[Management View]
CubeSmart reported a solid Q3 2025, with key metrics showing stabilization. The company highlighted diminishing supply headwinds and improved pricing activity in core markets. Management noted that move-in rates in the same-store portfolio were positive year over year for the first time since Q1 2022.

[Outlook]
The company raised the midpoint of same-store revenue and expense guidance for the full year 2025 while maintaining FFO per share as adjusted. Guidance for Q4 same-store revenue growth implies negative results but at an improved trajectory compared to the prior quarter. CubeSmart plans to continue expanding its third-party management portfolio and proceed with new developments and acquisitions.

[Financial Performance]
- FFO per share: $0.65, consistent with expectations.
- Same-store revenue: Declined 1% YoY.
- Same-store average occupancy: 89.9%, down 80 basis points YoY.
- Same-store operating expenses: Increased 0.3% YoY.
- Same-store NOI: Declined 1.5% YoY.
- Move-in rate growth: Increased 2.5% YoY.
- Customer churn: 4%-5% monthly.

[Q&A Highlights]
Question 1: How are you balancing rate and occupancy in the current demand environment?
Answer: The balance between rate and occupancy varies by market. In stable markets like New York City and Washington, D.C., both rate and occupancy are strong. In stabilizing markets like Miami and Los Angeles, rates and occupancy are improving but still down YoY. In markets like Atlanta and Phoenix, the focus is on navigating new move-in customer rates versus occupancy.

Question 2: What percentage of leads and bookings are AI-influenced today, and how does the cost compare to traditional search engine leads?
Answer: Less than 1% of leads currently originate from large language models like ChatGPT.

Question 3: Have you seen an increase in merchant builder sellers coming to market?
Answer: There has been no significant change. Most merchant builders are looking for ways to extend out and anticipate better times ahead, with financial institutions generally cooperating.

Question 4: Can you provide color on October trends for move-in rates and occupancy?
Answer: The occupancy gap to last year has contracted, and the average rent on rentals is in the 1.9%-2% range for October.

Question 5: Are you seeing more acquisition opportunities or deal flow?
Answer: CubeSmart has three stores under contract, indicating movement in the right direction. The gap between buyer and seller expectations has shrunk, making the market more constructive.

Question 6: What are your thoughts on pricing, promotions, and discounting in the off-peak season?
Answer: CubeSmart has not changed its discounting strategies. The 2.5% gross move-in rate growth is also the net rate, as promotions have not changed.

Question 7: Have you seen any changes in new customer behavior or price sensitivity?
Answer: In markets like Manhattan and Chicago, there is less price sensitivity, and CubeSmart can raise new customer rents. In markets like Atlanta and Phoenix, the focus is on finding the right balance to convert customers.

Question 8: What is your outlook for the third-party management business?
Answer: CubeSmart added 46 stores to its platform in Q3, bringing the total to 863. The company focuses on adding new stores and owners, with churn mainly due to transactions.

Question 9: Are there certain markets you are more comfortable underwriting for acquisitions?
Answer: CubeSmart is comfortable underwriting in all markets but considers different risk hurdles based on market characteristics. The company does not blacklist any market but ensures risk-adjusted returns.

Question 10: What are the stabilized cap rates for the three assets being acquired in Q4?
Answer: The assets are being acquired at cap rates in the low 5% range, stabilizing around 6% by year two or three.

Question 11: How does New York City compare to other Northeast markets in terms of performance?
Answer: New York City outperforms due to stable supply, a need-based customer base, and high asset quality. Other Northeast markets like Philadelphia have more supply and a mixed customer base.

Question 12: What is your outlook for development in New York City?
Answer: CubeSmart looks for opportunities that complement its existing portfolio and meet demand. The lack of tax incentives makes it challenging to find new development opportunities.

Question 13: What trends are you seeing in average length of stay?
Answer: Customers staying more than one year increased by 50 basis points YoY. Those staying more than two years are down 140 basis points YoY but up 50 basis points compared to 2019.

Question 14: What is your outlook for supply in the coming years?
Answer: Supply is expected to be constrained due to elevated costs and cautious lending by local and regional banks. The recovery in move-in rates will be gradual, with new supply taking 18 months to come online.

Question 15: How did move-in trends play out during the quarter?
Answer: Move-in trends peaked in July and then sequentially slowed down, consistent with historical patterns.

[Sentiment Analysis]
Analysts and management maintained a cautiously optimistic tone, highlighting stabilizing trends and improved pricing activity. Management emphasized a conservative outlook for 2026, with expectations for gradual improvement.

[Quarterly Comparison]
| Metric | Q3 2025 | Q3 2024 |
|-------------------------------|---------|---------|
| FFO per share | $0.65 | $0.65 |
| Same-store revenue growth | -1% | 0% |
| Same-store average occupancy | 89.9% | 90.7% |
| Same-store operating expenses | +0.3% | +1.0% |
| Same-store NOI growth | -1.5% | -0.5% |
| Move-in rate growth | +2.5% | -1.0% |

[Risks and Concerns]
- Continued supply headwinds in Sunbelt markets.
- Uncertainty in demand conditions.
- Potential impact of economic downturn on consumer health and demand.

[Final Takeaway]
CubeSmart's Q3 2025 earnings call highlighted stabilizing trends and improved pricing activity in core markets. The company raised its full-year guidance for same-store revenue and expenses while maintaining FFO per share. Management remains cautiously optimistic about 2026, expecting gradual improvement in operational metrics. The focus on strategic acquisitions and third-party management expansion positions CubeSmart for continued growth, despite ongoing challenges in certain markets.