CubeSmart(US:CUBE)2019-07-26 20:32Property Management and Operations - As of June 30, 2019, the company owned 516 self-storage properties, an increase from 493 properties as of December 31, 2018, totaling approximately 36.0 million rentable square feet[157] - The company managed 648 stores for third parties, bringing the total number of owned and/or managed stores to 1,164[157] - The company focuses on maximizing internal growth opportunities and selectively pursuing targeted acquisitions and developments of self-storage properties[161] - The company experienced seasonal fluctuations in occupancy levels, typically higher during summer months due to increased moving activity[159] - The company owned 467 same-store properties and 49 non-same-store properties as of June 30, 2019[177] - The company’s approach to management combines centralized marketing and revenue management with local operations teams for effective market-level oversight[158] Revenue and Income - For the six months ended June 30, 2019, stores in Florida, New York, Texas, and California contributed approximately 16%, 16%, 10%, and 8% of total revenues, respectively[163] - Rental income increased from $127.8 million in Q2 2018 to $136.0 million in Q2 2019, a rise of $8.2 million or 6.4%[185] - Same-store rental income rose by $2.3 million primarily due to higher rental rates, with realized annual rent per square foot increasing by 2.1%[185] - Other property related income grew from $15.0 million in Q2 2018 to $16.9 million in Q2 2019, an increase of $1.9 million or 12.5%[186] - Property management fee income increased from $4.9 million in Q2 2018 to $6.1 million in Q2 2019, a rise of $1.1 million or 23.2%[188] - Net income attributable to the company's common shareholders rose from $38.4 million in Q2 2018 to $49.4 million in Q2 2019, an increase of $11.0 million or 28.7%[190] - Rental income increased from $252.0 million during the six months ended June 30, 2018 to $267.6 million during the six months ended June 30, 2019, an increase of $15.6 million, or 6.2%[198] - Other property related income increased from $29.3 million during the six months ended June 30, 2018 to $32.6 million during the six months ended June 30, 2019, an increase of $3.3 million, or 11.3%[199] - Property management fee income increased from $9.4 million during the six months ended June 30, 2018 to $11.6 million during the six months ended June 30, 2019, an increase of $2.3 million, or 24.0%[201] Expenses and Financial Performance - Depreciation and amortization expenses rose from $35.0 million in Q2 2018 to $40.7 million in Q2 2019, an increase of $5.6 million or 16.0%[190] - General and administrative expenses increased from $8.3 million in Q2 2018 to $9.8 million in Q2 2019, a rise of $1.5 million or 17.5%[191] - Interest expense increased from $15.5 million in Q2 2018 to $18.1 million in Q2 2019, an increase of $2.7 million or 17.4%[192] - Property operating expenses increased from $98.3 million during the six months ended June 30, 2018 to $101.5 million during the six months ended June 30, 2019, an increase of $3.3 million, or 3.3%[203] - Depreciation and amortization increased from $70.0 million during the six months ended June 30, 2018 to $79.1 million during the six months ended June 30, 2019, an increase of $9.1 million, or 13.0%[204] - Interest expense increased from $30.6 million during the six months ended June 30, 2018 to $35.7 million during the six months ended June 30, 2019, an increase of $5.0 million, or 16.5%[206] Cash Flow and Financing - Cash provided by operating activities for the six months ended June 30, 2019 was $177.3 million, reflecting an increase of $21.6 million compared to $155.7 million for the same period in 2018[209] - Cash used in investing activities increased from $100.7 million for the six months ended June 30, 2018 to $250.8 million for the six months ended June 30, 2019, reflecting an increase of $150.2 million[210] - Cash provided by financing activities was $82.5 million for the six months ended June 30, 2019, compared to a cash outflow of $54.6 million for the same period in 2018, reflecting a change of $137.1 million[213] - The company sold 4.1 million common shares under its "at-the-market" equity program at an average sales price of $33.09 per share, resulting in gross proceeds of $136.5 million during the six months ended June 30, 2019[237] Debt and Liquidity - The total principal balance outstanding for unsecured senior notes was $1.5 billion as of June 30, 2019, with a weighted average effective interest rate of 4.82% for the 2022 notes and 4.33% for the 2023 notes[223] - The company incurred costs of $3.9 million in 2019 related to amending and restating the Credit Facility, which is now comprised of a $750.0 million unsecured revolving facility maturing on June 19, 2024[228] - The company’s liquidity needs beyond 2019 will include contractual obligations for debt repayments and potential discretionary expenditures for acquisitions and store developments[218] - As of June 30, 2019, the company was in compliance with all financial covenants under the Senior Notes and the Amended and Restated Credit Facility, including a maximum total indebtedness to total asset value of 60%[234] - The average outstanding debt balance increased $128.7 million to $1,816.3 million during the six months ended June 30, 2019 compared to $1,687.6 million during the same period in 2018[206] Market Sensitivity and Performance Indicators - The company’s operating results are sensitive to changes in overall economic conditions that impact consumer spending, including discretionary spending[160] - A 100 basis point increase in market interest rates on variable rate debt would decrease future earnings and cash flows by approximately $2.6 million annually[257] - 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 $85.8 million[258] - The company considers FFO a key performance indicator for evaluating store operations, excluding items not indicative of operating performance[244] - NOI is used to evaluate the economic productivity of stores, focusing on leasing, pricing, occupancy, and property operating expenses[240] - The company does not have off-balance sheet arrangements or relationships with unconsolidated entities, ensuring transparency in financial reporting[250]