CubeSmart (NYSE:CUBE) reported third-quarter results at the high end of its expectations, with the self-storage operator returning to positive year-over-year growth in same-store net operating income and adjusted funds from operations per share.
President and Chief Executive Officer Chris Marr said the quarter reflected stable demand for self-storage, reduced pressure from new supply and the company’s ability to balance rental rates and occupancy at individual properties. He said 17 of CubeSmart’s 20 largest markets posted accelerating revenue growth, led by urban Northeast and Midwest markets, while supply-affected Sunbelt and West Coast markets showed improvement.
“A very solid quarter for CubeSmart,” Marr said, adding that the company delivered on its forecasted inflection to positive NOI and FFO-per-share growth.
Revenue Growth Accelerates as Occupancy Improves
Chief Financial Officer Tim Martin said same-store revenue rose 1.9% in the third quarter, accelerating from 0.8% growth in the second quarter. Average occupancy increased 60 basis points year over year, while realized rent rose 50 basis points. Together, those metrics produced 1.2% growth in revenue per available foot, compared with 0.5% growth in the prior quarter.
Other property-related income increased 16.8%, driven by changes across merchandise sales, fees and truck-rental income. Martin said the growth was not from one-time items, though he expects the rate of growth in that category to moderate after the company laps prior changes.
CubeSmart said rental volume was positive in five of the last six months. Occupancy stood 90 basis points above the prior-year level at the end of September, compared with flat year-over-year occupancy at the end of June. Marr said the company experienced less of a seasonal decline from summer occupancy peaks than in prior years.
Move-in rates declined modestly year over year during the third quarter as the company emphasized volume in July, but rates returned to positive growth by the end of September. Through October, move-in rates were up in the low-single digits year over year, while rental volume was in line with the prior year and occupancy remained ahead of prior-year levels, according to Marr.
Expenses, Guidance and 2027 Outlook
Same-store operating expenses rose 1.3% during the quarter. Martin cited successful property-tax appeals, a better-than-expected insurance renewal and efforts to control expenses through technology and other operational initiatives. Revenue growth and expense discipline resulted in 2.1% same-store NOI growth for the quarter.
CubeSmart reported adjusted FFO per share of $0.66, at the high end of its quarterly guidance entering the period.
The company increased its full-year same-store revenue growth outlook to a range of 1% to 1.4%, representing a 33-basis-point increase at the midpoint. It lowered its outlook for same-store expense growth to 2.8% to 3.8%, a 58-basis-point improvement at the midpoint. Martin said the revised guidance implies positive full-year NOI growth and positive FFO-per-share growth at the midpoint.
For the fourth quarter, the midpoint of the revenue guidance implies approximately 1.5% same-store revenue growth, while the high end implies 2.3% growth, Martin said. The company did not provide 2027 financial guidance, but management expressed optimism about the operating setup entering the year.
Marr said the company expects its historically stronger Northeast and Midwest markets to continue leading if demand trends remain steady. He also expects the Sunbelt and Southwest markets to continue improving as supply is absorbed. A stronger housing market could further accelerate demand, he added.
Supply, Competition and Customer Retention
Management attributed much of the improving backdrop to declining deliveries of new storage facilities. Marr said the effect is developing market by market, citing North Jersey as an area where supply had weighed on results but where CubeSmart properties are now outperforming the broader metropolitan area.
He said the competitive environment has been constructive throughout the year as newer facilities have reached occupancy levels that allow owners and managers to become more comfortable raising rates. CubeSmart expects that backdrop to remain constructive in 2027.
Marr also highlighted the company’s digital marketing, customer-service reputation, online reviews and data-driven pricing tools as competitive advantages in attracting and converting customers. He said approximately 40% of customers have stayed with the company for more than two years, a level that has remained relatively consistent throughout the year.
CubeSmart has deployed generative artificial intelligence across the company and is beginning to explore agentic AI applications, Marr said. Management sees opportunities for the technology to support revenue optimization, efficiency and software development.
Capital Allocation and Balance Sheet Activity
CubeSmart continued to prioritize share repurchases, buying back 2.1 million shares for $83.9 million during the third quarter at an average price of $39.09 per share. Year-to-date repurchases totaled $159.8 million at an average price of $38.52 per share.
Martin said the company views its shares as more attractive than acquisitions of lower-quality assets at private-market valuations. He described a continuing public-private valuation disconnect, saying stabilized assets that meet CubeSmart’s quality standards were generally trading at cap rates of about 5.25% to 5.5%, while the company’s implied cap rate had been above 6% for much of the year.
The company expects its joint venture with Heitman to close in the fourth quarter, generating approximately $170 million in net proceeds. Management said the transaction will monetize non-core assets, retain participation in future upside and provide a potential avenue for external growth.
During the quarter, CubeSmart repaid a $300 million bond maturity and three secured loans totaling $40.3 million. After quarter-end, it closed a new $300 million unsecured bank term loan priced at SOFR plus 80 basis points. The company ended the quarter with $850 million drawn on its revolver and expects to finish the year with roughly $400 million outstanding, absent additional capital activity.
CubeSmart added 32 third-party managed stores during the quarter, ending September with 882 stores under management for third parties.
About CubeSmart (NYSE:CUBE)
CubeSmart (NYSE: CUBE) is a self-administered and self-managed real estate investment trust that owns, operates and manages self-storage facilities in the United States. The company provides storage space for households, businesses and other customers through a portfolio serving metropolitan areas and communities across the country.
Its facilities offer a range of storage options, including traditional and climate-controlled units, as well as space for vehicles, boats and recreational vehicles at select locations.
