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CubeSmart (CUBE)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 was a stabilization quarter with improving seasonal trends: total revenues rose to $282.3M (+6.1% YoY) and adjusted FFO/share hit $0.65, at the high end of guidance, while GAAP diluted EPS was $0.36 .
  • Versus Street: beat on revenue ($282.3M vs $275.5M consensus*), beat on FFO/share ($0.65 vs $0.635*), and missed GAAP EPS ($0.36 vs $0.379*). Management raised full-year midpoints for FFO/share and same-store ranges, and guided Q3 FFO/share to $0.64–$0.66 .
  • Operational drivers: improved new customer pricing and narrowing occupancy gaps; headwinds included higher interest expense (up $6.3M YoY) and lingering supply in Sun Belt MSAs; New York MSA strength offset weaker Sun Belt trends .
  • Catalysts: raised FY guidance midpoints, sector-leading expense control (insurance renewal, tax appeals), and consistent commentary that Q3 same-store revenue may be slightly more negative before improving in Q4; positive back-half trajectory into 2026 emphasized on the call .

What Went Well and What Went Wrong

What Went Well

  • Adjusted FFO/share at the high end of guidance ($0.65) and raised FY midpoints for FFO/share and same-store ranges; CFO: “Stabilizing operating fundamentals coupled with tighter expense control generated FFO per share at the high end of our guidance range” .
  • New customer pricing improved with net effective rates up 28.3% YoY; CEO: “Our net effective rates for new customers grew 28.3% compared to 15% in 2024” .
  • Expense discipline: favorable property insurance renewal, successful tax appeals, staffing/telecom efficiencies supported an improved expense outlook .

What Went Wrong

  • GAAP EPS of $0.36 declined YoY (vs $0.41), driven by higher interest expense (+$6.3M YoY to $29.1M) on a larger debt balance and higher rates; diluted EPS down YoY despite revenue growth .
  • Same-store metrics remained slightly negative: revenue -0.5%, NOI -1.1%; average occupancy 90.6% was 80 bps lower YoY as supply and macro housing sluggishness persisted .
  • Sun Belt markets (Florida, Arizona, and broader Sun Belt MSAs) continued to lag due to supply absorption; management expects longer recovery timelines versus urban Acela corridor markets .

Financial Results

MetricQ2 2024Q1 2025Q2 2025
Total Revenues ($USD Millions)$266.2 $273.0 $282.3
Diluted EPS ($)$0.41 $0.39 $0.36
Adjusted FFO per Diluted Share ($)$0.64 $0.64 $0.65
Same-Store Revenue Growth YoY (%)n/a-0.4% -0.5%
Same-Store NOI Growth YoY (%)n/a-0.8% -1.1%
Avg Same-Store Occupancy (%)91.4% 89.5% 90.6%

Same-Store Performance (606 stores)

MetricQ2 2024Q2 2025
Same-Store Rental Income ($USD Millions)$224.2 $222.6
Same-Store Other Property Income ($USD Millions)$11.6 $12.0
Same-Store Total Revenues ($USD Millions)$235.8 $234.7
Same-Store Operating Expenses ($USD Millions)$68.6 $69.4
Same-Store NOI ($USD Millions)$167.2 $165.3
Period-End Occupancy (%)91.8% 91.1%

KPIs and Operating Context

KPIQ1 2025Q2 2025
Consolidated Stores (count)659 659
Consolidated Rentable Sq Ft (MM)48.1 48.1
Portfolio Physical Occupancy (%)89.2% 90.8%
Third-Party Managed Stores (count)869 873
Third-Party Stores Added (quarter)33 30
Interest Expense ($USD Millions)$26.1 $29.1
Avg Outstanding Debt Balance ($USD Billions)$3.20 $3.43
Weighted Avg Effective Interest Rate (%)3.19% 3.32%
Net Debt / EBITDA (x)4.8x 4.7x

Estimate Comparison (S&P Global)

MetricQ2 2025 Consensus*Q2 2025 Actual
Total Revenues ($USD Millions)$275.5*$282.3
Diluted EPS ($)$0.379*$0.36
FFO / Share ($)$0.635*$0.65

S&P Global disclaimer: Values retrieved from S&P Global.*

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Diluted EPS (GAAP)FY 2025$1.41–$1.49 $1.44–$1.50 Raised midpoint
FFO, as adjusted, per diluted shareFY 2025$2.51–$2.59 $2.54–$2.60 Raised midpoint
Same-Store Revenue GrowthFY 2025-2.00% to 0.00% -1.25% to -0.25% Raised (less negative)
Same-Store Expense GrowthFY 20253.25% to 4.50% 1.50% to 3.00% Lowered (improved)
Same-Store NOI GrowthFY 2025-4.00% to -1.75% -2.75% to -1.25% Raised (less negative)
Property Mgmt Fee Income ($M)FY 2025$42–$44 $41–$42 Lowered
G&A Expense ($M)FY 2025$61.5–$63.5 $63–$64 Slightly higher
Interest & Loan Amortization ($M)FY 2025$118–$124 $118–$122 Narrowed lower top end
Diluted EPS (GAAP)Q3 2025n/a$0.36–$0.38 New
FFO, as adjusted, per diluted shareQ3 2025n/a$0.64–$0.66 New
Quarterly Dividend ($/share)Q2–Q3 2025$0.52 $0.52 (Q3 declared) Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024 and Q1 2025)Current Period (Q2 2025)Trend
Macro/Housing & DemandNo catalyst for sharp reacceleration; cautious given macro; gradual improvement expected Stabilization continued; improving occupancy and rates through July; Q3 same-store revenue slightly more negative then improving in Q4 Improving through H2 2025
Supply DynamicsSun Belt supply impact; expect absorption over time Sun Belt (FL, AZ, TX, Phoenix, Atlanta) still headwind; New York MSA strong; fewer new starts expected in 2026–2027 Mixed: urban strength; Sun Belt gradual recovery
Pricing/Rate Management (New customers)Move-in rates: Q4 down ~10%, Q1 down ~8%, April down ~2% YoY Net effective rates for new customers up 28.3% YoY; move-in rate YoY gap narrowing into July Positive momentum
Existing Customer Rate Increases (ECRI)Consistent strategy; data-driven cadence; no major changes No change; testing cadence continues; customer health supportive Steady execution
Expense ControlSector-leading controls; Q1 beat partly timing; personnel efficiencies Better insurance renewal; tax appeals; staffing/telecom efficiencies; improved FY expense guidance Improving expense growth
Marketing/AI & SearchPaid search focus; testing other channels Traditional search still dominant; evaluating LLMs/Gemini; work-in-progress Early-stage adoption
Regional TrendsNYC/DC/Chicago outperform; Northern NJ lag NYC boroughs strong; Long Island good; Northern NJ improving; Sun Belt lagging Divergent by region
Capital & DebtStrong balance sheet; bond maturity later 2025 Net debt/EBITDA 4.7x; $300M notes mature in Nov 2025; plan long-term unsecured issuance Proactive refinancing
Transactions/3P MgmtJV buyout; opportunities watching; 3P pipeline shifted to operating stores Underwriting more deals but risk-adjusted returns not compelling; some churn in 3P portfolio; added 30 stores Selective, capacity preserved

Management Commentary

  • CEO Christopher P. Marr: “The rental season saw modestly better seasonal performance compared to last year as key operating metrics maintained their positive momentum throughout the second quarter and into July” .
  • CEO: “Our net effective rates for new customers grew 28.3% compared to 15% in 2024... urban markets along the Acela corridor... continue to be our top performers” .
  • CFO Tim Martin: “Stabilizing operating fundamentals coupled with tighter expense control generated FFO per share at the high end of our guidance range… [we] raise the midpoints of our full-year FFO per share and same-store ranges” .
  • CFO: “We are very encouraged by the positive trends... improvements will take a little bit of time to flow through... Q3 same store revenue growth will be slightly more negative than it was in Q2 and then improving in Q4” .

Q&A Highlights

  • Guidance calibration: midpoints raised; top-end narrowed due to less robust demand at the high-end scenario; management prefers emphasizing midpoint raise over a trimmed top-end .
  • Regional color: New York MSA net rental income accelerated; Northern NJ slightly negative but improving; Sun Belt (Orlando, Miami, Atlanta) showing acceleration though still negative; broader Sun Belt supply deliveries to lag into next year .
  • Expense outlook: improved FY expense guidance driven by better insurance renewal, tax appeals, and store efficiency initiatives; expect heavier repair/maintenance in H2 and marketing spend to flex with returns .
  • Capital markets: Net debt/EBITDA 4.7x; $300M unsecured notes mature Nov-2025; plan to term out via long-dated unsecured debt; bond investors recognize credit metrics despite rating comparisons .
  • Transactions: Deal volume up YoY, but pricing not yet compelling on a risk-adjusted basis; 3P management sees some churn from portfolio sales but added 30 stores in Q2 .

Estimates Context

  • Q2 2025: Revenue beat ($282.3M vs $275.5M*), adjusted FFO/share beat ($0.65 vs $0.635*), GAAP EPS miss ($0.36 vs $0.379*). Expect Street to reflect stronger top-line and FFO trajectory but maintain caution on GAAP EPS given higher interest expense .
  • Q3 2025: Guidance FFO/share $0.64–$0.66 brackets consensus $0.649*; EPS guide $0.36–$0.38 brackets $0.381*; commentary that Q3 same-store revenue slightly more negative supports modestly conservative near-term revenue assumptions .
  • FY 2025: Raised midpoints for FFO/share and same-store ranges likely prompt upward revisions to FFO models and modest improvement to same-store assumptions; G&A higher and property management fees slightly lower than prior guidance temper the magnitude of raises .

S&P Global disclaimer: Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Revenue and FFO momentum: operational stabilization plus expense control drove an FFO/share beat and higher FY midpoints; focus on FFO/share trajectory over GAAP EPS given interest expense headwinds .
  • Near-term cadence: expect a slight dip in Q3 same-store revenue before improvement in Q4; trading setups may favor buying weakness into Q3 with an eye to Q4/H1’26 normalization .
  • Market mix matters: overweight urban Acela corridor and NYC boroughs continues to offset Sun Belt supply; relative outperformance in NYC is a key narrative lever .
  • Cost discipline sustained: better insurance renewal and tax appeals underpin improved FY expense guidance; margin stabilization hinges on continued expense execution .
  • Capital positioning: net debt/EBITDA ~4.7x and planned unsecured refinancing of Nov-2025 notes suggest low refinancing risk; bond markets appear to price metrics over agency ratings .
  • External growth optionality: underwriting pipeline active but selective; capacity to deploy via revolver and cash flow if pricing turns compelling; third-party management remains a scalable platform despite churn .
  • Modeling updates: raise FY FFO/share midpoint, trim property management fee income, increase G&A modestly; leave Q3 same-store assumptions slightly conservative in line with guidance .
Non-GAAP Note: FFO is defined per NAREIT; “FFO, as adjusted” excludes acquisition-related costs, early debt extinguishment, and other non-recurring items; NOI defined as total continuing revenues less continuing property operating expenses **[1298675_0001298675-25-000030_cube-20250731xex99d1.htm:2]** **[1298675_64392a65be684db9ba1f498a89718368_5]** **[1298675_0001298675-25-000030_cube-20250731xex99d1.htm:3]**.