CubeSmart (CUBE) Q2 2024 earnings summary

Executive summary

• Owned or managed 1,494 self-storage properties as of June 30, 2024, with 615 owned and 879 managed for third parties, spanning 44.4 million rentable square feet.

• Same-store rentals increased 1.8% year-over-year, with flat vacates and a 150 bps occupancy gain during the quarter, peaking earlier than usual in late June.

• Urban markets like New York, DMV, and Chicago outperformed, while softness persisted in West Coast Florida, Atlanta, and Tucson.

• Opened two new development projects and added 39 stores to third-party management, totaling 879 managed stores.

• Revenue is primarily derived from leasing storage space and management fees, with a focus on maximizing internal growth and selective acquisitions.

Financial highlights

• Total revenues for Q2 2024 were $266.2 million, up 2.1% from Q2 2023; six-month revenues rose 2.0% year-over-year to $527.6 million.

• Net income for Q2 2024 was $94.2 million, down 4.2% from Q2 2023; diluted EPS was $0.41, compared to $0.43 in Q2 2023.

• Same-store revenues grew 0.3% year-over-year; average occupancy declined 110 bps to 91.5%.

• Same-store operating expenses rose 4.2%, mainly due to property insurance and timing of repairs.

• FFO, as adjusted, was $146.0 million ($0.64 per diluted share), down from $0.66 per share in Q2 2023.

Outlook and guidance

• 2024 same-store revenue growth guidance narrowed to -0.75% to +0.25%.

• Full-year diluted EPS guidance: $1.71–$1.77; FFO per diluted share, as adjusted: $2.61–$2.67.

• Expense growth expectations improved due to better real estate tax outlook.

• Same-store NOI guidance revised to -3% to -1% for the year.

• Street rate parity with prior year not expected in 2024; timing for 2025 remains uncertain.