CubeSmart (CUBE) Q2 2025 Earnings Call August 01, 2025 11:00 AM ET Speaker0Thank you for standing by. My name is Jeannie, and I will be your conference operator today. At this time, I would like to welcome everyone to the CubeSmart Second Quarter twenty twenty five Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session.Thank you. Would now like to turn the call over to Josh Schulzer, Vice President of Financ ...

Financial Data and Key Metrics Changes - Same store occupancy reached 94.6%, up 60 basis points year over year and 120 basis points sequentially from the first quarter [4] - Flat same store revenue growth in the quarter, with positive year over year rate growth for new customers for the first time since March 2022 [4][11] - Core FFO guidance maintained at $8.15 per share, with same store revenue growth anticipated between negative 0.5% and positive 1% for the full year [7][13] Business Line Data and Key Metrics Changes - Completed one acquisition for $12 million and bought out two joint venture partners' interests in 27 properties for $326 million [5] - Bridge loan program generated $158 million in new originations, while third-party management program added 93 stores, expanding the managed portfolio to 1,749 stores [5][6] Market Data and Key Metrics Changes - Geographic diversification continues to benefit the portfolio, with growth markets offsetting softer conditions in regions affected by new supply or emergencies [6] - New customer rates improved year over year by over 2%, indicating positive trends in July [17] Company Strategy and Development Direction - The company is focused on balancing pricing and occupancy to maximize revenue while pursuing strategic growth to enhance long-term shareholder value [8] - A multichannel approach combining opportunistic acquisitions and capital-light activities is being employed to create value regardless of market conditions [6] Management's Comments on Operating Environment and Future Outlook - Management noted that while near-term revenue growth remains muted, operational discipline and investment strategy position the company well to navigate current conditions [8] - The company is optimistic about gradually improving fundamentals and expects potential acceleration in revenue growth in the second half of the year, particularly in the fourth quarter [13][31] Other Important Information - Same store expenses increased by 8.6%, primarily due to higher property taxes in certain states [12] - The company maintains a strong balance sheet with 89% of debt at fixed rates and a weighted average interest rate of 4.4% [12] Q&A Session Summary Question: Update on street rates and occupancy trends - Occupancy remained flat at 94.6% in July, with new customer rates up over 2% year over year [17] Question: Insights on net rental rate growth - Minor headwinds in LA, but the primary driver of net decrease is the move-out activity [21] Question: Comments on gradual progress and market performance - Positive trends in customer rates are expected to compound and improve revenue in the fourth quarter [19][25] Question: Performance of the LSI portfolio - The LSI portfolio is performing as expected, with rates improving faster than Extra Space rates [27] Question: Expectations for expenses and property taxes - Anticipated deceleration in expense growth in the second half of the year [39] Question: Demand and market health - Demand is steady, with occupancy levels indicating a healthy market despite challenges from new supply [41] Question: Insights on bridge loan products and repayments - Good demand for bridge loan products, with no imminent paybacks from preferred holders [47] Question: Competitive dynamics and acquisition strategy - The company remains active in evaluating acquisition opportunities but is disciplined regarding pricing [75] Question: Markets with easing supply headwinds - Markets like Portland, Seattle, Chicago, and Denver are seeing easing supply pressures, which is expected to improve revenue [81] Question: Third-party management program performance - Strong growth in the third-party management business, with new partners contributing to expansion [85] Question: Impact of AI on customer behavior - Increased use of AI in customer inquiries, leading to higher conversion rates on the website [71] Question: Future earnings growth expectations - Improvement in rate, moderation of vacates, and expiration of state emergencies are expected to aid recovery [109]