CUBE

Image source: The Motley Fool. Friday, July 31, 2026 at 11:00 a.m. ET Senior Vice President of Finance - Joshua Schutzer President and Chief Executive Officer - Christopher Marr Chief Financial Officer - Timothy Martin Operator: Hello, everyone. Thank you for joining us, and welcome to the CubeSmart Second Quarter 2026 Earnings Call. After today's prepared remarks, we will host a question-and-answer session. . I will now hand the call over to Josh Schutzer, Senior Vice President of Finance. Josh, please go ahead. Joshua Schutzer: Thanks, Sara. Good morning, everyone. Welcome to CubeSmart's Second Quarter 2026 Earnings Call. Participants on today's call include Chris Marr, President and Chief Executive Officer; and Tim Martin, Chief Financial Officer. Our prepared remarks will be followed by a Q&A session. In addition to our earnings release, which was issued yesterday evening, supplemental operating and financial data is available under the Investor Relations section of the company's website at www.cubesmart.com. The company's remarks will include certain forward-looking statements regarding earnings and strategies that involve risks, uncertainties and other factors that may cause the actual results to differ materially from these forward-looking statements. The risks and factors that could cause our actual results to differ materially from forward-looking statements are provided in documents the company furnishes to or filed with the Securities and Exchange Commission, specifically the Form 8-K we filed this morning, together with our earnings release filed with the Form 8-K and the Risk Factors section of the company's annual report on Form 10-K. In addition, the company's remarks include reference to non-GAAP measures. A reconciliation between GAAP and non-GAAP measures can be found in the second quarter financial supplement posted on the company's website at www.kepsmart.com. I will now turn the call over to Chris. Christopher Marr: Thank you, Josh, and thank you, everyone, for joining us this morning. 2026 marks a year of inflection as we returned to positive growth throughout the year. Following a stabilization in operating fundamentals in 2025, we saw same-store revenues inflect positively in early 2026. Our base case expectation is for continued acceleration in revenues that will lead to a return to positive earnings growth in the second half of 2026, providing a strong setup entering 2027. Our key performance indicators are flashing green, showcasing the resilience of the self-storage business and the value of having such a wide range of need-based demand for our product, benefiting us from not being overly reliant on any one source. Same-store revenues continue their positive momentum, reflecting the strength of our customer base the declining impact of new supply in many of our core markets and the quality of our portfolio and operating platform. Macro volatility is impacting the U.S. consumer However, our customers' health remains strong with lower vacate activity, elongating lengths of stay and continued solid credit metrics. This environment continues to showcase the strength of our quality focused strategy with primary markets outperforming and showcasing their lower beta characteristics. We had a positive and productive spring and summer busy rental season, closing the occupancy gap to 2025 by the end of June, and that momentum has continued into July. Second quarter move-in rates for new customers at a year-over-year positive 1.7%, improved sequentially by 80 basis points and all other factors held constant, provides an attractive setup for the back half of the year and heading into 2027. There continues to be a wide dispersion and move-in rates for new customers across our major markets. Strength continues in the Accella corridor, Austin, Stamford, New York and Philadelphia. In the Midwest, Chicago, Columbus and Cleveland, and very positive improving trends in our West Coast markets with our Inland Empire and Los Angeles properties exhibiting very strong sequential improvement and swinging second quarter same-store revenue growth on a year-over-year basis back into positive territory. With another solid quarter of sequentially improving trends we are optimistic for continued gradual recovery in our major Sunbelt markets. These markets are experiencing the most pressure from supply as well as macroeconomic factors impacting the consumer resulting in a challenging new customer pricing environment. We have maintained our disciplined capital allocation strategy. During the quarter, we executed against several objectives we articulated earlier in the year. including a new joint venture, the continued execution of our share repurchase program and the recast and increased capacity in our credit facility, and I know Tim is very excited to share the details with you during his prepared remarks. As we come to the end of July, our rental volumes are elevated over last year. As of July 30, our same-store physical occupancy is 91.1%, a 30 basis point increase over July 30, 2025. Our pricing algorithms have informed us that it is optimal to maintain seasonal pricing trends and build physical occupancy as we move into the fall. Self-storage remains a tremendously resilient business as we continue to benefit from the diverse set of needs-based use cases for the product even against the backdrop of volatile consumer confidence. We are optimistic about the outlook for our business, and we continue to see steady acceleration in fundamentals. Our high-quality portfolio, our sophisticated operating SIMs and our customer service focused team are well positioned to continue to drive us forward as we inflect back to positive earnings growth in the second half of 2026. I'll now turn it over to Tim for more details on the quarter and our positively updated guidance ranges. Tim? Timothy Martin: Thanks, Chris. Good morning, everyone. Thanks as always. We appreciate you taking the time to join us on the call today. Second quarter results were reflective of the positive environment that Chris touched on. with broad-based improvement across most markets as demand trends remain steady, while headwinds from new supply continue to dissipate. Same-store year-over-year revenue growth accelerated from 0.6% in the first quarter to 0.8% in the second quarter. Move-in rates grew 1.7% year-over-year, while the occupancy gap improved to flat by the end of the quarter. Those stabilizing trends and first half results led us to improving our full year same-store revenue guidance range to a new range of 0.5% to 1.25%, which implies at the midpoint, our expectation that same-store revenue growth will continue to accelerate in the back half of the year. Same-store operating expenses grew 4.4% over last year, in line with our expectations. As we previously discussed, we had some tough expense comps after 4 straight years of industry-leading expense control, especially in the first half of the year. We modestly improved our full year guidance range for same-store expenses to a new range of 3.25% to 4.5%, reflecting our expectation of moderating expense growth in the back half of the year. Revenue growth of 0.8% combined with 4.4% expense growth, yielded negative 0.7% same-store NOI growth for the quarter. We reported FFO per share as adjusted of $0.63 for the quarter, which was at the midpoint of our guidance entering the quarter. As discussed last quarter, we continue to execute on our disciplined capital allocation strategy, looking for creative ways to create shareholder value in an environment that continues to have a disconnect between public and private market valuations. We announced last evening, a new joint venture with Titan, where we will be contributing 15 noncore assets to a newly formed joint venture in which will have a 20% ownership stake. The contributed assets were identified as noncore, meaning either they were in isolated markets or they were in outer ring locations in core markets. This transaction allows us to unlock value at a market rate for these assets. continue to participate in upside potential through both future growth as well as fees with a partner, we have a very long and successful history with. It also improves the overall quality of our on-balance sheet portfolio. This initial transaction in the venture provides the seed portfolio with the opportunity to grow in the future, giving us yet another avenue for future external growth in addition to our on-balance sheet activity as well as our previously announced JV with CBRE. Proceeds from the transaction will be used to fund share repurchases, giving us a leverage neutral opportunity to accretively invest in our shares as they trade at implied valuations that are disconnected from where high-quality storage assets are trading in the private market. We had additional share repurchases during the second quarter, totaling $42.5 million, bringing us to $75.8 million year-to-date, with much of that activity done with the Heitman JV in mind. The relative value of our portfolio has continued to make it our most attractive investment option. On the third-party management front, we added 25 stores to the platform in the second quarter and ended the quarter with 872 third-party stores under management. Also during the quarter, we closed on our extended and expanded revolving credit facility, extending the maturity from February of '27 to June of 2030, we increased the capacity of the facility from $850 million to $1 billion and improve the pricing. A quick thank you to our entire high-quality bank group. We always appreciate your continued support. Our balance sheet is in great shape. We have a bond that matures next quarter, and we've been actively monitoring the debt markets and will continue to do so in the coming months. The expanded capacity on the revolver, combined with no debt maturities in 2027 gives us a lot of flexibility as we navigate through the next several quarters. Details of our 2026 earnings guidance and related assumptions were included in our press release last evening. Big picture, operating fundamentals continue to improve across most markets. Demand trends are steady headwinds from new supply continue to dissipate. We saw improvements in move-in rates as well as occupancy levels and our customers remain strong with lower vacate activity, elongating lengths of stay and no change to credit metrics. Our baseline expectation is for continued gradual improvement in top line growth for the balance of 2026. Our same-store expense guidance implies lower expense growth for the rest of the year. The midpoint of our same-store NOI range implies returning to positive growth in the second half of the year and the midpoint of our FFO per share adjusted guidance range also implies returning to positive earnings growth in the back half. So when you add it all up, we feel great about where we're positioned and see positive trends that are leading to a really nice setup for us in 2027. Thanks again for joining us on the call this morning. At this time, Sarah, why don't we open up the call for some questions. Operator: . Your first question comes from the line of Michael Griffin with Evercore ISI. Your line is open. Please go ahead. Michael Griffin: Great. Chris, in your prepared remarks, you talked about some key performance indicators in green. I was wondering if you can expand on that. I mean is this just really move-in rents getting better year-over-year as a result of maybe better comps, more moderating supply? Or is there anything on the organic demand side that you're seeing differently within the business right now? Christopher Marr: Yes. Thanks, Michael. I think it's that full menu. We're seeing very good top-of-funnel demand with a diverse set of use cases for the product. We're continuing to see the existing customer health, as we mentioned, credit metrics, et cetera, be very positive. We're continuing to see those existing customers stay with us on their storage journey. A bit longer each as time goes by. We're seeing some good trends across the board strength in the East Coast and the middle part of the country. some improving green shoots in the Sunbelt on customers' move-in rates I think on the OpEx side, as Tim said, we're seeing the trends as we would have expected to get better as we go into the back half of the year. So I think just broadly, I feel very good about where we are at this point in the year. Michael Griffin: Chris. That's some helpful context. And then Maybe, Tim, I appreciate your prepared remarks around the new joint venture. Is there anything you can share in terms of pricing or cap rates that, that deal transacted at? And I mean it seems like the near-term priorities is share repurchases. I mean are you seeing anything. I know you had the recently formed joint venture earlier this year, maybe to go on offense in terms of JVs, it doesn't seem like wholly owned on balance sheet acquisition pencil, but just curious how you weigh kind of those proceeds being used for either share repurchases or potential acquisition opportunities in the future? Timothy Martin: Thanks, Michael. Yes, I mean I consider the share repurchases in the transaction that we just announced with Heitman to absolutely be playing offense. It's playing offense in the context of the environment that we're in. It gives us a great opportunity to be consistent with our operating strategy of improving the quality of our portfolio. it allows us to take advantage of being able to contribute these assets at a market valuation, which I would characterize to your first question in the in the mid-5s from a cap rate perspective and being able to use those proceeds to take advantage of the disconnect of what we're seeing out there. So that's a bit redundant to my prepared remarks, but that's the gist of the approach. And then -- and then again, it gives us yet another vehicle to look at future growth opportunities along with Titan. Now that we have this seed portfolio in this venture gives us yet another path. I think the -- the market is starting to open up, and we're ready to get to that part of the offensive playbook as well when the time is right for us. Operator: Your next question comes from the line of Michael Goldsmith with UBS. Please go ahead. Michael Goldsmith: Chris, in your prepared remarks, you sounded more optimistic than you've been in some time. So can you -- and then you also talked about accelerating into strength into 2027. So can you talk a little bit about what it is specifically that's driving that? And then also, if you could talk a little bit about the cadence as it creates that set up for next year. Christopher Marr: Yes. Thanks, Michael. I am optimistic. The first part of the year here has been has been pretty strong and broad-based in terms of the demand. And I think, again, to my comment, I think we've lost a little bit of our focus on how resilient the business is. It's everyday acts of life that create an opportunity for a customer to experience the joy of self-storage. And so I think we're just seeing that. I think we also have maybe lost a little bit of the focus on the fact that the number 1, 2, 3 issue for our industry is and always has been supply. And I think what we're experiencing is we're really starting to see the benefits of that of that reduction and the impact of supply in many markets, right? I can pick to Cape Coral Florida, which may take years and years to finally overcome the burden of the amount of new deliveries there. But as you take it broadly across, we're starting to positive about the direction that we're moving here at Cube. I think we're also obviously seeing the positive impact of the high quality, highest quality portfolio that we have. And I think that portfolio... [Technical Difficulty] Operator: Ladies and gentlemen, we are experiencing some technical difficulties. Please hold. Ladies and gentlemen, thank you for your patience. We will now resume the broadcast. We have Michael Goldsmith on the line. Christopher Marr: Mike, I'm not sure when -- first of all, let me apologize for the technical problems, but we're back. I don't know when I was disconnected there, Michael, because I was on fire. But to just, I think, pick up on the back half of your question on cadence of timing. I think as we're not going to take a date specific, I think we see trends that have been very positive and those positive trends continuing. So whether that's at some point in the third quarter or the fourth quarter on average over the last half of the year, we do see a return to both positive cash flow growth and positive earnings growth. Operator: Your next question comes from the line of Spencer Glimcher with CubeSmart. Please go ahead. Christopher Marr: Spencer, I don't know this can get any funnier, but I don't know when you joined CubeSmart, welcome. Your onboarding will be next week. We'll have a little orientation. Spenser Allaway: Well, naturally, I have no questions then. Still one for me. Look, regulation efforts aren't new to this sector, but there has been slightly more success in passing through legislation on pricing transparency and I just want to get your thoughts on the impact of the recent legislation passed in New York regarding surveillance pricing and whether or not this affects how you set prices of New York Metro. Christopher Marr: Yes. Thanks, Spencer. So the CubeSmart way, if you just think about how we operate is we strongly in all -- with all of our stakeholders and all of the municipalities in which we operate or wish to operate. We believe in an open professional, responsible and reasonable dialogue with our stakeholders in those municipalities, whether that be around a proposed new development of self-storage and having a discussion about certainly why we would believe that self-storage in that location is an ideal use or whether it be how we operate our stores in those markets and getting that feedback. So the reality is often but not always, those are productive and healthy dialogues where we see everybody's point of view. And so specific to New York, but frankly, any municipality in which we operate. As long as that dialogue exists in a responsible and open way, we obviously want to listen to the points of view of the stakeholders and we want to share our point of view with the hope we get to a reasonable place. And as often in those discussions, it's ideal if both parties feel like they didn't get everything they wanted, but we reach a good meeting of the mine. So I think that specifically relates to that pricing, we will continue to look at how we price the tools that we used and be respectful of any sort of guardrails that are set up in the municipalities in which we operate. Operator: Your next question comes from the line of Ravi Medea with Mizuho. Ravi Vaidya: Your guidance forecasts a pretty significant moderation in expenses in the back half of the year. which line items do you think are most likely to benefit here going forward? Christopher Marr: Yes, a couple of things going on there. If you recall from last quarter, we had some pretty heavy winter expenses that impacted the first quarter. So that created that created some pressure on the run rate. You also had last quarter, a pretty big year-over-year increase in marketing spend, which had a lot to do with timing of when we deployed marketing spend last year versus when we did this year. So some of our marketing spend was a little front loaded this year. So I think you'll see a moderation on those two line items. We had a successful property insurance renewal in May. So a little bit of that flows through to some lower property insurance premiums in the back half of the year. And then I also touched on we expect a little bit of moderation on the personnel line item. So it's not really one line item in particular. It's across a bunch of them. And it's just -- this year, we happen to have a little bit of pressure when comparing year-over-year in the first half of the year. And if you look through the guidance, you nailed it. There's a pretty big moderation in expense growth. And I appreciate you asking the question, so I could say it again. Operator: Your next question comes from the line of Juan Sanabria with BMO Capital Markets. Juan Sanabria: Just to start, just curious on if you could comment on the July moving trends and how that trended throughout the second quarter. And maybe if you could comment as part of that around when you expect to and a return to the long-term same-store revenue growth trajectory. I believe previously, you said the second half '27, but wondering if that gets pulled forward with your renewed enthusiasm. Christopher Marr: Yes. Thanks, Juan. So when you think about July, as I mentioned in my prepared remarks, as of yesterday close, we were at a physical occupancy of 91.1%, that's a 30 basis point increase over July 30, 2025. Our rentals for the month of July were 3% higher than they were through the 30th than they were through the 30th of July last year. And on the vacate side, our vacates are also negative 3%, down 3% from where we were through the 30th of July last year. On the cadence, obviously, we continue to see, as I said, green lights that are encouraging and getting us very optimistic about next year. the exact pace and how we hit it is obviously going to be pretty varied based on a variety of factors. So I think we just continue to see that steady growth. We have that inflection to positive cash flow and earnings in the back half of this year and then continue to build off that each quarter through 2027. Juan Sanabria: Could you just let us know what the July move-in rate was? Apologies if that wasn't clear. Christopher Marr: Yes. As we think about, as I mentioned, our pricing systems are optimizing by leaning a bit more towards volume versus rate, which is a little bit different than this time last year. This has been built into our expectations. So we would expect in our base case that early third quarter, we don't see growth year-over-year in asking rents and then those metrics return to positive as we get deeper into the third quarter and through Q4. And I'll caveat all that with the fact that we price in real time. And so our strategy may change from [indiscernible]. Operator: Your next question comes from the line of Viktor Fadiv with Scotiabank. Viktor Fediv: On the Heitman JV, should we think of this as the completion of broader portfolio optimization effort? Or have you identified some additional assets that could be candidates for similar transactions in the near term? And what will be the capital structure of this JV, including expected leverage at the entity level? Christopher Marr: Yes. Thanks for the question. So the -- that's it for now for us on finding opportunities to sell or contribute assets into a venture I wouldn't consider this necessarily portfolio burning. We really like our portfolio. This transaction was more geared towards in the current environment, what can we do to increase our ability to fund share repurchases in a way that's leverage neutral. And this was a good opportunity for us to accomplish a number of things. from a strategic standpoint, improving the quality of the portfolio, having an additional path for future external growth with a long-term partner in Heitman and from a leverage standpoint, the venture does expect to put leverage on the venture the amount and the timing of that is still a little bit up in the air. We don't expect to close on this until the fourth quarter. So there's a little bit of time to settle all those moving pieces, but it wouldn't surprise me if ultimately, we ended up having somewhere in the neighborhood of 50% leverage on the venture, but that's still to be decided. Operator: Your next question comes from the line of Todd Thomas with KeyBanc. Please go ahead. Todd Thomas: I wanted to ask about occupancy specifically, you saw occupancy continue to build through quarter end and commented that occupancy has increased slightly higher in July rentals up 3% in July 2. It seems like the rental season extended a bit further than prior years. Has the strength in rental activity persisted throughout the July period? Is there any sense whether that might continue into August sort of up until sort of the Labor Day weekend, which I think historically has been more typical of the leasing season. And any sense what's driving the improving trends and really more of this traditional leasing season versus some of the more prior years? Christopher Marr: Yes. Thanks. Great question. So the trends we have seen are not quite at those levels that, again, we always struggle with what's normal here looking backwards. But if you think about that 2016, 2018 sort of time period, typically, we would have seen peak a little bit deeper into July. So this is a lot closer to that than certainly we've seen over the last 3 years, not all the way back there. So as we -- base case expectations, we would assume as we get into August here, and we start to see the college students vacate and go back to school and the other typical patterns that we'll have -- we see good green lights for August, but don't expect to see any aberration in sort of normal behavior. And then that's sort of our base case expectation as we get through the fall and into the winter. So I think the cause of the positive trends. Again, I go back to the resilience of the business and the fact that we're not reliant upon one particular source of demand. So I think it is just this continued awareness of the product, continued awareness of our brand and I think the continued reduction in the impact of new supply, which again, I would place is probably the primary reason for why we're experiencing what we're experiencing. Todd Thomas: Okay. And then I wanted to go back to the question around the New York City regulation on pricing and licensing requirements. Just curious to get your thoughts whether -- does that impact asset pricing or underwriting in any way? Does that sort of change the landscape in New York City at all in your view? Christopher Marr: No. I think the thing that it changes in the landscape in New York City is, unfortunately, and we feel bad for the smaller operators, I think it's -- the ultimate burden is significantly higher on them. When you think about the types of things that are being discussed, many of them are already ingrained in the day-to-day practices of us and our larger peers. So I think it only will make it more attractive for folks look at Cube and our position and our execution in that market. And you can see the you can see the metrics that are disclosed. We are outperforming in the New York MSA, and I think we will to do that, and that will make us even more attractive as an option, either as an owner of that asset if that small operator wishes to sell or as a third-party manager if they wish to partner up with. Operator: Your next question comes from the line of Nick Joseph with Citi Bank. Your line is open. Please go ahead. Nicholas Joseph: Maybe just following up on that question. It sounds like you're already doing many of the requirements in New York City, but have you had to implement any new practices ahead of it, like allergen testing or anything else to comply? Christopher Marr: Yes. At this point, anything, we have not done anything meaningfully different than we have been doing in New York state or elsewhere in the country. I think we're all sort of navigating through all of this as it's sort of evolving, but have not identified anything yet that would be a material deviation to our normal practices. Nicholas Joseph: And you talked about kind of the debt markets earlier. Just curious where you think you could price 10-year debt today if you go down that road. Christopher Marr: Yes. So if we were looking at a 10-year today, it would probably be in the mid-5s, maybe a little higher and then a 7-year call it, 50 basis points inside of that. So we're actively monitoring the markets. The 10-year obviously, has been pushing up a little bit here in recent weeks and there's an awful lot of volatility in the world. And so that's the not so great news. The good news is that we have a tremendous amount of flexibility as we have additional capacity on the revolver, and we have nothing maturing in 2027. So we have a good bit of time to be patient and opportunistic as we think about long-term strategy from a debt perspective. Operator: Your next question comes from the line of Michael Mueller with JPMorgan. Michael Mueller: So Chris, outside of COVID, when you look back at recoveries over the past 30-plus years or so, what was the largest same-store revenue increase that you remember seeing in a single year? Christopher Marr: Yes, 30 years, a long time. So I'm not sure I'm going to get this 100%. But I think if you eliminate the COVID year something in that 7% to 8% kind of quarterly same-store revenue growth was probably the next highest and I think that was for a couple of straight years. I think that was like 2012, '13, '14. Timothy Martin: Coming out of GFC, and there was no supply -- so the complete lack of supply led to multiple years of 7-plus percent type top line growth. Nicholas Joseph: Got it. Okay. And if you're thinking about a level of improvement from 1 year to the next, for example, if you're starting at 0. What was the most you were calling in a year? That wasn't a 7% revenue improvement here? Christopher Marr: I have -- my memory is not that good. I think again, I think if you -- even if you think about COVID and how quickly that happened, because of the churn, right, there's only so many customers vacating each month, which is -- that churn is lower than it was historically. It takes a couple of quarters to get elevated to that level. Operator: Your next question comes from the line of Brendan Lynch with Barclays. Please go ahead. Brendan Lynch: You guys have been kind of talking about the setup for 2027. Certainly, supply can't come back online fast enough to impact next year. Chris, you also mentioned the resiliency of the self-storage demand we've seen lots of countercyclical demand drivers and past challenging macro environments. So I guess the question is, what are the risks that could cause a deceleration relative to the outlook that you're kind of presenting here today? Christopher Marr: Yes. Great question. Again, I'll keep coming back and pound in the drum that the biggest headwind for storage is and always has been supply. And as you noted, we don't see at this stage of 2026. Any material increase in supply or its impact certainly in '27. So at this stage, I would say that risk is low. I think the second risk that has always created a near-term challenge for our industry. Is any sort of black swan event that causes the consumer to freeze in place. So if you think about some of the unfortunate events, the onset of COVID, the GFC and the related bankruptcies can go all the way back to -- those typically have a short-term impact on move-ins as consumers tend to freeze in place and stop making decisions. They also then tend to have the corresponding effect where you see vacate volumes decline. And it takes a while until the consumer recovers. But those type impacts have typically been weeks if maybe a month or 2 months and then the industry tends to bounce right back. Brendan Lynch: Great. That's helpful. And then maybe one for Tim, just on [indiscernible]. I think you suggested there's going to be some moderation in the year-over-year comp for personnel -- just walk us through your thoughts on running a little bit leaner on the labor front versus maybe adding a little bit more head count to maintain the in-person relationships in the facilities themselves. Timothy Martin: Yes, I think it's always that balance of trying to find the optimal staffing levels to provide the level of customer service that we insist on providing. And the changes and the evolution on that line item really date back to things that we did last year. And so later in 2025 we saw a little bit of pressure on that line item as we were adding back some store hours and making some adjustments that increased the level from where we had reduced it to. And so I think what you're going to see here in the back half of the year is just getting up against those comps. And so the first half of the year saw a more difficult comp for adjustments that we made over time during 2025. We feel like we're in a great spot right now. from a combination of staffing, technology and our approach to attracting new customers and making sure that we're providing great service to our existing customers. And so nothing that we're doing today, more stuff that we did about a year ago. Operator: Your next question comes from the line of Omotayo Okusanya with Deutsche Bank. Please go ahead. Omotayo Okusanya: Quick question just the Sunbelt markets and some of your earlier comments. Can you just kind of talk us through how you're thinking about recovery in part of a few of those markets, again, you did mention that oversupply in places like Fort Myers, really could be a multiyear problem. But I just kind of think through those markets and you're trying to think about potential inflection. How should we be thinking about that, whether it's a year away, 2 years away? Or just whatever kind of Chris, whatever your comfort ball is telling you selling some of you appreciated? Christopher Marr: Yes. So I think as everyone knows, this is a micro market business. So even within Sunbelt markets, we see pockets that are improving more rapidly than others, likely largely due to, again, that impact of the new construction, the new supply that has been brought on board adjacent to those same stores in those markets. So I think it's improving. If you look at the sequential results, as we mentioned, you're seeing the same-store revenues going in a good direction. I think it will be unique to each individual market, like let's use Miami as an example. There, you had an awful lot of supply, but an attractive and continues to be an attractive place both for individuals and businesses to work and live. And I think we saw that supply get absorbed fairly expediently and you've seen results in Miami move a little bit quicker towards and into positive growth territory. I think the major Texas markets and the Southwest, it will be a bit slower and gradual how to predict which quarter or which date things flip positive. That's really difficult to say. But I do think we'll just kind of see this continued gradual recovery throughout the balance of 2026. Operator: Your next question comes from the line of Juan Sanabria with BMO Capital Markets. Please go ahead. Juan Sanabria: Storage is so sexy I had to come in twice. Just hoping -- just following up on the JV and investments discussion for CBRE and Heitman, is the topic going forward, those 2 ventures would acquire in the open market going forward to grow. And I think Tim, you said something about like a falling or something in your prepared remarks and just curious if you could elaborate on that. Timothy Martin: Yes, I think the most likely avenue for growth in each of those ventures would be would be open market opportunities, perhaps things that we manage currently that we can find a home for. And each of those ventures and each of those partners have areas of focus that range from the type of opportunity as far as return profile, early-stage lease-up, stabilized, looking at different markets. And so the great thing for our investments team having each of those partners is -- gives us the ability to pursue a pretty wide range of opportunities, and that's pretty exciting. I think the -- what was the second part of your question? Juan Sanabria: You mentioned, I think, some falling in the acquisition market, maybe more product coming to market, just kind of elaborate. Timothy Martin: Yes, hasn't fall off all that much for us, but I think you're starting to see some momentum and a lot more things that are -- I think the brokerage community is pretty excited about the things that are starting to come across their plates. I think there continues to be an evolution that the market is what the market is. And I think sellers understand where buyers are and vice versa, and it feels like it's getting a little bit more constructive and the thing that hasn't changed is that it certainly feels like there is a wave of opportunity that is coming, and we've talked about that in prior quarters. I just think you have an awful lot of self-storage assets that are held by folks who want liquidity, some who are going to need liquidity, you have things in closed-end funds that ultimately have to close. And you've had a fairly -- you've had a really modest amount of transactions here now for 2 years running. And so certainly feel like the dam is going to break, and when it does, there's going to be an awful lot of opportunity. And from a CubeSmart perspective, we want to make sure that we're in the best position we can be in to take advantage of that, and that's what we're preparing to do. Juan Sanabria: And then lastly, just to be -- sorry to be greedy here. On the labor front and the wages, just curious on where you think we are in the optimization of FTEs or what have you. And kind of are we at a max in terms of efficiency gains? Or what you think the future may hold. Christopher Marr: Yes. Thanks, Juan. I think that's an area that is likely subject to continued evolution. I think on the service delivery front and especially in our or more dense urban markets, you continue to see the value of having our teammates in the stores, keeping them clean and providing great customer service. I think as we as we continue to evolve in our utilization of AI looking for ways where that can enhance customer service. Many of those will be hand-in-hand with our teammates delivering. And so I would expect that while that may not that will likely translate into revenue gains on the efficiency side more than necessarily focused on the cost side of things. But the markets that the technology and the opportunities to serve and then also our customers' preferences continue to evolve, and we would expect that we would expect those trends to be continuing, as I described. Operator: We have reached the end of the Q&A session. I will now turn the call back to Chris Marr for closing remarks. Christopher Marr: All right. Thanks, everybody, for participating today. We apologize for the technical difficulties. I'm told that we can blame Michael Goldsmith if we need to. But as we look forward here, we are excited about the return to growth. return to growth in cash flows, return to growth in earnings, returning to growing our assets under management, whether that be through our excellent third-party management platform acquiring stores with our partners or on balance sheet, and we will continue to execute on that growth in a very disciplined way laser-focused on creating shareholder value. So thank you all. Look forward to seeing you in the future and talking to you again next quarter. Operator: This concludes today's call. Thank you for attending. You may now disconnect. Before you buy stock in CubeSmart, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and CubeSmart wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. 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As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. CubeSmart (CUBE) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

This story was originally published on CRE Daily. Join 70,000+ commercial real estate professionals getting daily news, market insights, and industry analysis delivered straight to their inbox with the free CRE Daily newsletter. The top three US self-storage REITs released Q2 2026 results signaling steady fundamentals with some divergence in NOI growth and expense trends. CubeSmart, Extra Space, and Public Storage reported varied same-store metrics, with Extra Space outperforming in NOI while Public Storage closed a major $10.5B acquisition. Operators are signaling ongoing appetite for property expansion and management platforms, despite rising operating costs and some revenue headwinds. CubeSmart, Extra Space Storage, and Public Storage reported Q2 2026 earnings, according to Inside Self-Storage. Results showed steady occupancy, firmer move-in pricing, and continued efficiency efforts. Public Storage also closed its $10.5B NSA deal after the quarter ended, reshaping the competitive landscape. Steady rental demand supported high occupancy across the sector. However, rising expenses continued to pressure margins. Operators still expanded through acquisitions and third-party management despite uneven revenue growth. CubeSmart reported adjusted FFO of $0.63 per diluted share. Same-store NOI fell 0.7% year over year. Revenue declined 0.8%, while expenses rose 4.4%. Average occupancy reached 90.4%, ending the quarter at 91%. The REIT owns or manages 1,534 facilities. Extra Space increased same-store revenue 2.4% and same-store NOI 3.5%. Expenses fell 0.5%, while occupancy reached 94.2%. The company expanded its third-party management platform to 2,373 properties. It also acquired $90.7M of facilities. Public Storage posted a 74.2% same-store NOI margin. Revenue fell 0.6%, while operating costs rose 4.4%. Occupancy improved to 92.5% as move-in rents recovered from Q1. The company acquired 20 properties for $222.5M. It also announced the $10.5B NSA acquisition and a $1.2B purchase of Public Storage Canada. Operators continue balancing rising costs with expansion. CubeSmart’s property expenses increased by $7M during Q2. Higher payroll and property taxes drove the increase. Still, the company added 25 stores to its management platform. Extra Space stood apart by lowering same-store expenses while expanding operations. Meanwhile, Public Storage doubled down on scale. Its NSA acquisition expands its US footprint. The biggest operators also face tougher competition for customers in major markets, making portfolio scale increasingly valuable. Its Canadian acquisition adds 68 properties. Planned development and expansion projects could add another 4M SF. Across the sector, operators rely on acquisitions and management growth to offset rising operating costs. These earnings highlight the balancing act facing self-storage REITs in 2026. Companies continue pursuing growth while managing higher operating costs. Occupancy remained healthy across the sector. Public Storage ended Q2 at 92.5%, Extra Space at 94.2%, and CubeSmart at 91%. Revenue trends, however, diverged. Extra Space outperformed peers in same-store NOI through disciplined cost control. CubeSmart and Public Storage both faced 4.4% annual expense growth. Public Storage also reported a 0.6% revenue decline despite higher occupancy. Lower annual rent per occupied SF weighed on results. Public Storage’s NSA acquisition also reflects accelerating industry consolidation. Larger deals strengthen market leaders but increase integration risks. These results set new benchmarks for efficiency, scale, and disciplined execution. All three REITs plan to keep expanding management platforms, pursuing acquisitions, and developing new facilities. Public Storage leads with 2.8M SF under development and a strong acquisition pipeline. Extra Space and CubeSmart also entered Q3 with larger third-party management portfolios. Investors will watch expense inflation, property taxes, and rental pricing through the rest of 2026. Slower rent growth or weaker occupancy could pressure margins further. For now, sector stability depends on scale, disciplined cost control, and careful portfolio expansion. Dallas-Fort Worth Rents Dip as Apartment Supply Grows Austin Multifamily Rents Edge Up as Supply Pressures Build Texas Multifamily Supply Dips as Investors Move Ahead of Rents

Interested in CubeSmart? Here are five stocks we like better. Operating trends improved: Second-quarter same-store revenue increased 0.8% year over year, occupancy reached 91.1%, and rental volumes rose 3% while vacates fell 3%. Strength was concentrated in Northeast and Midwest markets, while Sun Belt markets remained pressured by new supply. Guidance was raised: CubeSmart increased its full-year same-store revenue growth outlook to 0.5%–1.25% and expects expense growth to moderate, supporting a return to positive same-store NOI and adjusted FFO-per-share growth in the second half of 2026. Capital allocation and liquidity improved: A new Heitman joint venture involving 15 non-core properties is expected to fund share repurchases, while the company expanded its revolving credit facility to $1 billion and extended its maturity to 2030. Look To REITs For Reliable Yield Even In Recessionary Environment CubeSmart (NYSE:CUBE) said second-quarter operating trends improved across much of its portfolio, prompting the self-storage real estate investment trust to raise its full-year same-store revenue outlook and project a return to positive earnings growth in the second half of 2026. President and Chief Executive Officer Chris Marr described 2026 as “a year of inflection” after operating fundamentals stabilized in 2025. He said same-store revenue turned positive early this year and that the company expects continued acceleration through the remainder of 2026, creating what management views as a favorable setup for 2027. → Why SK hynix Could Be the Best AI Chip Stock to Buy Now 3 Rewarding REITs to Buy Now Same-store revenue rose 0.8% year over year in the second quarter, accelerating from 0.6% growth in the first quarter, according to Chief Financial Officer Tim Martin. CubeSmart reported adjusted funds from operations per share of $0.63, at the midpoint of its prior quarterly guidance. Marr said the company experienced a productive spring and summer rental season, closing its occupancy gap versus 2025 by the end of June. As of July 30, same-store physical occupancy was 91.1%, up 30 basis points from the same date a year earlier. → Microsoft Just Flipped the AI Spending Narrative Overnight CubeSmart (NYSE: CUBE) Stock is a Smart Pullback Play July rental volumes were 3% above the comparable 2025 period through July 30, while vacates were down 3%, Marr said. He added that CubeSmart’s pricing systems were favoring occupancy growth over rate during the early third quarter, and the company did not expect year-over-year asking-rent growth at that point. Management expects asking-rent metrics to return to positive territory later in the third quarter and through the fourth quarter, although Marr said pricing decisions may change week to week. Second-quarter move-in rates for new customers increased 1.7% year over year and improved 80 basis points sequentially. Marr said customer credit metrics remained stable, vacate activity was lower, and customer lengths of stay were increasing. → Carrier Earnings Could Send the Stock to a New All-Time High The company cited strength in markets along the Acela Corridor, including Boston, Stamford, New York and Philadelphia, as well as Chicago, Columbus and Cleveland. Marr also pointed to improving conditions in West Coast markets, with Inland Empire and Los Angeles properties returning to positive year-over-year same-store revenue growth during the second quarter. Sun Belt markets continued to face more pressure from new supply and consumer-related macroeconomic challenges. Marr said recovery will vary by market and described it as gradual, noting that Miami has absorbed supply more quickly while major Texas and Southwest markets may take longer to improve. He said certain heavily supplied areas, such as Cape Coral, Florida, could take years to work through excess new deliveries. CubeSmart raised its full-year same-store revenue growth guidance to a range of 0.5% to 1.25%. At the midpoint, the outlook assumes growth will accelerate during the second half of the year. Same-store operating expenses increased 4.4% year over year in the second quarter, while same-store net operating income declined 0.7%. The company narrowed and modestly improved its full-year same-store expense-growth guidance to 3.25% to 4.5%. Martin said the expected moderation in expenses during the second half reflects several factors, including difficult first-half comparisons tied to winter costs, timing of marketing spending, lower property insurance premiums following a May renewal, and moderation in personnel costs. “The midpoint of our same-store NOI range implies returning to positive growth in the second half of the year, and the midpoint of our FFO per share’s adjusted guidance range also implies returning to positive earnings growth in the back half,” Martin said. CubeSmart announced a new joint venture with Heitman that will receive 15 assets classified by the company as non-core. CubeSmart will retain a 20% ownership interest in the venture, which is expected to close in the fourth quarter. The contributed properties are either in isolated markets or in outer-ring locations within core markets, Martin said. He characterized the transaction’s valuation as being in the “mid-fives” from a capitalization-rate perspective. Proceeds from the transaction are expected to fund share repurchases, which CubeSmart said would provide a leverage-neutral way to invest in its shares. The company repurchased $42.5 million of stock during the second quarter, bringing year-to-date repurchases to $75.8 million. Martin said the joint venture may eventually employ leverage of roughly 50%, though the amount and timing have not been finalized. He said CubeSmart does not currently have additional assets identified for similar sales or contributions, emphasizing that the transaction was designed to support repurchases, improve portfolio quality and create another avenue for external growth. CubeSmart also added 25 stores to its third-party management platform during the quarter, ending the period with 872 third-party stores under management. Management said the company’s ventures with Heitman and CBRE could pursue open-market acquisitions and potentially provide an outlet for properties CubeSmart already manages. During the quarter, CubeSmart extended and expanded its revolving credit facility. The facility’s maturity was extended from February 2027 to June 2030, capacity increased to $1 billion from $850 million, and pricing improved, Martin said. The company has a bond maturing next quarter but no debt maturities in 2027. Martin said CubeSmart was monitoring debt markets and estimated that 10-year debt could currently price in the mid-5% range, with seven-year debt approximately 50 basis points lower. Marr said the principal risk to the company’s outlook remains new supply, although management does not currently expect a material increase in supply pressure during 2027. He also cited the possibility of major disruptive events that could temporarily cause consumers to delay move-in decisions, though he said such effects have historically been short-lived for the self-storage sector. CubeSmart (NYSE: CUBE) is a publicly traded real estate investment trust (REIT) specializing in the ownership, operation and management of self-storage facilities across the United States. The company's portfolio comprises properties in primary and secondary markets, catering to both individual and business customers seeking flexible, short-term and long-term storage solutions. CubeSmart's facilities feature a range of unit sizes, climate-controlled options and advanced security features, supported by on-site managers and centralized customer service operations. In addition to traditional self-storage units, CubeSmart offers specialty services such as vehicle and boat storage, retail sales of packing and moving supplies, and tenant insurance programs. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "CubeSmart Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for July 2026.

This article first appeared on GuruFocus. Same-Store Revenue Growth: Accelerated to 0.8% year-over-year in Q2 2026, up from 0.6% in Q1 2026. Same-Store Operating Expenses: Grew 4.4% year-over-year in Q2 2026. Same-Store NOI Growth: Negative 0.7% for Q2 2026, reflecting revenue growth of 0.8% combined with 4.4% expense growth. FFO per Share (Adjusted): $0.63 for Q2 2026, at the midpoint of guidance. Move-In Rates: Up 1.7% year-over-year for new customers in Q2 2026. Same-Store Physical Occupancy: 91.1% as of July 30, 2026, a 30-basis point increase over July 30, 2025. Share Repurchases: $42.5 million in Q2 2026, bringing year-to-date total to $75.8 million. Third-Party Management: Added 25 stores in Q2 2026, ending the quarter with 872 third-party stores under management. Full-Year 2026 Same-Store Revenue Guidance: Improved to a range of 0.5% to 1.25%. Full-Year 2026 Same-Store Expense Guidance: Improved to a range of 3.25% to 4.5%. Warning! GuruFocus has detected 5 Warning Sign with CUBE. Is CUBE fairly valued? Test your thesis with our free DCF calculator. Release Date: July 31, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Same-store revenues returned to positive growth in Q2 2026, with acceleration expected in the second half of the year. Move-in rates for new customers increased 1.7% year-over-year, with strong performance in key markets like the Acela Corridor and New York. Customer health remains strong, with lower vacate activity, longer lengths of stay, and solid credit metrics. Executed a new joint venture with Heitman, contributing non-core assets to unlock value and fund accretive share repurchases. Expanded and extended the revolving credit facility to $1 billion with maturity in 2030, enhancing balance sheet flexibility. Same-store operating expenses grew 4.4% year-over-year, outpacing revenue growth and leading to negative same-store NOI growth of 0.7% in Q2. Macro volatility is impacting the US consumer, creating a challenging new customer pricing environment in Sunbelt markets. New supply continues to pressure certain markets, such as Cape Coral, Florida, which may take years to fully absorb. The company expects no year-over-year growth in asking rents in early Q3 as pricing algorithms prioritize volume over rate. The Heitman JV transaction is not expected to close until Q4, with leverage and timing details still uncertain. Q: Chris, in your prepared remarks, you talked about some key performance indicators flashing green. Is this just move-in rents getting better year over year as a result of better comps and moderating supply, or is there anything on the organic demand side that you're seeing differently?A: Christopher Marr (President and CEO): It's the full menu. We're seeing very good top-of-funnel demand with a diverse set of use cases for the product. We're continuing to see existing customer health, credit metrics, and lengths of stay be very positive. We're seeing strength in the East Coast and middle of the country, with improving green shoots in the Sunbelt on move-in rates. On the OpEx side, we're seeing trends get better as we go into the back half of the year. Q: On the new joint venture with Heitman, can you share pricing or cap rates? It seems like near-term priorities are share repurchases. How do you weigh proceeds being used for buybacks versus potential acquisition opportunities?A: Timothy Martin (CFO): I consider the share repurchases and the Heitman transaction to absolutely be playing offense in the current environment. It allows us to improve the quality of our portfolio and take advantage of contributing these assets at a market valuation, which I would characterize in the mid-5s from a cap rate perspective. We can use those proceeds to take advantage of the disconnect between public and private valuations. This gives us yet another vehicle for future growth opportunities with Heitman, and we are ready to get to that part of the offensive playbook when the time is right. Q: You sounded more optimistic than you have been in some time. What is specifically driving that, and what is the cadence that creates the setup for 2027?A: Christopher Marr (President and CEO): The first part of the year has been strong and broad-based in terms of demand. We are seeing the benefits of the reduction in the impact of supply in many markets. We are also seeing the positive impact of our high-quality portfolio. On the cadence, we see trends that have been very positive and those positive trends continuing. Whether that's at some point in the third quarter or the fourth quarter, on average over the last half of the year, we do see a return to both positive cash flow growth and positive earnings growth. Q: There has been more success in passing legislation on pricing transparency. What are your thoughts on the recent legislation passed in New York regarding surveillance pricing, and does this affect how you set prices in the New York Metro?A: Christopher Marr (President and CEO): The CubeSmart way is to have an open, professional, responsible, and reasonable dialogue with all stakeholders in the municipalities in which we operate. Specific to New York, but frankly any municipality, as long as that dialogue exists in a responsible and open way, we want to listen to the points of view of stakeholders and share our point of view. We will continue to look at how we price and the tools we use, and be respectful of any sort of guardrails that are set up in the municipalities in which we operate. Q: Your guidance forecasts a pretty significant moderation in expenses in the back half of the year. Which line items are most likely to benefit?A: Timothy Martin (CFO): A couple of things are going on. We had heavy winter expenses in the first quarter and a big year-over-year increase in marketing spend that was front-loaded this year. We had a successful property insurance renewal in May, so lower premiums will flow through in the back half. We also expect a little bit of moderation on the personnel line item. It's not really one line item in particular; it's across a bunch of them. Q: Can you comment on July moving trends and when you expect a return to the long-term same-store revenue growth trajectory?A: Christopher Marr (President and CEO): As of July 30, we were at a physical occupancy of 91.1%, a 30-basis point increase over July 30, 2025. Our rentals for the month of July were 3% higher than last year, and vacates are down 3%. We continue to see green lights that are encouraging and getting us very optimistic about next year. We have that inflection to positive cash flow and earnings in the back half of this year and then continue to build off that each quarter through 2027. Q: On the Heitman JV, should we think of this as the completion of a broader portfolio optimization effort, or have you identified additional assets for similar transactions? What will be the capital structure, including expected leverage?A: Christopher Marr (President and CEO): That's it for now on finding opportunities to sell or contribute assets into a venture. This transaction was more geared towards increasing our ability to fund share repurchases in a way that's leverage neutral. From a leverage standpoint, the venture does expect to put leverage on, but the amount and timing is still up in the air. We don't expect to close until the fourth quarter, but it wouldn't surprise me if we ended up with somewhere in the neighborhood of 50% leverage on the venture. Q: You saw occupancy continue to build through quarter end, and rentals are up 3% in July. Has the rental season extended further than prior years, and what's driving the improving trends?A: Christopher Marr (President and CEO): The trends we have seen are not quite at the levels of the 2016-2018 time period, but this is a lot closer to that than what we've seen over the last 3 years. We would assume as we get into August, we'll see good green lights but don't expect an aberration in normal behavior. The cause of the positive trends goes back to the resilience of the business and the continued reduction in the impact of new supply, which I would place as the primary reason for what we're experiencing. Q: Does the New York City regulation on pricing and licensing requirements impact asset pricing or underwriting in any way? Does it change the landscape in New York City?A: Christopher Marr (President and CEO): The thing it changes is that the ultimate burden is significantly higher on smaller operators. Many of the things being discussed are already ingrained in the day-to-day practices of us and our larger peers. It will make it more attractive for folks to look at Cube and our position in that market. We are outperforming in the New York MSA, and that will make us even more attractive as an option, either as an owner of an For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Management characterized 2026 as a year of inflection, with same-store revenues turning positive in the first half and a projected return to positive earnings growth in the second half. Performance is being driven by the 'resilience of the self-storage business' and a diverse set of need-based demand sources, reducing reliance on any single consumer segment. The impact of new supply is explicitly cited as the primary headwind that is now 'dissipating' in core markets, allowing for improved pricing power and occupancy gains. Operational strength is particularly noted in the East Coast and Midwest, while West Coast markets like Los Angeles and the Inland Empire showed 'very strong sequential improvement' back into positive territory. Management highlighted that customer health remains robust, evidenced by lower vacate activity, elongating lengths of stay, and stable credit metrics despite macro volatility. The company is leaning into a volume-over-rate strategy in the near term, using pricing algorithms to build physical occupancy heading into the fall season. Full-year same-store revenue guidance was raised to 0.5% to 1.25%, assuming continued acceleration in the back half of the year. Management expects a 'nice setup for 2027' as supply impacts continue to fade and the portfolio benefits from a return to positive cash flow growth. Expense growth is projected to moderate significantly in the second half of 2026 due to easier year-over-year comparisons and lower property insurance premiums following a May renewal. The company anticipates asking rents will return to year-over-year growth deeper into the third quarter and through the fourth quarter of 2026. Strategic focus remains on 'portfolio optimization,' utilizing joint ventures to unlock capital from non-core assets for accretive share repurchases. Announced a new joint venture with Titan, contributing 15 non-core assets at a 'mid-5s' cap rate to unlock value and improve overall portfolio quality. Executed $75.8 million in share repurchases year-to-date, viewing the stock as an attractive investment due to the disconnect between public and private market valuations. Expanded revolving credit facility capacity to $1 billion and extended maturity to 2030, providing flexibility with no debt maturities until 2027. Management addressed new New York City pricing transparency regulations, stating they do not expect a material impact as their existing practices already align with most requirements. Management clarified that 'green lights' include top-of-funnel demand, existing customer health, and sequential improvements in Sunbelt 'green shoots.' Noted that customers are staying longer on their 'storage journey,' which provides a stable base for revenue growth. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. The JV is viewed as 'playing offense' by allowing the company to sell assets at market rates and reinvest in their own shares at a discount. The venture is expected to carry approximately 50% leverage and serves as a vehicle for future external growth opportunities. July rentals were up 3% year-over-year through the 30th, while vacates were down 3%, leading to a 30 basis point increase in physical occupancy to 91.1%. The rental season is behaving more like the 'normal' 2016-2018 period, with peak activity extending deeper into July than in recent years. Management believes the regulatory burden will be higher for smaller operators, potentially making CubeSmart a more attractive partner or acquirer. Confirmed they have not yet identified any requirements that would necessitate a 'material deviation' from their current operating practices. Management senses a 'wave of opportunity' coming as sellers in closed-end funds seek liquidity after two years of modest transaction volume. Indicated that the brokerage community is seeing more product come to market as buyer and seller expectations begin to align.

MALVERN, Pa., July 30, 2026 (GLOBE NEWSWIRE) -- CubeSmart (NYSE: CUBE) today announced its operating results for the three and six months ended June 30, 2026. “Second quarter results reflected continued momentum in operating fundamentals, highlighted by steady acceleration in same-store revenue growth driven by improving occupancy trends and strengthening new customer pricing across the portfolio,” commented President and Chief Executive Officer Christopher P. Marr. “The formation of our new Heitman joint venture unlocks value from our portfolio and provides an accretive source of capital to support share repurchases, while maintaining the financial flexibility to capitalize on future investment opportunities.” Key Highlights for the Second Quarter Reported diluted earnings per share (“EPS”) attributable to the Company’s common shareholders of $0.39. Reported funds from operations (“FFO”), as adjusted, per diluted share of $0.63. Same-store (623 stores) net operating income (“NOI”) decreased 0.7% year over year, resulting from a 0.8% increase in revenues and a 4.4% increase in operating expenses. Same-store occupancy averaged 90.4% during the quarter, ending at 91.0%. Amended and restated our unsecured revolving credit facility, increasing the size from $850 million to $1 billion, improving the pricing, and extending the maturity date to June 2030. Repurchased 1.1 million common shares of beneficial interest through our share repurchase program for $42.5 million at an average purchase price of $38.96 per share. Added 25 stores to our third-party management platform, bringing our total third-party managed store count to 872. Financial Results Net income attributable to the Company’s common shareholders was $89.6 million for the second quarter of 2026, compared with $83.0 million for the second quarter of 2025. Diluted EPS attributable to the Company’s common shareholders increased to $0.39 for the second quarter of 2026, compared with $0.36 for the same period last year. FFO, as adjusted was $143.1 million for the second quarter of 2026 compared with $148.9 million for the second quarter of 2025. FFO, as adjusted, per diluted share decreased 3.1% to $0.63 for the second quarter of 2026, compared with $0.65 for the same period last year. Investment Activity Disposition Activity Subsequent to June 30, 2026, the Company entered into an agreement to contribute 15 wholly-owned stores to a newly-formed joint venture with an affiliate of Heitman Capital Management (“Heitman”) for an agreed-upon value of $197.0 million. The Company will receive cash and own a 20% interest in the joint venture, while Heitman will contribute cash and own the remaining 80% interest. The stores subject to the agreement contain approximately 0.9 million square feet and are located in Connecticut (3), Georgia (1), North Carolina (2), Ohio (1), Texas (2), Utah (4) and Virginia (2). The transaction is expected to close in the fourth quarter of 2026. Development Activity The Company has agreements with developers for the construction of self-storage properties in high-barrier-to-entry locations. As of June 30, 2026, the Company had one joint venture development property under construction. The Company anticipates investing a total of $28.0 million related to this project and had invested $8.7 million of that total as of June 30, 2026. The development property is located in New York and is expected to open during the third quarter of 2027. Third-Party Management As of June 30, 2026, the Company’s third-party management platform included 872 stores totaling 57.5 million rentable square feet. During the three and six months ended June 30, 2026, the Company added 25 and 58 stores, respectively, to its third-party management platform. Same-Store Results The Company’s same-store portfolio as of June 30, 2026 included 623 stores containing 45.2 million rentable square feet, or approximately 93.3% of the aggregate rentable square feet of the Company’s 662 consolidated stores. These same-store properties represented approximately 94.8% of the Company’s property NOI for the three months ended June 30, 2026. Same-store physical occupancy as of both June 30, 2026 and 2025 was 91.0%. Same-store total revenues for the second quarter of 2026 increased 0.8% and same-store operating expenses increased 4.4% compared to the same quarter in 2025. Same-store NOI decreased 0.7% from the second quarter of 2025 to the second quarter of 2026. Operating Results As of June 30, 2026, the Company’s total consolidated portfolio included 662 stores containing 48.5 million rentable square feet with physical occupancy of 90.7%. Total revenues increased $4.2 million and property operating expenses increased $7.0 million for the second quarter of 2026, as compared to the same period in 2025. The increase in revenues was primarily attributable to higher rental rates in our same-store portfolio, while the increase in property operating expenses was primarily attributable to increases in personnel expenses and property taxes. Interest expense increased from $29.1 million during the three months ended June 30, 2025 to $30.3 million during the three months ended June 30, 2026, an increase of $1.2 million. The increase was attributable to an increase in the average outstanding debt balance and higher interest rates during the 2026 period compared to the 2025 period. The average outstanding debt balance increased from $3.43 billion during the three months ended June 30, 2025 to $3.51 billion during the three months ended June 30, 2026. The weighted average effective interest rate on our outstanding debt increased from 3.32% during the three months ended June 30, 2025 to 3.33% for the three months ended June 30, 2026. Financing Activity In June 2026, the Company amended and restated its unsecured revolving credit facility. The amendment increased the size of the facility from $850 million to $1 billion, improved the pricing, and extended the maturity date from February 2027 to June 2030. During the three months ended June 30, 2026, the Company repurchased 1.1 million common shares of beneficial interest through its share repurchase program for $42.5 million, resulting in an average purchase price of $38.96 per share. As of June 30, 2026, 10.1 million shares remained available for repurchase under this program. Quarterly Dividend On May 19, 2026, the Company declared a quarterly dividend of $0.53 per common share. The dividend was paid on July 15, 2026 to common shareholders of record on July 1, 2026. 2026 Financial Outlook “Strong operating performance through the first half of the year has resulted in increases to the midpoint of our same-store revenue, same-store NOI, and FFO guidance ranges,” commented Chief Financial Officer Tim Martin. “In the quarter, we continued to enhance our liquidity profile and execute our disciplined capital allocation strategy through the expansion of our revolving credit facility and through share repurchases at prices that represent compelling long-term value.” The Company estimates that its fully diluted earnings per share for 2026 will be between $1.58 and $1.64, and that its fully diluted FFO per share, as adjusted, for 2026 will be between $2.54 and $2.60. Due to uncertainty related to the timing and terms of transactions, the impact of any potential future speculative investment activity is excluded from guidance. For 2026, the same-store pool consists of 623 properties totaling 45.2 million rentable square feet. Conference Call Management will host a conference call at 11:00 a.m. ET on Friday, July 31, 2026 to discuss financial results for the three months ended June 30, 2026. A live webcast of the conference call will be available online from the investor relations page of the Company’s corporate website at investors.cubesmart.com. Telephone participants may join on the day of the call by dialing 1 (833) 461-5787 using conference ID number 574860863. Registered financial analysts participating on the call may avoid delays by pre-registering using the following link: https://events.q4inc.com/analyst/574860863?pwd=XXrIBM1q. A replay of the webcast will be available on the Company’s website following the live event. Supplemental operating and financial data as of June 30, 2026 is available in the investor relations section of the Company’s corporate website. About CubeSmart CubeSmart is a self-administered and self-managed real estate investment trust (“REIT”). The Company's self-storage properties are designed to offer affordable, easily accessible and, in most locations, climate-controlled storage space for residential and commercial customers. According to the 2026 Self-Storage Almanac, CubeSmart is one of the top three owners and operators of self-storage properties in the United States. Non-GAAP Financial Measures Funds from operations (“FFO”) is a widely used performance measure for real estate companies and is provided here as a supplemental measure of operating performance. The April 2002 National Policy Bulletin of the National Association of Real Estate Investment Trusts (the “White Paper”), as amended, defines FFO as net income (computed in accordance with GAAP), excluding gains (or losses) from sales of real estate and related impairment charges, plus real estate depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Management uses FFO as a key performance indicator in evaluating the operations of the Company's stores. Given the nature of its business as a real estate owner and operator, the Company considers FFO a key measure of its operating performance that is not specifically defined by accounting principles generally accepted in the United States. The Company believes that FFO is useful to management and investors as a starting point in measuring its operational performance because FFO excludes various items included in net income that do not relate to or are not indicative of its operating performance such as gains (or losses) from sales of real estate, gains from remeasurement of investments in real estate ventures, impairments of depreciable assets, and depreciation, which can make periodic and peer analyses of operating performance more difficult. The Company’s computation of FFO may not be comparable to FFO reported by other REITs or real estate companies. FFO should not be considered as an alternative to net income (determined in accordance with GAAP) as an indication of the Company’s performance. FFO does not represent cash generated from operating activities determined in accordance with GAAP and is not a measure of liquidity or an indicator of the Company’s ability to make cash distributions. The Company believes that to further understand its performance, FFO should be compared with its reported net income and considered in addition to cash flows computed in accordance with GAAP, as presented in its consolidated financial statements. FFO, as adjusted represents FFO as defined above, excluding the effects of acquisition related costs, gains or losses from early extinguishment of debt, and other non-recurring items, which the Company believes are not indicative of the Company’s operating results. The Company defines net operating income, which it refers to as “NOI,” as total continuing revenues less continuing property operating expenses. NOI also can be calculated by adding back to net income (loss): interest expense on loans, loan procurement amortization expense, loss on early extinguishment of debt, acquisition related costs, equity in losses of real estate ventures, other expense, depreciation and amortization expense, general and administrative expense, and deducting from net income (loss): equity in earnings of real estate ventures, gains from sales of real estate, net, other income, gains from remeasurement of investments in real estate ventures and interest income. NOI is a measure of performance that is not calculated in accordance with GAAP. Management uses NOI as a measure of operating performance at each of its stores, and for all of its stores in the aggregate. NOI should not be considered as a substitute for net income, cash flows provided by operating, investing and financing activities, or other income statement or cash flow statement data prepared in accordance with GAAP. The Company believes NOI is useful to investors in evaluating operating performance because it is one of the primary measures used by management and store managers to evaluate the economic productivity of the Company’s stores, including the ability to lease stores, increase pricing and occupancy, and control property operating expenses. Additionally, NOI helps the Company’s investors meaningfully compare the results of its operating performance from period to period by removing the impact of its capital structure (primarily interest expense on outstanding indebtedness) and depreciation of the basis in its assets from operating results. Forward-Looking Statements This presentation, together with other statements and information publicly disseminated by CubeSmart (“we,” “us,” “our” or the “Company”), contain certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, or the “Exchange Act.” Forward-looking statements include statements concerning the Company’s plans, objectives, goals, strategies, future events, future revenues or performance, capital expenditures, financing needs, plans or intentions relating to acquisitions and other information that is not historical information. In some cases, forward-looking statements can be identified by terminology such as “believes,” “expects,” “estimates,” “may,” “will,” “should,” “anticipates,” or “intends” or the negative of such terms or other comparable terminology, or by discussions of strategy. Such statements are based on assumptions and expectations that may not be realized and are inherently subject to risks, uncertainties and other factors, many of which cannot be predicted with accuracy and some of which might not even be anticipated. Although we believe the expectations reflected in these forward-looking statements are based on reasonable assumptions, future events and actual results, performance, transactions or achievements, financial and otherwise, may differ materially from the results, performance, transactions or achievements expressed or implied by the forward-looking statements. As a result, you should not rely on or construe any forward-looking statements in this presentation, or which management or persons acting on their behalf may make orally or in writing from time to time, as predictions of future events or as guarantees of future performance. We caution you not to place undue reliance on forward-looking statements, which speak only as of the date of this presentation or as of the dates otherwise indicated in such forward-looking statements. All of our forward-looking statements, including those in this presentation, are qualified in their entirety by this statement. There are a number of risks and uncertainties that could cause our actual results to differ materially from the forward-looking statements contained in or contemplated by this presentation. Any forward-looking statements should be considered in light of the risks and uncertainties referred to in Item 1A. “Risk Factors” in our Annual Report on Form 10-K and in our other filings with the Securities and Exchange Commission (“SEC”). These risks include, but are not limited to, the following: adverse changes in economic conditions in the real estate industry and in the markets in which we own and operate self-storage properties; the effect of competition from existing and new self-storage properties and operators on our ability to maintain or raise occupancy and rental rates; the failure to execute our business plan; adverse consumer impacts and declines in general economic conditions from inflation, tariffs, changes in interest rates and wage stagnation, including impacts on the demand for self-storage, rental rates and fees and rent collection levels; reduced availability and increased costs of external sources of capital; financing risks, including rising interest rates, the risk of over-leverage and the corresponding risk of default on our mortgage and other debt and potential inability to refinance existing or future debt; counterparty non-performance related to the use of derivative financial instruments; risks related to our ability to maintain our qualification as a REIT for federal income tax purposes; the failure of acquisitions or developments of self-storage properties to close on expected terms, or at all, or to perform as expected; increases in taxes, fees and assessments from state and local jurisdictions; the failure of our joint venture partners to fulfill their obligations to us or their pursuit of actions that are inconsistent with our objectives; reductions in asset valuations and related impairment charges; negative publicity relating to our business or industry, which could adversely affect our reputation; increases in operating costs, including, without limitation, insurance, utility and other general expenses, which could adversely affect our financial results; cybersecurity breaches, cyber or ransomware attacks or a failure of our networks, systems or technology, which could adversely impact our business, customer and employee relationships or result in fraudulent payments; risks associated with generative artificial intelligence tools and large language models and the conclusions that these tools and models may draw about our business and prospects in connection with the dissemination of negative opinions, characterizations or disinformation; changes in real estate, zoning, use and occupancy laws or regulations; risks related to or consequences of earthquakes, hurricanes, windstorms, floods, wildfires, other natural disasters or acts of violence, pandemics, active shooters, terrorism, insurrection or war that impact the markets in which we operate; potential environmental and other material liabilities; governmental, administrative and executive orders, regulations and laws, which could adversely impact our business operations and customer and employee relationships; uninsured or uninsurable losses and the ability to obtain insurance coverage, indemnity or recovery from insurance against risks and losses; changes in the availability of and the cost of labor; other factors affecting the real estate industry generally or the self-storage industry in particular; and other risks identified in Item 1A of our Annual Report on Form 10-K and, from time to time, in other reports that we file with the SEC or in other documents that we publicly disseminate. Given these uncertainties, we caution readers not to place undue reliance on forward-looking statements. We undertake no obligation to publicly update or revise these forward-looking statements, whether as a result of new information, future events or otherwise except as may be required by securities laws. Because of the factors referred to above, the future events discussed in this presentation may not occur and actual results, performance or achievement could differ materially from that anticipated or implied in the forward-looking statements. Contact: CubeSmartJosh SchutzerSenior Vice President, Finance(610) 535-5700

Image source: The Motley Fool. Friday, Aug. 1, 2025 at 11 a.m. ET President & Chief Executive Officer — Christopher P. Marr Chief Financial Officer — Timothy M. Martin Need a quote from a Motley Fool analyst? Email [email protected] Christopher P. Marr: Thank you, Josh. Good morning, everyone, and thanks for joining us. We posted a very solid beat and raise second quarter. The stabilization trends we experienced in the first quarter continued their positive momentum throughout the second quarter and into the month of July. Year-to-date, our key performance indicators have exceeded the expectations we articulated entering the year. Our expectation of an anemic housing market and the absence of any catalyst for a sharp recovery have proven accurate. Our belief in the continued health of our customer base, the resiliency of our product and the gradual improvement of fundamentals have been directionally accurate, albeit the impact of new supply and the pace and magnitude of improvement in new customer move- in rates have been more positive compared to our base case assumptions. Digging a bit deeper into performance through the busy season, our trough-to-peak occupancy grew 190 basis points compared to 180 basis points last year. Our net effective rates for new customers grew 28.3% compared to 15% in 2024. Overall, rate trends have been very constructive. In the first quarter, move-in rents were down 8.3% over the first quarter of last year. That gap in the second quarter contracted to 4%. And in July, the gap was 3.3% and has been narrowing throughout the month. We are experiencing similar solid trends in occupancy with the gap to last year narrowing further in July. Continuing one further layer deeper and looking at major market performance, our urban markets along the Acela Corridor, along with the stores in Chicago continue to be our top performers, indicative of the more muted reliance on housing transactions and stickier customer base. And the laggards are the markets across the more volatile Sunbelt, primarily Florida and Arizona, which are more reliant on housing mobility and are still absorbing new supply. Our New York MSA continues to shine with solid sequential acceleration in net rental income from the first quarter. The boroughs continue to lead the way, benefiting from the reduction in new supply and the broad base of consumer and small business demand, followed by very good performance in Long Island, while Northern New Jersey continues to gradually improve as the supply is absorbed. Looking ahead, we expect the baseline for occupancy and move-in rates should approach parity by the end of the year. Naturally, given the fact that we turn over approximately 5% of our cubes in any given month, it will take time for all of that positive momentum to flow through the revenue algorithm. We recognize that there remains a risk of volatility with the consumer as they have likely not fully absorbed the impact of ongoing governmental and monetary policy decisions. While acknowledging that risk, our results through our busy season, along with more recent trends have made us increasingly more confident that our operational trends will continue to steadily improve through the back half of 2025, putting us on much better footing as we head into 2026. Thank you. And I'd now like to turn the call over to Tim Martin, our Chief Financial Officer. Timothy M. Martin: Thank you, Chris. Good morning, everyone. And as always, thanks for taking a few minutes out of your day and spending it with us. Second quarter results reflect exactly what Chris was touching on, the continuation of stabilizing operating trends that we talked about back in the first quarter. Same-store revenue growth was down 0.5% over last year, with average occupancy for our same-store portfolio down 80 basis points to 90.6% during the quarter. From a rate perspective, our move-in rates during Q2 were down about 4% year-over-year, improving from down 8% in Q1 and from down 10% back in Q4 of last year. Same-store operating expenses grew 1.2% over last year, again, this quarter, trending a bit better than our expectations. We've had sector-leading expense controls over the past 3 years, and our team's focus in this area continues to show up in the results. I'll expand on some of the expense line items in a moment when discussing changes to our full year guidance ranges. Revenue growth of negative 0.5% combined with 1.2% expense growth yielded negative 1.1% same-store NOI growth for the quarter. We reported FFO per share as adjusted of $0.65 for the quarter, which was at the high end of our guidance range entering the quarter. We were quiet this quarter as it relates to on-balance sheet investments. The team continues to evaluate a healthy volume of acquisition opportunities, but returns on marketed transactions haven't reached compelling levels on a risk-adjusted basis from our perspective. We remain well positioned with plenty of capacity when we do find attractive deals. We added 30 stores to our third-party management platform during the quarter, bringing that total to 873 stores at quarter end. We have seen some churn in the third-party portfolio from larger transactions, including our acquisition of 28 stores from our joint venture last quarter as well as a handful of portfolios that our third-party owners have sold this year. Balance sheet metrics remain strong with net debt-to-EBITDA at 4.7x. Our $300 million of 2025 senior unsecured notes mature in November of this year. So we will be actively monitoring the market in the coming months with a focus on issuing long-term unsecured debt and effectively pushing that debt out to the end of our maturity schedule. Details of our 2025 earnings guidance and related assumptions were included in our release last evening. Second quarter results, combined with the continuation of stabilizing operating trends were the primary drivers of our improved FFO per share and our same-store operating estimates. Overall trends, as we've mentioned, continue to move in a positive direction with all key operating metrics seeing better-than-forecasted performance through July. The negative occupancy and rate gaps have narrowed throughout the year. The cadence and pace that these improving trends have on year-over-year revenue growth as we look at the balance of the year are impacted by a variety of things, including the timing of changes we made in our fee structure mid last year, the timing related to rate increases to existing customers and how that flows through revenue year-over-year as well as the reality that only about 5% of our customers churn on a monthly basis. Embedded in our expectations for third quarter results is our expectation that same-store revenue growth will be slightly more negative than it was in the second quarter and then improving as we get into the fourth quarter. So while we're very encouraged by the positive trends in operating fundamentals, I just want to manage expectations that these improvements will take a little bit of time to flow through. On the expense front, as I mentioned, we had a really good first half of 2025 as we continue to be laser-focused on improving expense efficiencies. Our improved expectations that led to our improved expense growth guidance range were driven by a variety of line items, but the leading areas of improvement were the much better-than-anticipated insurance renewal in May, successful property tax appeals and the impact of efficiency-focused projects at our stores, including staffing and telecom initiatives. That wraps up our prepared remarks for this morning. Thanks again for joining us on the call. And at this time, Jeannie, let's open up the call for some questions. Operator: [Operator Instructions] Your first question comes from the line of Samir Khanal with Bank of America. Samir Upadhyay Khanal: I guess, Chris, thanks for the color on July. It looks like you are seeing positive trends, which is good to see. Just curious on the revenue side, you took the midpoint up, which was good, but you also took the top end down slightly. So I guess what were you assuming at the top end that you felt was sort of out of reach based on your assumptions? Timothy M. Martin: Samir, it's Tim. Yes, the top end would have assumed a stronger improvement in overall levels of demand. And we're just reining in the high end of those expectations as a result of that's not how the busy season played out. We just don't see that the high end is in the cards. So we brought it down. But again, I would much rather focus on the fact that we raised guidance in the midpoint than the part that you're pointing out that we narrowed the top end. Samir Upadhyay Khanal: Okay. Got it. And then I guess on the revenue growth as it relates to New York, still very strong versus the portfolio, but did decelerate a little bit. Maybe provide some color around the New York boroughs and kind of what you're seeing maybe in the Northern New Jersey area. Any color would be helpful. Christopher P. Marr: Yes. So the positive trends across the portfolio are also embedded in the New York MSA as a whole. So net rental income accelerated from Q1 to Q2 fairly nicely. The overall total revenue came down a bit, again, back to Tim's comments at the beginning related to changes we made last year in fees, et cetera, that had a very difficult comp, particularly given the nature of the customer in the boroughs, difficult comp for Q2. So very encouraged by net rental income growth continue to move in a really positive direction in both the boroughs as well as in Long Island. I think as it relates to North Jersey, that same-store cadence, net rental income there, we're seeing continued movement in a good direction, albeit it does remain slightly negative year-over-year and therefore, is a bit of a drag on the MSA as a whole. But no real meaningful supply being delivered. The supply in North Jersey is being absorbed. And so overall, really pleased with New York, the cadence of New York, continued stickiness of the customer base there and our position on a relative basis to our peers and our outperformance relative to other operators in that market during the quarter. Operator: Your next question comes from the line of Michael Goldsmith with UBS. Michael Goldsmith: You mentioned twice on the call that the monthly turnover of your customers is 5%. And then can you help us tie that to just the pace of recovery in that the third quarter is going to be a little bit more negative than the second quarter and just how street rates continue to close the gap and get better, but then it just takes time for that to flow through. Can you kind of just tie that all together and just provide a picture of how the recovery and the stabilization should take place? Timothy M. Martin: Yes. Thanks, Michael. So it is the reality that the operating fundamentals, all of the key metrics that we look at, whether it's levels of demand, pricing to new customers, narrowing the occupancy gap, all of those things are improving. The reality is that probably the most encouraging thing about 2025 is it's feeling more normal from day-to-day, week-to-week, month-to-month, certainly more normal than it has been over the last 2 years. As we've talked about for the past several quarters, if not the past 2 years, it's just been a little bit bumpy here as we've gone through post pandemic and kind of the reset that we've all been through the last 3 years. And so what that does is it creates a little bit of that volatility that we saw last year creates interesting comps year-over-year. And so it just doesn't naturally flow through in a steady and programmatic way, the way everybody that's building a model would like it to. And so that's why we're pointing out that there still is a little bit of volatility in how all of that flows through. The 5% is just a reminder that even if we have a really good month, it's a really good month that churns 5% of the portfolio, right? And so it just takes time as all that goes through. We touched upon some of the things that are creating the bumpiness and perhaps, I guess, the unpredictability from your perspective on how all that flows through related to what we did with fees, what we did and what we continue to do with rate increases to existing customers. And all of those things create a little bit of noise in how all of the positive fundamentals flow through to the bottom line. Ultimately, all of this is gearing towards the ultimate stabilization and kind of the end of the reset and I think we're going to be in a great spot here as we think about where we're starting 2026. Michael Goldsmith: And then just as a follow-up. First quarter, you were able to acquire out of a JV, little activity in the second quarter. So can you provide a little color on what you're seeing in the transaction market? Is there a lot on the market is what does pricing look like? It sounds like it hasn't been too favorable to your appetite. So can you just provide a little more color on that. Timothy M. Martin: Yes. Thanks, Michael. Not a lot has changed from what we've talked about in the prior handful of quarters. We continue to underwrite. I would say deal volume is -- it's up from where it was last year. The number of opportunities that we're underwriting is a little bit higher than where we were this time last year. But the result remains the same, which is we're competitive on some deals. We're not as competitive on others. And just on a risk-adjusted basis, where it makes sense for us to invest based on our outlook for an individual opportunity and our cost of capital, just not quite there yet, just not able to transact in any meaningful way. Operator: Your next question comes from the line of Todd Thomas with KeyBanc Capital Markets. Todd Michael Thomas: Yes. I was just wondering, just following up a little bit on your comments around same-store revenue growth stabilizing and beginning to recover in the fourth quarter later in the year. You talked about the New York City Metro. I'm curious if you can speak to the operating trends in the Sunbelt markets where it's been a little bit weaker, Texas, Phoenix, Atlanta. Is the inflection that you're anticipating later in the year consistent with what you would expect to see in those markets? Or will those markets take a little bit longer to recover still? Christopher P. Marr: Yes. Todd, I think the positive directional trends are across markets, right? So when you think about just as an example, if we think about acceleration from markets kind of first quarter to second quarter, and then you've got some of the Sunbelt markets that are actually showing that improvement, Orlando, Miami, Atlanta. I think 6 of our top 20 showed some acceleration, albeit still not positive. So I think we're -- on the one hand, I think you're seeing things being constructive. On the other hand, when you think about the supply that is out there and that is supposed to be delivered. And again, I think some of these projects will clearly lag into next year, but it eventually will be delivered. You still have pretty high amount of deliveries in Atlanta and Houston and Dallas and Phoenix. So again, I recognize that there are large MSAs, they're sprawling. It's possible to construct storage in those markets where you're not necessarily clumped together with existing product as you are in some of the urban areas. But I do think it will be a longer time frame for those higher impacted supply markets to recover, but I do think trends will get better. Todd Michael Thomas: Okay. It seems pretty broad-based. The other question I had was this morning, we got a little bit of a weaker jobs report and uncertainty around the economy and consumer has been high for a little while in general. As you think about your ECRI program and revenue management, you shift your strategy at all in sort of a proactive way to consider a potentially weakening macro or economic backdrop. Does anything change? Or do you let the system continue to manage it based on demand? Christopher P. Marr: Yes. I think fundamentally, because of the nature of the product is just one in which the need is so broad-based, which is why it's so resilient. The systems will identify the need and the expected demand and then sort of match those 2 up and lather rinse, repeat. I do think we watch, again, the health of the existing customer relative to kind of what's going on macro. But as I think we've said to date, the existing customer continues to remain pretty healthy. Operator: Your next question comes from the line of Juan Sanabria with BMO Capital Markets. Juan Carlos Sanabria: Apologies if I missed this, but I guess what is the main driver of the expected decel in same-store revenue in the third quarter versus second quarter. Is it a product of tougher comps in kind of the other ancillary revenue line? Or is it something else? Timothy M. Martin: I'm sorry, Juan. Just to reiterate, it's a combination of the timing is to really just how things flow through and show up in revenue. It's the timing of when we made adjustments to some of the fees earlier in 2024. It's the reality as to how the rate increases to existing customers just flow through revenue and the timing of that, the volatility that we are seeing less of now, but we did see volatility last year, which creates a little bit of bumpiness in a variety of different comps. And then just the reality that as fundamentals continue to improve, you get a little bit of that help in each month, but only a little bit given the churn. So it just takes time for all this to flow through. We're super positive about the direction of all of the trends in operating fundamentals. Just want to make sure that we're telegraphing how we think it's all going to flow through ultimately into the revenue result that you should expect to see for the balance of the year. Juan Carlos Sanabria: And then just you noted 3PM business saw some churn. I guess what's the expectation in the second half? Are there any other large chunkier portfolios that are being sold away from you guys that could see that number of third-party managed stores actually go down? Or just curious on what visibility you have there? Timothy M. Martin: Yes, not a great deal of visibility. Obviously, the stores that are leaving our platform as they're sold that we know about, we're incorporating that into our expectations. We've talked about it in the prior quarters, one of the benefits that we've had from a relatively sluggish transaction market over the past 18 to 24 months has been that we had been experiencing less churn as a result of a slow transaction market. Now that it's starting to pick up at least a little bit, we're starting to see some stores leave the platform. And part of the business, we try to do a great job for our owners. I think we do. And oftentimes, that positions them to accomplish their objectives, which is to maximize the cash flow and be in a good position to transact and realize a profit. So part of the business, what we can do to control it is to continue to do a great job of onboarding stores, 30 more stores onboarded to the program this year. That's the part that we have a little bit more control over. The rest of it is kind of a result. Operator: Your next question comes from the line of Eric Wolfe with Citi. Nicholas Gregory Joseph: It's Nick Joseph here with Eric. You touched on the high non deliveries in some of the markets and the continued impact that you're feeling there. Are there any indications of construction starts picking up in any of your markets? Obviously, you're dealing with the residual of starts that have already occurred? Christopher P. Marr: No, I think it's actually the opposite. For the most part, as you would expect, raw material costs are up, land values certainly have not gone down. Labor is challenging to obtain and expensive. And your cost of borrowing, if it's available for speculative development is tight and then trying to pencil out returns that make sense in this market today, given all that for your potential equity investors is also a challenge. So obviously, deals are coming out of the ground or had already come out of the ground or getting completed. But I think as we look out a little bit further and you look at '26, '27, I think we're going to see a lot of delays, a lot of projects that don't get started until some of those factors that I just discussed are resolved more favorably. So I think supply will continue to be overall constructive, albeit in certain markets, it's continued -- it will continue to have a bit of a headwind. Nicholas Gregory Joseph: That's helpful. How far off do you think -- or how far do in-place rents need to move before supply starts to pencil? Christopher P. Marr: Yes. I mean that's just such a micro market specific. And again, it all comes back down to -- on the cost side as well. And if you own the dirt, how long have you owned it, what your basis is, et cetera. So given where rates are, again, relative to certainly where they would have been in 2020 or 2021 when some of these developers would have started focusing in on these projects, I think we've still got a bit of a ways to go. Operator: Your next question comes from the line of Spenser Glimcher with Green Street. Spenser Bowes Glimcher: Can you just provide an update on the Texas JV you entered into at the beginning of the year? I'm just curious how these properties have been trending from an operational standpoint. Timothy M. Martin: The Hines portfolio you're referring to, the Dallas stores, everything is going very much according to what we thought would happen. We -- that portfolio, as a reminder, was extraordinarily attractive to us because those assets, if you could have taken a map and said, where would you like to add stores to complement our existing footprint in the Dallas MSA, the overwhelming majority of those were basically a perfect fit for us as to how they fit in. So the integration of those stores went very, very smoothly. The pricing of those stores and how they're complementary to our existing assets has played out just as we had hoped and expected. So nothing really to report other than we're delighted with the transaction. It's performing very much in line with how we thought it would. Spenser Bowes Glimcher: Okay. Great. Are you able to share maybe what the occupancy and/or rental gap is between those assets and then the same-store pool? Timothy M. Martin: I don't have that right in front of me. Happy to follow up with you. Spenser Bowes Glimcher: Okay. And then maybe just kind of shifting gears. I know you guys already talked about the Sunbelt quite a lot. But maybe just more specifically, and I know it's a smaller market, but if you could just share a little color on the Austin market dynamics. I'm just curious what drove operating expenses so high in the quarter? Christopher P. Marr: Yes. Austin on the operating expense side is taxes. So that's just the nature of timing and getting information from the state, et cetera. Overall, Austin is impacted by supply as is Dallas. Again, one of those markets where 5 years ago, everybody would have told you that you can't build another self-storage facility. And here we are today with a lot more self-storage facility. So good market long term under some supply pressure at the moment. And then on the operating expense side, as I said, just a... Timothy M. Martin: And specifically on taxes, it's not bad news this year. It was good news last year. We had a refund. We had a nice refund last year, which creates a difficult comp when comparing this year's expenses to last year's. Operator: Your next question comes from the line of Michael Griffin with Evercore ISI. Michael A. Griffin: I'm curious if you can unpack the same-store expense guidance a bit. Obviously, you guys have done a good job controlling expenses and about 1% year-to-date in the first half. Looking ahead, I mean, this acceleration, I guess, expected in guidance, probably about 3% in the back half. Is that a timing issue? It seems like comps from the second half of '24 may be more favorable. I don't know if there's kind of anything you can add there about why you're expecting that acceleration to get to the revised midpoint. Timothy M. Martin: Yes. The -- part of it is what we talked about last quarter, we had some of our beat in the first quarter was timing related, but some of it was better-than-expected seasonal type expenses. So that was some good news that we talked about last quarter that we're not expecting to repeat itself or we don't have the opportunity for it not to snow in August and have that help our results. Part of it is some of the efficiencies that we've seen on personnel expense. We've been fortunate to be able to capture a lot of efficiencies, as I mentioned, over the past going now north of 3 years. But at some point, those efficiencies kind of lap and you're back to kind of normal inflationary type growth in those line items. Some of the cadence between what we experienced in the first half of the year versus the back half of the year is timing related. We are going to have a little bit heavier repair and maintenance. Our expectation is that our repair and maintenance expense will be a little bit higher in the second half of the year than it has been in the first, in line with our expectations, but a lot of that comes down to timing. Marketing is always the wildcard as to we're going to spend based on the opportunities that we see and the returns that we get on that incremental spend. We also have a little bit of a difficult comp in the fourth quarter related to real estate taxes, some refunds that we had last year, relative to an expectation of not very many, who knows? Maybe we get some across the finish line in the fourth quarter, but that's not our expectation as we sit here. The biggest driver on the positive side when you think about the back half is on the insurance renewal. I mentioned it briefly, but we had a very favorable property insurance renewal back in May. That was better than what we expected. Our risk management team did a great job there, and we're in a much better position than we thought we were going to be from an insurance standpoint. Michael A. Griffin: That's some helpful context. And then maybe just on the new customer acquisition front. Obviously, kind of Google searches and search engine optimization has been a priority over the past couple of years. But as we get this emergence of AI or GPT and usage there, do you have a sense of how many prospective customers are starting to use these AI tools to find storage units? Or is most of the traffic still coming in from traditional Internet searches. Christopher P. Marr: Yes. Most of the traffic is still coming in through traditional Internet searches. The LLMs are evolving. And when you think about the utilization and the types of queries, you can get your mind around those queries that involve some form of additional information, judgment. For example, you could see using an LLM to say, which college would be appropriate for my daughter because you're going to get that interaction then with a follow-up to say, well, can you help me by giving some more information? What is she interested in? What part of the country? What your what's your affordability index, et cetera. Compare that to self-storage near me, there's just not that same level. And so I think we were with our partners, our agency and our friends at Google last week digging into all this and the use of Gemini and how one can get ahead of the curve here, and it's moving fast. Our marketing team is all over it. But I would say to date, the traditional sort of self-storage near me on a map continues to dominate. Operator: Your next question comes from the line of Ki Bin Kim with Truist. Ki Bin Kim: Just a follow-up on that previous question. Let's say, more of that search gets funneled through AI agents. Do you think that leads to price discovery becoming a bigger factor for customers? Christopher P. Marr: Yes. Ki Bin, I think at this point, it really does seem that, that interaction through a more AI-driven search, the underlying tenets of what gives the response, again, you're looking for that response that regardless of the form is meant to deliver the best answer for the query. I still think you're going to come down to things like reviews, like the speed and validity of your website, like anything that gives your product higher validity, higher respect within the answer that whatever engine is trying to get you to. So at the moment, there are going to be some things that change. They always do in the search environment as they always have as Google has changed its priorities and algorithms over the years. But again, fresh off of this summit, I think at the moment, it's a work in progress. And again, will video be more important? Will other things get higher priority in terms of the responsiveness, probably, but exactly what they are today, work in progress. Ki Bin Kim: Okay. And just a broader question. Do you think the sector -- software sectors rents can grow something closer to inflationary levels even if housing doesn't come back, given that we are probably lapping some of that? And assuming supply is kind of static, do you think the rents can rise in this group? Christopher P. Marr: Yes. I think -- again, I think once you've reestablished a baseline that is reflective of the existing -- of the existing demand, what you need then is that churn, right? Again, back to the number of customers that come in and out every month after you've reestablished that baseline, then I think you grow from there. And again, I think that -- I think we're on that path of both Cube and the industry at that. Ki Bin Kim: Okay. And Chris, if I can squeeze in a third one, you might like this one. I'm just curious, like why do you guys have a BBB rating from S&P Global, whereas like EXR that has more leverage has a better rating? And I'm looking at your pricing, I don't think you're paying more for it, but is there any -- are you leaving any money on the table for not getting a better rating. Timothy M. Martin: Man, I might have you join my next call with our friends at S&P and Moody's. I think you make some valid points there. I think part of the disconnect, certainly from a consistency of credit metrics and conservative credit metrics and continued access to our unsecured bondholders. We have an awful long track record with this strategy, and I think that goes a long way down that path. I think size becomes part of it. Part of the differentiator. But I would agree with the premise of what you're suggesting and certainly something that we're aware of and think about and talk about. I think at the end of the day, though, Ki Bin, when we do transact, I do think that there's the view of S&P and Moody's and there's the rating. And then there's ultimately, as with anything, there's how investors look at us and look at that rating. And I do think we get credit for all of the metrics that you're referring to in how our bonds trade. So it's not like there's a specific point where you say you have this rating, therefore, this is your pricing. I think our investors in our bonds do look at all of the things that you're looking at as they think about how to price our bonds, both our existing bonds and future issuances. Operator: Your next question comes from the line of Mike Mueller with JPMorgan. Michael William Mueller: I guess, Chris, when you look back over the past 30 years or so in the business, have there been any like clear triggers or catalysts that cause stagnant market move-in rates to move up outside of housing cycles? I mean we know significant supply kind of does the opposite, but just curious about on the upside. Christopher P. Marr: Well, I think to the sharpness of the upside, certainly, the period in the second half of '20 through the very beginning of '22 in my 30 years was the sharpest of the up driven by the various factors related to the pandemic. I think when you look back, you're right, supply is always going to be the headwind. Macro events that cause the consumer to freeze in place, COVID, Lehman bankruptcy, 9/11, those tend to cause a short-term blip that freezes demand. It generally, when you take out supply and you take out Black Swan events, pricing has always tended to sort of move up at or a little bit higher than inflation. I think the last several years, as we've had a variety of differing strategies across the sector as to how to price the new customer, I think that's created a bit of volatility that we did not have in the past. Michael William Mueller: Got it. Okay. And second question, how has ECRI pushback been recently compared to, say, the past couple of years? Christopher P. Marr: No change. I think we are, again, still in an environment where the existing customer remains pretty healthy. And I think -- and I think the stickiness of them and the nature of the product has supported the ECRI process. As Tim talked about, the one thing we are doing more of is testing and trying out different cadence, different strategy around the timing and the amount of that increase, which has created some bumpiness as we've talked about here for a while. But overall, general reaction from the customers is unchanged. Operator: Your next question comes from the line of Ravi Vaidya with Mizuho. Ravi Vijay Vaidya: I wanted to ask about the transaction markets. I think that we might see more product coming to market in the second half of the year here. Maybe can you describe your appetite to execute on acquisitions and maybe some of your funding sources? And what are some of the IRRs or benchmark returns that you're looking to target as you make these decisions? Timothy M. Martin: Yes. Thanks. As I mentioned earlier, the transaction market, the volume of opportunities that we've had to underwrite this year is up a little bit from where it would have been a year ago. Seasonally, the transaction market in our sector tends to pick up here in the coming months as many sellers want to get through that one more busy season, that one more leg of rate growth or occupancy growth in order to sell their assets. So this is the time of the year where if you are a seller, you're starting to think about gearing up to bring your store to market. So this tends to be seasonally a good time to go forward. From our perspective, we are very focused on finding opportunities that are consistent with our overall portfolio growth strategy, which is primarily focused in top 40 MSAs, high-quality assets in high-quality markets. And so that's our -- that's what we're looking for on balance sheet. And then from a return standpoint, we're looking for things that are -- certainly, if they're stable acquisitions, we're looking at pricing that would be accretive to our earnings. If there's something that's less than stable or something that we see a good opportunity for it to grow, significantly under our operating platform, then we're going to look at stabilized type returns and think about how the potential acquisition is complementary or not to our existing portfolio. So there are a variety of things that we're looking for. Ultimately, where we are right now is that, as I had mentioned, on a risk-adjusted basis, given our cost of capital and our return requirements, we're just not seeing -- we're not seeing things of high-quality trade at prices that work for us. I think that could change any day. I think that could change tomorrow from how would we fund it. We have an $850 million line of credit. We have great access to a variety of different capital sources. We have established a leverage level, as I talked about earlier, that gives us quite a bit of capacity. If we saw a wave of opportunity, we could -- we don't need to be reliant upon issuing equity because we have some capacity in our balance sheet that we could, for a period of time, find some things that are -- if they're attractive, we could utilize debt to do that. We have a significant amount of free cash flow that we generate each year that could also fund those opportunities. I would think for us that the -- even sector-wide, I think the opportunities are as you're coming out of a development cycle, you would think that a lot of the stores that have been developed over the past 2, 3, 4 years are developed as they traditionally are by merchant builders and by pockets of capital that do not have forever time lines on how long they want to own their self-storage asset. So I do think that there is a building wave of potential opportunities of folks that have been sitting on the sidelines from a selling standpoint that ultimately need liquidity and desire liquidity and want to come to market. They're just waiting for a better time as are we as a buyer waiting for a time where the math makes sense for us and returns make sense for us and for our shareholders. Operator: There are no further questions at this time. I will now turn the call back over to Chris Marr for closing remarks. Christopher P. Marr: Thank you, everyone. It was a very solid quarter here at Cube. Those stabilizing trends continued into July, which gave us comfort and confidence to raise our guidance expectations for the year. So we believe we're in a good position here as we navigate the back half of '25, and we're optimistic about what 2026 will hold for us. I think we'll continue to see reduced levels of deliveries, reduced impact from supply. The existing customer continues to be quite healthy. So a good backdrop as things stabilize here and we begin to see more positive opportunities as we move into next year. So thank you all for listening. Enjoy the rest of your summer, and we will look forward to speaking with you on our third quarter earnings call. Operator: Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect. Before you buy stock in CubeSmart, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and CubeSmart wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. 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