CubeSmart Q1 2025 Earnings Call Transcript

Quartr
Provided by Quartr
May 2, 2025

There are 14 speakers on the call.

Operator

Thank you for standing by. My name is Eric, and I will be your conference operator today. At this time, I would like to welcome everyone to the CubeSmart First Quarter twenty twenty five Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session.

Operator

I would now like to turn the call over to Josh Schutzer, Vice President of Finance. Please go ahead.

Speaker 1

Thank you, Eric. Good morning, everyone. Welcome to CubeSmart's first quarter twenty twenty five earnings call. Participants on today's call include Chris Marr, President and Chief Executive Officer and Jim Martin, Chief Financial Officer. Our prepared remarks will be followed by a Q and A session.

Speaker 1

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 strategy 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 eight ks we filed this morning, together with our earnings release filed on the Form eight ks and the Risk Factors section of the company's annual report on Form 10 ks. 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 first quarter financial supplement posted on the company's website at www.cubesmart.com.

Speaker 1

I'll now turn the call over to Chris.

Speaker 2

Thank you, Josh. Thank you, everyone, for joining us this morning. Our performance in the first quarter was strong. Our key performance metrics all trended towards the higher end of our expectations. We expected we experienced I'm sorry, we experienced solid top of funnel demand.

Speaker 2

Rental rates for new customers continue to improve, narrowing their year over year gap, and our existing customer health remains solid. Muted operating expense growth reflects the continued optimization of our platform while not losing focus on providing our renowned best in class customer service. This positive operational performance resulted in $0.64 of FFO per share, a penny beat to the high end of our guidance. As previously discussed, during the quarter, we closed on the acquisition of our joint venture partners' interest in a high quality portfolio, expanding our presence in several key markets. Our strong markets, the New York City boroughs, Chicago and the Washington, D.

Speaker 2

C, Maryland and Virginia suburbs, all continue to exhibit their strength, and our supply impacted markets Northern New Jersey, Phoenix and Atlanta, are exhibiting signs of stabilization or recovery. Through four decades of operating in the self storage industry, I remain impressed by its resilience. The quality and geographic diversity of our portfolio, the economic diversity of our need based customer and the ever increasing sophistication of our platform provide great confidence in the long term health of the industry and in our performance as a leading operator. Now I'd like to turn the call over to Tim Martin, our

Speaker 3

Chief Financial Officer, for his comments on the quarter. Tim? Thanks, Chris. Good morning, everyone. Thanks, as always, for taking a few minutes out of your day spend it with us.

Speaker 3

First quarter results, as Chris mentioned, were strong, coming in a little bit better than our expectations, giving us a nice positive start to the year. Same store revenue growth was down 0.4% over last year, a nice improvement from down 1.6% in the fourth quarter. Our average occupancy for our same store portfolio was down 50 basis points to 89.5% during the first quarter, again, a gap that narrowed from down 120 basis points during the fourth quarter. From a rate perspective, our move in rates during Q1 were down about 8% year over year, and that was an improvement on Q4 when we were down about 10% year over year. So while we're not back to an inflection point where we're seeing growth over prior year levels, we are seeing improvements in all of these key metrics.

Speaker 3

Same store operating expenses grew only 0.6% over last year, a result that was better than we had modeled for the quarter. We had a little bit of good news versus our expectations across a number of line items. Some of those are more timing related, like marketing and repair and maintenance, while others, like personnel and weather related costs, were good results versus expectation that lead to an improvement in our outlook for full year expense growth. So revenue growth of negative 0.4% combined with 0.6% growth in operating expenses yielded negative 0.8% same store NOI growth for the quarter. We reported FFO per share as adjusted of $0.64 for the quarter, which was $01 higher than our guidance entering the quarter.

Speaker 3

On the external growth front, we closed on the previously announced acquisition of the remaining 80% interest of one of our unconsolidated joint ventures known as HVP IV. As we discussed on last quarter's call, this was a portfolio of 28 early stage lease up stores that were acquired between 2017 and 2021, predominantly in top 30 MSAs. Our investment of $452,800,000 included $44,500,000 that represented our portion of repaying the venture level debt. So we now wholly own the portfolio on an unencumbered basis. Another successful venture for us, creating meaningful value for both parties and resulting in an accretive transaction, an attractive basis in a geographically diverse recent vintage portfolio with perfect underwriting and still yet a little bit of outsized growth on the horizon as some of the assets fully stabilize.

Speaker 3

On the third party management front, we added 33 stores to the platform in the quarter and ended the quarter with eight sixty nine third party stores under management. Balance sheet remains in excellent shape with net debt to EBITDA at 4.8 times. We have a bond maturity later in the year that we will address either with existing capacity or through accessing the debt markets opportunistically here in the coming quarters. Details of our 2025 earnings guidance and related assumptions were included in our release last night. As I opened with, performance in the first quarter was strong with most metrics near the higher end of our expectations with narrowing year over year declines in move in rates and occupancy throughout the quarter, while our existing customer metrics remain strong.

Speaker 3

That said, we've all seen the headlines. Starting in April, there's been quite a bit of uncertainty throughout the economy, which results in volatility for the large consumer decisions, which can be drivers for storage demand. At this point, we do not foresee any improvement to the frozen housing market given the current rate environment and market uncertainty, and so our base case remains for gradual improvement in operational metrics in 2025, but without a catalyst for sharp reacceleration. The recent uncertainty around the consumer leads us to maintain our prior range of expectations for top line growth. We did see better than expected performance on expenses, which allowed us to narrow that range slightly, providing a modest improvement to the midpoint of our FFO per share range.

Speaker 3

That concludes our prepared remarks. Thanks again for joining us on the call this morning. At this time, Eric, let's open up the call for some questions.

Operator

Your first question comes from the line of Sameer Tanal with Bank of America. Please go ahead.

Speaker 4

Yes. Good morning, everybody. I guess maybe, Chris, you mentioned when I looked at the press release yesterday, you talked about solid demand, You kind of characterized the environment that way. Just maybe expand on that comment. Help us understand what the drivers are to demand at this time that you certainly saw in the first quarter?

Speaker 4

Thanks.

Speaker 2

So the beauty of our business and why it's so resilient is that our customer can be everyone. And so the drivers of demand in the quarter, given what's going on in the housing market, clearly, customer who is selling, buying a single family home continues to not be at the levels that we would have experienced historically, and that's been the situation now for a few years. So within that demand, it's the everyday life events plus our business customers who find us as a solution to whatever their need is for storing their possessions for a defined period of time. So nothing new. It's just an incredibly resilient business with a very, very diverse customer base, with a very diverse set of needs.

Speaker 2

And as a result, we've proven over time to be a very, very resilient business, and that's what's so great about self storage.

Speaker 4

Got it. And then I guess, Tim, I'm sorry if I missed this, but where was occupancy in April? I know you mentioned that being 89.7% in March.

Speaker 2

Yeah. This is Chris. Eighty nine point nine percent is where we ended April.

Speaker 4

And just as a follow-up, I know one of your peers had talked about maybe lowering rates in April to kind of get to the higher occupancy. Is that something you had to do as well in your portfolio?

Speaker 2

Yes. So the average rent rate on rentals, if you just think about sort of that sequential move as we've gone over the last couple of quarters and then into April, move in rates in the fourth quarter on average were down 10% year over year. In the first quarter that then contracted to down 8%. And during the month of April, they were down about 2%.

Speaker 4

Okay. Got it. Thank you. Thanks.

Speaker 5

Your next question comes from the line of Eric Wolf with Citi. Please go ahead.

Speaker 6

Hey, good morning. It's Nick Kerr on for Eric this morning. So I guess you mentioned the strong start to the year, but you're not adjusting guidance as much given macro volatility. So I guess the question is, if we're in a less volatile environment like when you gave guidance initially, what would have changed? Would same store revenue have gone up a little bit more?

Speaker 6

Would core FFO have gone up a little bit more? Just help us think through like what that would have looked like.

Speaker 3

I appreciate the question. The thing that is consistent regardless of Juan's view on macro volatility is that it's still the date on the calendar, right? We're still very early on in our leasing season. So even if you weren't in that environment, not sure that you would see us or others in the industry have a dramatic move on our expectations for the full year based only on the first quarter results. You combine that with the fact that we set our expectations in February and communicated them.

Speaker 3

Not all that much has changed. It was a good first quarter, and it was a little bit better than we thought it was going to be. That said, we still have the whole rental season ahead of us. Even in more normal times, it's a little bit easier to predict what might that might look like, but it's still imperfect until you get a little bit deeper into the rental season.

Speaker 6

Thanks for that. So I guess the follow-up would be, what would you guys consider a good peak leasing season? Like, how can we measure that?

Speaker 3

Good relative to our expectations? Good relative to historical performance? Like, what what is your good

Speaker 6

relative to? Guess I guess, if we were sitting on the second quarter call right now and you say we had a good peak leasing season, what would that entail?

Speaker 3

Yes. Well, I would entail that being good relative to what we expect it to be. And so our expectation included in the base you know, in our baseline scenario is that we are not anticipating a a rental season that looks like a pre pandemic, air quote, normal rental season, in that we're not expecting the same gains in physical occupancy that we would typically see seasonally. We're not expecting the same level of rate growth that we historically, in a normal time, would have seen. We're expecting something a little bit more muted.

Speaker 3

So for us, heading into this rental season, good would be what we expect. Great would be something that looked a little bit more like normal levels of seasonality. Great is not our expectation at this point.

Speaker 6

Understood. Thank you.

Speaker 7

Thank you.

Speaker 5

Your next question comes from the line of Spencer Grimser with Green Street. Please go ahead.

Speaker 8

Thank you. Just as it relates to market level performance, some of your Texas markets seem to be under pressure in 1Q. Can you just talk about what drove the underperformance there, and kind of how you're thinking about expectations moving forward for the rest of the year for those markets?

Speaker 2

Sure. Yeah. When you get into, again, Dallas, Houston, Austin, San Antonio, Austin, a supply impacted market, I think, is coming back, and we see green shoots there and feel pretty good about Austin. When you think about Houston, again, solid, a market that has, again, super resilient theme for the call, absorbed a lot of supply and did so with some pretty good population growth, pretty good job growth and is, I think, in a good footing and moving in a good direction. Dallas is a little bit tough.

Speaker 2

Part of that is supply. Part of that is pricing decisions from the competitive set that we face in Dallas. So we're working through both of those. But again, as I said in my prepared remarks, I think all of these markets we're feeling good about and I think are at one end, stabilizing and at the other end, I think, moving in moving in a pretty good direction.

Speaker 8

Okay. Great. That's really helpful color. And then just on the two developments in process, it seems as though those are trending well in terms of timing and then total anticipated costs. But I'm just curious if there's been any setbacks or surprises on input costs or labor just given the broader economic climate?

Speaker 3

Thanks, Spencer. There have not been any surprises. I mean, any development has its challenges along the way. But just given the timing of those projects, they were in advance of from a raw material standpoint of being exposed to all of the volatility that we've seen in recent weeksmonths. So from a timing perspective, we were on the fortunate side of not being impacted in any meaningful way on those projects.

Speaker 8

Okay. Great. Thank you so much.

Speaker 2

Thank you.

Speaker 5

Your next question comes from the line of Todd Thomas with KeyBanc. Please go ahead.

Speaker 9

Hi, thank you. Good morning. Chris, Tim, you ran ahead of your budget in the first quarter, and I understand the conservatism, just being it's early in the year and just given all of the uncertainty today. But the 2Q guide assumes a flat result at the midpoint relative to the first quarter, which I do not believe has really happened very often going back to 02/2005, the first year after the company IPO ed. Sounds like you're seeing some seasonality, rents and occupancy are trending higher through April.

Speaker 9

So can you just discuss some of the puts and takes? What causes FFO to hold steady? And what's assumed at the lower end of 2Q FFO guide to $0.63 that'd be down $01 sequentially?

Speaker 3

Yeah. Good question. Don't really spend a lot of time thinking about that sequence. Couple of different things that are going on. We have it was a good first quarter, a little bit better.

Speaker 3

Some of that is on timing of operating expenses. As you know, on the top line growth, we have the other income line item, which we are lapping some changes that we made a year ago. And so we'll get a little bit less of a contribution from that line item starting in the second quarter. The timing on some expenses, it's timing of of marketing spend this year versus last year. I guess it's a combination of things.

Speaker 3

Nothing nothing meaningful that I can point to that would, you know, that would point to that trend being different than it had been historically other than expense timing.

Speaker 9

Okay. That's helpful. And then, Chris, you you mentioned, small business customer demand in one of your comments or responses. Are you seeing that demand pick up at all? And are there certain markets in particular where you have seen some evidence of that type of demand materializing a little bit more?

Speaker 2

Yes. To some degree, the urban market. So we see a little bit of a pickup in that customer base in New York, in some of the more urban areas of North Jersey. We see it in the more urban areas of Chicago, a little bit in Washington, D. C.

Speaker 2

Proper. And it's a combination of, you know, folks finding us as a solution to making a commitment to more permanent space. So instead of, you know, small warehouse or or a portion of a space in a warehouse, not not not necessarily due to, any particular marketing efforts on our side, I think more from a from a growing awareness of self storage. And in this in the more suburban areas, you know, it's really it's really submarket or or actually store specific. What we have not seen is any distress.

Speaker 2

So we have not really seen a pickup in small businesses that are using us because they have chosen to shut down, which, you know, we view in the near term here at least as positive.

Speaker 3

Your

Speaker 5

next question comes from the line of Michael Griffin with Evercore Please go ahead.

Speaker 10

Great. Thanks. Obviously, a good job on the expense controls this quarter. Just curious, particularly for the personnel expense going down year over year, I mean, that more kind of proactive management of staffing Is it wage related?

Speaker 10

You know, how how should we think about kind of that line item throughout the cadence of the year?

Speaker 3

Yeah. It's a thanks for the question. It's a it's a combination of a of of a handful of things. What it's not is wage. Certainly, there's still wage inflation, we look to be competitive with our teammates in the store.

Speaker 3

They're a critically important part of our model and our success. That said, we have been able to, over the past several years, find ways to be more efficient in how we're staffing the stores, managing the hours in the stores. And so that's really part of the contribution on that line item. That is a line item that we don't a little bit of it also is what we did in the first quarter of last year versus this year. I wouldn't expect to see that type of number repeat itself throughout the year.

Speaker 3

Our expectation for the full year is for that number to be more flat than negative compared to last year in total for the year.

Speaker 10

Great. That's helpful. And then just on the acquisition opportunity set, obviously, you bought out your JV partner stake in one venture in first quarter. But as you look ahead, are there any opportunities maybe to buy out some of the other existing joint ventures? Do wholly owned acquisitions make sense right now?

Speaker 10

If you can give us a sense of that, that'd be helpful.

Speaker 3

Wholly owned acquisitions would make a lot of sense for us if sellers would sell us their assets at the price we would like to pay. Unfortunately, that's not the way the world works. I think the volatility in the market and head fakes in both directions on where interest rates are ultimately going to land has created an environment that I would have described to you as three months ago being a little bit more constructive where buyers and sellers were starting to converge on valuation. Would say the last handful of months has probably sent that back in the other direction a little bit as there's just an awful lot of uncertainty as to where cost of capital ultimately lands for everyone on both sides of the table. So a little bit hazy right now.

Speaker 3

From our perspective, what we focus our energy on is looking at every opportunity, trying to uncover every opportunity to maintain a healthy balance sheet that gives us the capacity to transact when we see attractive opportunities to do so. But just like some of our other commentary on where we see the rental season and other things, I would say the investments part of the equation is also pretty fuzzy. You would think that there is an increasing line of potential sellers that's building because there hasn't been a high level of transactions here over the past, gosh, going on now twenty four months. So you would think there would become some more and more motivation on the seller side. But that said, if you're a seller and you're not forced to come to the table, maybe you continue to wait for a little bit better day to bring your asset to market.

Speaker 10

Great. That's it for me. Thanks for the time.

Speaker 11

Thank you.

Operator

Your next question comes from the line of Ravi Vaidya with Mizuho. Please go ahead.

Speaker 12

Hi, guys. Good morning. Hope you guys are doing well. I just wanted to ask about your ECRI strategy right now, particularly as we're starting to see the second derivative and a number of fundamentals improve? Like, how are you thinking about your eCRR rates?

Speaker 12

Are still elevated right now, or are you looking to bring them back down and maybe increase move in

Speaker 11

rates? Thanks.

Speaker 2

Yeah. Thank you. So our our strategy has not changed in and has been fairly consistent for, you know, over a year now. The actual tactics underlying, you know, do change on a on a frequent basis because we're completely data driven, and it's simply looking at the in place customers who are who are eligible for a rate increase and thinking about how to balance great customer service, a good customer experience with that plan. And so I think in this environment, that's more constructive on price.

Speaker 2

We'll just continue to, again, let the data drive our decisions. The ECRIs in the quarter were fairly consistent with where they were both last quarter and last year. And I would not envision at this point that we would be making any meaningful change to the program

Speaker 12

at this time. Got it. Thank you. That's all for me.

Operator

Your next question comes from the line of Daniel Chikarico with Scotiabank. Please go ahead.

Speaker 11

Great. Thank you. Looking to understand the sequential rate trends so far this year. How much are street rates maybe or your moving rates up from the seasonal trough in late January, early February through April? And how does that compare to 2024 or a pre COVID quote unquote, normal year?

Speaker 2

Sure. And so if you think about it and I guess I talked about it to a prior question, They've been moving in a very constructive direction. Q4 averaged down about ten percent, Q1 averaged down about eight percent. And then in the month of April, the average was down a little bit north of two percent. If we look at that compared to how rates just the sequential movement in rates, they're up about mid teens.

Speaker 2

And if you compare that to kind of how that sequential curve moved last year, it's better than what we saw in 2024.

Speaker 11

Great. Thanks. I was looking for the latter part of that, so appreciate it. How does the 89.9 at the April compared to last year?

Speaker 2

Yeah. It's a 90 basis point gap to last year.

Speaker 11

Great. Appreciate the time. Yes. Thanks.

Operator

Your next question comes from the line of Ki Bin Kim with Truist Securities. Please go ahead.

Speaker 12

Thank you. Good morning. I wanted to ask a couple of questions on the New York City market and D. C. Both markets rebounded nicely.

Speaker 12

I was curious, is that more along the lines of the rebound you saw nationally in your portfolio? Or are there certain elements about New York City or DC that you think are more supportive that might have more sustainability going forward? Yes.

Speaker 2

Great question, Ki Bin. It's as often in our business a mixture of the two. The boroughs seeing very good performance that is led by The Bronx and Brooklyn, both seeing kind of five ish type percent same store revenue growth,

Speaker 6

very

Speaker 2

solid. Queens, the submarkets with the exception of Long Island City doing well. Long Island City is going to face a pretty competitive supply situation here for a little bit, quite close to all of our stores in that market. And then the opposite, when you get to the MSA, is Northern New Jersey, which is kind of flat in the first quarter, and it's still moving in a good direction with the supply impact but has a ways to go. D.

Speaker 2

C, I think, again, the suburbs continue to be quite strong, and the district itself is up close to 4% in the quarter, same store revenue and moving in a good direction. So I would say to kind of get more direct, a little bit better than what we're seeing nationally. We're seeing in New York City, Washington and its suburbs and Chicago. And I think those trends marginally will continue as we go throughout the year.

Speaker 12

And do you think the strength in D. C. Has anything to do with those or some of the government employee turnover?

Speaker 2

So we asked that question, and we are grassroots, having the folks in the stores try to see what kind of color they can obtain from our customers. Nothing obvious yet on that front.

Speaker 12

Okay. Thank you. And congrats on a good quarter.

Speaker 7

Thank you.

Operator

Your next question comes from the line of Michael Goldsmith with UBS. Please go ahead.

Speaker 13

Good morning. Thanks a lot for taking my question. It seems like you're seeing a really nice improvement in street rates in April down 2% versus down 8% in the first quarter. Just trying to unpack that a little bit. Is that a reflection of the comparisons?

Speaker 13

Is that a reflection of a different strategy? Is that just, you know, lowering, you know, rates kind of as low as it can be without, without driving incremental met demand? Just trying to understand kind of like what is, what are the factors driving that improvement there?

Speaker 2

Yeah. We saw, obviously, a very good first quarter. You know, if you take if you take leap year out, our rentals in the quarter were flat to last year, which in this environment was really, really good. And that was with a gradual improvement from January to February to March in rate. And as I said, rate's moving up sequentially a little bit more than what we would have seen better than what we saw last year.

Speaker 2

So with that, it continued into April. April is pretty volatile. And again, we'll continue to watch this. There's obviously everything that Tim spoke about that's happening in the world today, and we're carefully watching how that impacts the consumer. So frankly, Michael, we're kind of taking it day to day, week to week here at this point.

Speaker 13

Got it. And just a follow-up. You talked a little bit about some expense timing. Can you provide a little bit more color what's going on there? And I think in particular, have referenced marketing, but if you can just clarify, what moves where and if that's expected to come back later in the year, that would be helpful.

Speaker 13

Thanks.

Speaker 3

Thanks, Michael. The two big areas from a timing perspective that I would note, one is R and M expense, that is just one of those things. It's a combination of when things break and when you spend. And when you think about year over year comparisons, can be we're a little bit heavier last year than we were this year. So timing on that line item.

Speaker 3

But the bigger one is the one you talked about, which is marketing. And we don't spend to a budget on the marketing line item. We we spend to the opportunity to deploy marketing dollars in a way that gets us a good return on that incremental spend. And it's it's a line item that you've seen for for years for us is is gonna have some volatility in in it throughout the year. When you combine that, it was the same way last year.

Speaker 3

Right? If we find compelling opportunities to deploy marketing spend that gets us a good return, when you think about it in conjunction with how we're pricing, there are going be years where in the first quarter we press on that pedal a little bit more. There are going to be years like this year where we pull back on that a little bit. But our expectation for the year is that while we may have pulled back a little bit on that in the first quarter, our expectation is there's more likely than not an opportunity for us to press down on the pedal a little bit more later in the year. So our expectation for the year in marketing hasn't really changed.

Speaker 3

It's just we're a little bit late in the first quarter.

Speaker 13

Got it. Thank you very much. Good luck in the second quarter. Okay. Thanks.

Operator

Next question comes from the line of Hong Zhang with JPMorgan. Please go ahead.

Speaker 11

Yeah. Hey, guys. I mean, it it seems like the operating environment is still pretty pretty mixed. I was just wondering if you're seeing more demand for the third party management side from just operators looking to work with you.

Speaker 2

Thank you for the question. I the the the short answer is yes. Obviously, the mix changes. Right? So we've gone from saying, the majority of our pipeline being development stores, new development stores.

Speaker 2

And as that has become increasingly more challenging and we're seeing a decline in new supply, it shifted a bit to more of the open and operating stores for a variety of reasons. Some is just stress in this environment, and they recognize the value of the CubeSmart brand. Some of it is simply life events that cause an owner or an operator to want retain CubeSmart. We're seeing a little bit less of the institutional activity, which is, again, no surprise if you've seen a little bit less overall activity on the acquisition front here given the climate as you described. So that, I think, is the color and the short answer.

Speaker 11

Got it. And I guess that's my follow-up. I understand self storage business is relatively more recession resilient than other property types, but I was just wondering what what how you think the business would react if we really do enter a recession later this year.

Speaker 2

Well, I think you hit it spot on. And through short ones and the GFC, thinking about this since 1993, 'ninety four, typically, you just see, you know, customers who come to self storage and rent because they find themselves wanting to cut back on expenses and they may move in with a friend and, you know, go from a one bedroom to a two bedroom and they have duplicative possessions, you may see, you know, folks moving home with mom and dad to save some money and, again, duplicative possessions. It may take longer to find that post college employment, and that may create a demand. So again, the beauty of the business is that through most cycles, we perform quite well. And then on the vacate side, there's always this misnomer that you're going to see an increase in vacates because of an economic recession.

Speaker 2

And our experience with that is that it's just not usually the case in any material way.

Speaker 11

Got it. Thank you.

Speaker 6

Thanks.

Operator

Your next question comes from the line of Brennan Lynch with Barclays. Please go ahead.

Speaker 7

Great. Thank you for taking my questions. I think your marketing spend has mainly been for paid search, but you've also commented in the past about testing other channels. Can you provide an update on that and any color on the progress with those initiatives?

Speaker 2

Sure. Well, you know, the marketing efforts run, again, from from SEO, organic to paid, and and, you know, different costs associated with each of those. And then, you know, it expands into social media to varying types of other media advertisements on satellite radio, etcetera. And then more limited of recent vintage out of home, which would be advertising in an urban market like New York on bus, kings or tails, etcetera. So it runs across the gamut, but you're spot on.

Speaker 2

The most the highest expenditure tends to be in the form of paid search.

Speaker 7

Great. That's helpful. And maybe just help us understand what leads to more kind of high level brand recognition type marketing on buses or on satellite radio versus the the much more targeted search oriented spend?

Speaker 2

Yeah. Ultimately, right, your your highest brand level recognition is the store itself. And so just think about you're a consumer and you're going to see, although I don't know why you would, you know, the Brooklyn Nets play basketball and you're walking down Atlantic Avenue and you're seeing, you know, three beautiful CubeSmarts as you as you take your stroll. And so now it's top of mind. Right?

Speaker 2

So that's giving you the most brand recognition, and that's why we see a disproportionate amount of SEO given our dominant New York City presence with those great assets. And so now it's in your mind. Now you may may, because we know where you're walking and and you're listening to one of the satellite radios, you get an ad that's further reinforcement, etcetera. But until you have an actual need, right, that's just that's just giving you kind of that back of mind brand awareness. No different than in the nineties, you wanted to build your store on the nicest street halfway in between, you know, the nicest multifamily in town and the most popular shopping center in town.

Speaker 2

You wanted those cars coming back and forth and seeing your doors. So then when the need occurs, right, you're top of mind. That's when, instead of searching for self storage near me, which would be the most ubiquitous term, you you direct to CubeSmart, and then you find us, you know, great customer service. We have the cube to satisfy your need and your rent.

Speaker 7

Great. Thank you for the color. Yes.

Operator

I'll now turn the call back over to Chris Marr, President and CEO, for closing remarks. Please go ahead.

Speaker 2

Sure. Thank you all for listening. I think the themes that clearly you're getting is it's prudent at this point to neither be Pollyanna or Chicken Little. You know, we're gonna work through the opportunity set that's provided to us, and what we can assure you is that we will be maximizing that opportunity and focused on delivering shareholder value. So thank you all very much for taking your time here today, and we look forward to speaking to you again after the second quarter.

Speaker 2

Take care.

Operator

Ladies and gentlemen, this concludes today's call. Thank you all for joining. You may now disconnect.

Powered by Quartr
Earnings Conference Call
CubeSmart Q1 2025
00:00 / 00:00