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CubeSmart (CUBE)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered resilient operational performance: total revenues rose to $273.0M (+4.5% YoY), diluted EPS was $0.39, and FFO as adjusted per diluted share was $0.64, with same-store NOI down 0.8% YoY and average occupancy at 89.5% .
  • Against Wall Street consensus, CUBE posted a small EPS beat ($0.39 vs $0.382*) and a clear revenue beat ($273.0M vs $266.7M*). Management cited a “positive start,” with improving move-in rates and expense control; April occupancy reached 89.9% .
  • Guidance was modestly improved: raised the lower end for 2025 diluted EPS ($1.41 from $1.40) and FFO as adjusted ($2.51 from $2.50), narrowed same-store expense growth, and maintained top-line ranges given macro uncertainty; Q2 2025 guidance implies EPS $0.35–$0.37 and FFO $0.63–$0.65 .
  • Strategic catalysts: acquisition of the remaining 80% interest in the 28-store HVP IV portfolio for $452.8M, ongoing demand for third‑party management (869 stores), and sequential improvement in street rates (April down ~2% YoY vs down ~8% in Q1) .

What Went Well and What Went Wrong

What Went Well

  • FFO beat and expense discipline: “$0.64 of FFO per share, a $0.01 beat to the high end of our guidance,” with same-store operating expenses up just 0.6% YoY, better than modeled .
  • Demand and pricing trends improved: move‑in rates improved sequentially (Q4 down ~10% YoY, Q1 down ~8%, April down ~2%) and April occupancy ended at 89.9% .
  • Portfolio quality and market strength: CEO emphasized resilience and strength in top markets (NYC boroughs, Chicago, DC suburbs), with signs of stabilization in supply‑impacted markets (Phoenix, Atlanta, Northern NJ) .

What Went Wrong

  • Same-store softness: same‑store NOI fell 0.8% YoY on -0.4% revenues and +0.6% expenses; end occupancy was 89.7% vs 90.3% last year .
  • Interest burden increased: interest expense rose to $26.1M from $22.9M (+$3.2M) on higher average debt balance ($3.20B vs $2.99B) and rates (3.19% vs 3.03%) .
  • Market headwinds: Texas (especially Dallas) remained pressured due to supply and competitor pricing, tempering near-term performance despite green shoots in Austin and solid footing in Houston .

Financial Results

Revenue – YoY comparison

MetricQ1 2024Q1 2025
Total revenues ($USD Millions)$261.406 $273.036

EPS and Net Income – sequential trend

MetricQ3 2024Q4 2024Q1 2025
Diluted EPS ($USD)$0.44 $0.45 $0.39
Net income attributable to common shareholders ($USD Millions)$100.8 $101.9 $89.197

Same-Store Portfolio KPIs – YoY

MetricQ1 2024Q1 2025
Same-store total revenues ($USD Millions)$232.246 $231.410
Same-store operating expenses ($USD Millions)$65.620 $66.038
Same-store NOI ($USD Millions)$166.626 $165.372
Gross margin (%)71.7% 71.5%
Period-end occupancy (%)90.3% 89.7%
Period average occupancy (%)90.0% 89.5%
Realized annual rent/occupied sq ft ($USD)$22.61 $22.55

Consensus vs Actual – Q1 2025

MetricConsensusActual
Diluted EPS ($USD)$0.382*$0.39
Total revenues ($USD Millions)$266.673*$273.036

Values marked with * retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Diluted EPS ($)FY 2025$1.40–$1.49 $1.41–$1.49 Raised lower end
FFO, as adjusted, per diluted share ($)FY 2025$2.50–$2.59 $2.51–$2.59 Raised lower end
Same-store revenue growth (%)FY 2025-2.0% to 0.0% -2.0% to 0.0% Maintained
Same-store expense growth (%)FY 20253.25%–4.75% 3.25%–4.50% Lowered upper end
Same-store NOI growth (%)FY 2025-4.25% to -1.75% -4.00% to -1.75% Raised lower end
Property mgmt fee income ($M)FY 2025$42–$44 $42–$44 Maintained
G&A ($M)FY 2025$61.5–$63.5 $61.5–$63.5 Maintained
Interest & loan amortization ($M)FY 2025$118–$124 $118–$124 Maintained
Weighted avg shares & units (M)FY 2025230.5 230.5 Maintained
Dilution from properties in lease-up ($/share)FY 2025($0.01)–($0.02) ($0.01)–($0.02) Maintained
Diluted EPS ($)Q2 2025—$0.35–$0.37 New quarterly guide
FFO, as adjusted, per diluted share ($)Q2 2025—$0.63–$0.65 New quarterly guide
Dividend per share ($)Q1 2025 / Q2 2025$0.52 declared $0.52 declared Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024 / Q4 2024)Current Period (Q1 2025)Trend
Rates & occupancyCompetitive environment; occupancy 90.2% in Q3; macro volatility into Q4 Move‑in rates improving (Q4 -10% YoY, Q1 -8%, April ~-2%); April occupancy 89.9% (90 bps below LY) Improving sequentially
Macro/housingNo sharp acceleration expected; cautious backdrop Housing market “frozen”; maintain prior top-line ranges Constrained
Expense/marketingAd costs higher in Q3; property taxes up in Q4 Same-store opex +0.6% YoY; marketing spend timing (lighter in Q1, likely more later in year) Better control / timing shift
Supply dynamics—Texas mixed: Dallas tough (supply, competitor pricing); Austin recovering; Houston resilient; Northern NJ still impacted Stabilizing in parts; Dallas pressured
ECRI policy—ECRIs unchanged, data-driven, consistent with last quarter and last year Steady
Third-party management893 (Q3); 902 (Q4) stores under management Pipeline shifting toward operating-store engagements; 869 stores at Q1 Sustained demand; mix shifting
Acquisition marketContracted small deals in Q3; Hines JV in Q4 HVP IV buyout closed; market hazy with valuation uncertainty and sellers hesitant Opportunistic; uncertain

Management Commentary

  • CEO: “Our performance in the first quarter was strong… Rental rates for new customers continue to improve… This positive operational performance resulted in $0.64 of FFO per share, a $0.01 beat to the high end of our guidance.”
  • CEO: “Our high-quality portfolio with its focus on top-tier markets uniquely positions us to perform during uncertain economic climates.”
  • CFO: “We do not foresee any improvement to the frozen housing market… base case remains for gradual improvement… maintaining our prior range of expectations for top line growth.”
  • CFO: “Balance sheet remains in excellent shape with net debt to EBITDA at 4.8x… bond maturity later in the year [to be] addressed with capacity or opportunistic debt markets.”

Q&A Highlights

  • Demand drivers and occupancy: Diverse, resilient customer base with everyday life events and small business usage; April occupancy 89.9% .
  • Street rates: Sequential improvement with April down ~2% YoY vs Q1 down ~8% YoY .
  • Q2 guidance cadence: Flat sequential FFO at midpoint driven by expense timing and lapping changes in other income; marketing spend expected to pick up later in year .
  • Market color: Dallas challenged by supply/competitor pricing; Austin recovering; Houston resilient; NYC boroughs and DC strong; Northern NJ still impacted by supply .
  • Strategy levers: ECRI approach unchanged and data-driven; third‑party management demand shifting toward operating stores .
  • Investment landscape: Sellers and buyers diverging on valuation given rate uncertainty; maintain optionality with healthy balance sheet .

Estimates Context

  • Q1 2025 EPS: $0.39 actual vs $0.382* consensus — modest beat; revenue: $273.0M actual vs $266.7M* consensus — clear beat. Management tightened elements of FY 2025 guidance (raised lower ends for EPS/FFO) but maintained top-line ranges due to macro volatility .
    Values marked with * retrieved from S&P Global.

  • Near-term estimate implications: Sequential rate improvement and expense control may support modest upward revisions to FY expense assumptions and the lower end of FFO/EPS ranges, while macro/housing constraints likely cap top-line estimate changes in the near term .

Key Takeaways for Investors

  • Sequential demand improvement: watch street rates and occupancy into peak leasing season (April occupancy 89.9%; April street rates ~-2% YoY) as potential catalysts for sentiment if maintained or strengthened .
  • Expense discipline is a differentiator: same‑store opex up only 0.6% YoY and marketing spend timing flexibility provide levers to protect NOI amid rate normalization .
  • Guidance signals cautious optimism: raised lower ends for FY EPS/FFO and narrowed expense growth, but top-line ranges unchanged given “frozen” housing market; trade setup favors operational execution over macro beta .
  • Market mix matters: strength in NYC/DC/Chicago offsets pressure in Dallas; focus on localized supply/pricing dynamics when modeling regional contributions .
  • Balance sheet capacity for selective growth: HVP IV buyout adds recent‑vintage assets; maintain optionality as transaction market remains hazy; monitor late‑year bond maturity plans .
  • Third‑party management pipeline: continued demand with a shift to operating-store engagements supports fee income stability within guidance .
  • Interest expense headwinds: higher average debt and rates increased interest expense (+$3.2M YoY); rate path and refinancing plans are key watch items for 2H 2025 .

Additional KPIs and Portfolio Snapshot

MetricQ3 2024Q4 2024Q1 2025
Third-party managed stores (#)893 902 869
Consolidated stores (#)615 631 659
Total rentable square feet (Millions)44.4 45.8 48.1
Consolidated physical occupancy (%)89.7% 88.8% 89.2%

Notes:

  • Q1 2025 consolidated revenue and EPS from company financials; consensus estimate comparison uses S&P Global data (marked with *).
    Values marked with * retrieved from S&P Global.