CubeSmart heads west on heels of big portfolio buy

John Egan
March 1, 2022

On the heels of its $1.7 billion acquisition of the Storage West portfolio, CubeSmart may be more likely to nail down infill opportunities near the newly added facilities.

During CubeSmart’s fourth-quarter earnings call Feb. 25, Tim Martin, the self-storage REIT’s chief financial officer, said the 59-facility Storage West portfolio “was a great strategic fit for us, as it enabled us to acquire high-quality, well-positioned stores and to diversify our portfolio into several markets that we’ve historically been underweight in.”

Martin said the Storage West deal, which closed in December, gives Malvern, PA-based CubeSmart “a great opportunity” to seek infill locations in all of Storage West’s markets. The portfolio is concentrated in Arizona, California, Nevada and Texas.

“Now that we have established a deeper presence in each of those markets, I think our intel is better, I think our underwriting is better. I think we are a more natural buyer for many of those opportunities,” Martin told Wall Street analysts.

CubeSmart anticipates spending $500 million this year on acquisitions. Of that amount, nearly half is already earmarked for closed or pending acquisitions of wholly owned facilities.

Highlights of CubeSmart’s 2021 results include:

  • A 13.8% increase in same-store revenue compared with 2020. For 2022, CubeSmart expects same-store revenue to climb 10.5% to 12.5%.
  • A 19.7% rise in same-store NOI compared with the previous year. The REIT expects same-store NOI to grow 11.5% to 14.5% this year.
  • A 1% decline in same-store operating expenses compared with 2020. CubeSmart forecasts a 6% to 7.5% jump in same-storage operating expenses in 2022.
  • A 40% share of facilities affected by new supply. That compares with 40% in 2018, 50% in 2019 and 45% in 2020. This year, CubeSmart foresees that figure dropping to 35%.

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