CubeSmart Q2 Earnings Call Highlights

Key Points

• 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.

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.

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.

Occupancy and demand trends improve

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.

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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.

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.

Guidance updated as expense growth is expected to moderate

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.

Heitman venture to support repurchases and portfolio strategy

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.

Credit facility expanded

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.

About CubeSmart (NYSE:CUBE)

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.

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