CubeSmart Sees Signs of Stabilization in a Uncertain Market
CubeSmart, a leading self-storage company, recently reported on its 2024 Q4 earnings call that it may have seen an inflection point in the trend of decelerating same-store revenue growth. According to Chris Marr, President and Chief Executive Officer, the company's year-over-year growth in same-store revenues has begun to slowly improve since hitting a trough in November last year.
Specifically, CubeSmart reported that its year-over-year same-store occupancy gap narrowed from 100 basis points negative at year-end '24 to negative 50 basis points as of the end of February. The company also noted that rents achieved for new customer rentals have improved their year-over-year negative gap from an average of -10.3% in the fourth quarter to last week averaging -7.4%. This indicates a stabilization of the market, with existing customers performing along historically normal levels.
CubeSmart's base case expectations for revenue growth in 2025 assume that the gradual pattern of improvements from their fourth-quarter metrics will continue across all major markets. However, they do not see a near-term obvious catalyst to sharply reaccelerate organic growth. Despite this cautious outlook, the company remains optimistic about the long-term health of its business and has been actively seeking opportunities to grow externally.
One such opportunity was the successful closing out of a joint venture investment in February, where CubeSmart acquired its partner's interest in an accretive transaction. The company also raised equity capital at attractive valuations under their ATM program, which allowed them to take advantage of a portion of their leverage capacity to fund the balance of the purchase.
CubeSmart's CEO Chris Marr emphasized that the company has successfully navigated through cycles and times of great uncertainty for over 30 years. With its deliberate construction of properties between 2017 and 2021, CubeSmart's portfolio is well-positioned to weather any economic storms, despite the uncertain macroeconomic and geopolitical environment.
Overall, while CubeSmart may not see a sharp reacceleration in growth in the near term, their stabilization of same-store revenue growth and successful execution on strategic objectives are positive signs for the company. As the market continues to stabilize, it will be interesting to see how CubeSmart performs in 2025 and beyond.
