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1. Company Snapshot

1.a. Company Description

CubeSmart is a self-administered and self-managed real estate investment trust.The Company's self-storage properties are designed to offer affordable, easily accessible and secure storage space for residential and commercial customers.According to the 2020 Self-Storage Almanac, CubeSmart is one of the top three owners and operators of self-storage properties in the United States.

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1.b. Last Insights on CUBE

CubeSmart's recent performance has been impacted by several factors. The company's Q2 earnings release showed a beat on FFO and revenue estimates, but investors may be concerned about the self-storage industry's headwinds. CubeSmart's decision to price $450 million of 5.125% senior unsecured notes due 2035 may indicate a need for capital, potentially diluting shareholder value. Additionally, the Fed's potential rate cuts, hinted at by Chair Powell, may affect the company's borrowing costs and dividend yield, currently at 5.2%. (Source: Bloomberg)

1.c. Company Highlights

2. CubeSmart's Q3 2025 Earnings: A Resilient Performance

CubeSmart reported a solid third quarter, with FFO per share as adjusted coming in at $0.65, in line with analyst estimates. Same-store revenues declined 1% year-over-year, while average occupancy dropped 80 basis points to 89.9%. However, same-store operating expenses grew only 0.3% over last year, reflecting the company's focus on expense control. The company's EPS came out at $0.65, matching analyst estimates.

Publication Date: Nov -08

📋 Highlights
  • Improved Guidance:: Raised guidance for key same-store and earnings metrics, driven by lessening new supply impact and a constructive pricing environment.
  • FFO Performance:: FFO per share (adjusted) reached $0.65, with same-store revenues down 1% YoY and average occupancy at 89.9% (-80 bps).
  • Move-In Growth:: Move-in rents increased 2.5% year-over-year, with no change in promotions, reflecting pricing power and portfolio quality.
  • New York Outperformance:: NYC outperformed Northeast markets due to low new supply, strong demand, and high-quality assets.
  • Development Outlook:: Extended development supply runway anticipated due to elevated costs, cautious underwriting, and slow recovery in move-in rates.

Operational Highlights

The company's operational performance was marked by a 2.5% year-over-year increase in move-in rates, indicating a more constructive pricing environment. The occupancy gap to last year contracted, and the company saw favorable year-over-year variances in utilities expenses and property insurance. Christopher Marr, President and CEO, noted that the company's systems try to maximize revenue from each customer, varying by market, and that they are finding the right balance between rate and occupancy.

Revenue Growth Prospects

CubeSmart's revenue growth prospects appear promising, with Christopher Marr citing a 4-5% monthly increase in average rents. This growth is attributed to prolonged pricing power, and the effects are expected to flow through the portfolio over time. The company's move-in rents are up 2.5% on a gross basis, with no change in promotions. With a healthy consumer and steady performance in solid markets, the company is poised for growth.

Valuation and Outlook

With a P/E Ratio of 24.09 and a Dividend Yield of 5.54%, CubeSmart's valuation appears reasonable. Analysts estimate next year's revenue growth at 3.5%. The company's strong in-place rent per occupied square foot and quality focus are expected to drive future performance. As Christopher Marr noted, "if demand picks up, we could see more elevated performance." With a ROE of 12.6% and a ROIC of 95.62%, the company is well-positioned to capitalize on growth opportunities.

Market Dynamics

The company's performance was also influenced by market dynamics, with certain markets showing year-over-year improvements in rates. The New York City market, in particular, outpaced other Northeast markets due to a lack of new supply and high-quality assets. As the company continues to navigate the evolving market landscape, its focus on expense control and revenue growth is expected to drive future success.

3. NewsRoom

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Only 3 REITs For The Next 10 Years

Dec -01

Source: seekingalpha.com

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CubeSmart: A Good Self-Storage REIT To Consider After Recent Fear Pushed The Price Lower

Dec -01

Source: seekingalpha.com

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Doves Take The Wheel

Nov -30

Source: seekingalpha.com

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B&I Capital AG Reduces Position in CubeSmart $CUBE

Nov -27

Source: defenseworld.net

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A Fed Divided

Nov -23

Source: seekingalpha.com

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Trump's 50-Year Mortgage Idea Could Be A Big Gift To REITs

Nov -20

Source: seekingalpha.com

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Buried Treasure: Your Map To 13 Strong-Yielding Bargain REITs

Nov -17

Source: seekingalpha.com

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Hawks In The House

Nov -16

Source: seekingalpha.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.48%)

6. Segments

Rental

Expected Growth: 4.5%

Rental from CubeSmart's 4.5% growth driven by increasing demand for self-storage units, fueled by rising housing costs, urbanization, and e-commerce growth. Additionally, CubeSmart's strategic expansion into high-growth markets, investments in technology, and focus on customer experience contribute to its growth momentum.

Other Property Related Income

Expected Growth: 4.2%

CubeSmart's 4.2% growth in Other Property Related Income is driven by increasing demand for storage solutions, strategic acquisitions, and expansion of existing facilities. Additionally, the company's focus on third-party management and joint ventures has contributed to revenue growth. Furthermore, the implementation of revenue management systems and yield optimization strategies have also boosted income.

Property Management Fee

Expected Growth: 4.8%

CubeSmart's 4.8% growth in Property Management Fee is driven by increasing demand for self-storage units, strategic acquisitions, and expansion of third-party management services. Additionally, the company's focus on operational efficiency, technology enhancements, and revenue management initiatives have contributed to the growth.

7. Detailed Products

Self Storage Units

CubeSmart offers a range of self storage units in various sizes to accommodate different storage needs, from small to large units.

Climate-Controlled Storage

CubeSmart provides climate-controlled storage units that maintain a consistent temperature and humidity level, perfect for storing sensitive items.

Outdoor RV and Boat Storage

CubeSmart offers outdoor storage spaces for RVs, boats, and other vehicles, providing a secure and convenient storage solution.

Business Storage Solutions

CubeSmart provides customized storage solutions for businesses, including inventory storage, document storage, and equipment storage.

Packing and Moving Supplies

CubeSmart offers a range of packing and moving supplies, including boxes, tape, and bubble wrap, to help with moving and storage needs.

Delivery and Labor Services

CubeSmart provides delivery and labor services to help with moving and storage needs, including loading and unloading of storage units.

8. CubeSmart's Porter Forces

Forces Ranking

Threat Of Substitutes

CubeSmart has a low threat of substitutes due to the lack of alternative options for self-storage services. The company's diversified portfolio of storage facilities and amenities makes it difficult for substitutes to emerge.

Bargaining Power Of Customers

CubeSmart's customers have moderate bargaining power due to the availability of alternative storage options. However, the company's strong brand reputation and convenient locations mitigate this power to some extent.

Bargaining Power Of Suppliers

CubeSmart has a low bargaining power of suppliers due to its large scale of operations and diversified supplier base. This reduces the company's dependence on individual suppliers.

Threat Of New Entrants

The threat of new entrants in the self-storage industry is moderate due to the capital-intensive nature of the business and the need for significant investment in infrastructure. However, the industry's growth prospects and relatively low barriers to entry make it attractive to new entrants.

Intensity Of Rivalry

The self-storage industry is highly competitive, with several established players competing for market share. CubeSmart faces intense rivalry from competitors such as Public Storage and Life Storage, which can lead to pricing pressures and increased marketing expenses.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 51.10%
Debt Cost 3.95%
Equity Weight 48.90%
Equity Cost 7.63%
WACC 5.75%
Leverage 104.51%

11. Quality Control: CubeSmart passed 5 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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National Storage

A-Score: 6.2/10

Value: 5.3

Growth: 5.4

Quality: 7.2

Yield: 10.0

Momentum: 1.0

Volatility: 8.0

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STAG Industrial

A-Score: 6.1/10

Value: 3.4

Growth: 5.4

Quality: 7.2

Yield: 7.0

Momentum: 4.0

Volatility: 9.3

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First Industrial Realty Trust

A-Score: 5.9/10

Value: 2.5

Growth: 5.6

Quality: 8.0

Yield: 6.0

Momentum: 4.0

Volatility: 9.3

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Terreno Realty

A-Score: 5.8/10

Value: 2.4

Growth: 6.9

Quality: 7.4

Yield: 6.0

Momentum: 4.0

Volatility: 8.3

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EastGroup Properties

A-Score: 5.8/10

Value: 2.0

Growth: 6.1

Quality: 7.1

Yield: 6.0

Momentum: 4.0

Volatility: 9.3

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CubeSmart

A-Score: 5.7/10

Value: 3.0

Growth: 6.2

Quality: 5.9

Yield: 8.0

Momentum: 2.0

Volatility: 9.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

36.63$

Current Price

36.63$

Potential

-0.00%

Expected Cash-Flows