indicating a strong balance sheet [14] Business Line Data and Key Metrics Changes - The company experienced a positive trend in move-in rates, improving from -10% in Q4 2024 to +2.8% in Q4 2025 [5] - Same-store expenses grew by 2.9% in Q4, influenced by real estate taxes and property insurance, offset by increases in marketing and repairs [10] - Over 75% of the top 25 markets saw revenue growth accelerate from Q3 to Q4 2025 [8] Market Data and Key Metrics Changes - The occupancy gap improved to 88.7% by the end of January 2026, narrowing from year-end levels [6] - Only 19% of same-store assets are projected to face new supply impacts in 2026, the lowest percentage since 2017 [9] - The Northeast and Midwest urban markets continue to outperform, while Sun Belt and West Coast markets are beginning to show improvement [4][7] Company Strategy and Development Direction - The company is focused on capital allocation strategies, including a new joint venture with CBRE IM for $250 million to invest in high-growth markets [12] - The management team emphasizes maintaining a high-quality portfolio and is open to asset dispositions or joint ventures to enhance shareholder value [14][68] - The company aims to return to historical revenue growth levels by addressing occupancy gaps and improving pricing strategies [8][60] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about returning to growth in 2026, citing stabilized fundamentals and improved operating metrics [4] - The company anticipates gradual improvement in financial results, with expectations for FFO per share in 2026 ranging from $2.52 to $2.60 [14] - Management acknowledged the impact of external factors such as weather-related costs and inflation on operating expenses [28] Other Important Information - The company executed share repurchases during the quarter, with an expanded authorization allowing for approximately $475 million in capacity [13] - The management team is actively monitoring legislative changes affecting pricing and transparency in the self-storage market [22] Q&A Session Summary Question: Can you discuss the supply situation and its impact? - Management clarified that the 19% of stores impacted by supply in 2026 refers to those competing against new deliveries from 2024 to 2026, indicating a lessening impact compared to previous years [19][20] Question: How is the lawsuit in New York affecting operations? - The company is aware of the lawsuit and is focused on compliance and providing optimal customer experiences [22][23] Question: What is driving the higher operating expenses compared to peers? - Management noted that real estate taxes and weather-related costs are significant drivers of expense growth, alongside inflationary pressures on personnel costs [28] Question: What is the outlook for move-in rates? - Management expects steady improvement in move-in rates, with a focus on maximizing customer value rather than just volume [35][60] Question: Can you elaborate on the joint venture with CBRE? - The joint venture is aimed at investing in core plus and value-add opportunities in high-growth markets, with the potential for future collaborations [29][30] Question: How does the company view share buybacks versus acquisitions? - Management indicated that while share buybacks are attractive, they remain open to acquisitions if compelling opportunities arise [46][78] Question: What is the outlook for the New York MSA? - Management expects New York to continue being a top-performing market, benefiting from recovering supply headwinds and strong demand trends [42][43]