If you build it, CubeSmart will come.

CubeSmart President and CEO Chris Marr said the publicly traded self-storage REIT wants to manage facilities that are being developed in its key markets.

“Last quarter, we talked about 18 stores in some form of development in the top 10 MSAs that directly compete with Cube. That number has grown to 28,” Marr told Wall Street analysts during CubeSmart’s first-quarter earnings call.

Folks who are interested in developing a self-storage facility have fully realized the benefits of brand and the benefits of scale.
— Chris Marr, president and CEO of CubeSmart

Those markets include major Texas cities; Chicago, IL; New York City, NY; and Miami, FL.

When asked who will be operating those facilities, Marr said: ”Hopefully, CubeSmart will be operating all of them.”

Managing new facilities

Marr said the majority of new developers are hiring third-party managers to run their facilities. Oftentimes, they team up with CubeSmart or another third-party manager before going after financing.

“Folks who are interested in developing a self-storage facility have fully realized the benefits of brand and the benefits of scale,” Marr said.

Marr said the company has a pipeline of about 30 facilities that will be branded and managed by CubeSmart once the developers complete them. As of March 31, CubeSmart managed 181 facilities for other owners.

Buying new facilities

CubeSmart also has a robust pipeline of newly built facilities that it plans to buy from developers once they’re finished.

The REIT currently has three facilities under contract (two in Texas and one in New York) to buy for more than $69 million. Since the quarter ended March 31, CubeSmart bought a brand-new facility at 5818 Lyndon B. Johnson Freeway in Dallas, TX, for $15.8 million.

The company has another five brand-new facilities under contract as part of a joint venture in which CubeSmart is investing $115.6 million. Four of the facilities are in New York and one facility is in Virginia. Two facilities are scheduled to open this year; the remaining facilities will open in 2016.

Picking up existing facilities

As for existing facilities, CubeSmart recently wrapped up the acquisition of 26 facilities from Harrison Street Real Estate Capital for $223 million. During the first quarter, CubeSmart purchased the last four Harrison Street facilities — all in the Chicago, IL, area — for $27.5 million. Deals for most of the Harrison Street facilities were completed in the fourth quarter of 2014.

CubeSmart purchased another three properties from other owners during the first quarter for $21.8 million. The facilities are in Texas, Tennessee and Arizona.

Marr said CubeSmart has one other property under contract for about $7 million.

Operating results

CubeSmart reported positive results during the quarter, earning total profit of $8.5 million. That’s up 86 percent from the same quarter a year ago. During the same period, revenue grew 18.8 percent to $103.7 million.

Revenue at the company’s 361 same-store locations grew 7 percent during the first quarter, while profit grew 9.5 percent.

Revenue gains were driven by sustained growth in occupancy and rental rates.

Occupancy at the end of the quarter for same-store locations stood at 91.2 percent, up from 89.3 percent a year earlier. Realized rent grew 5 percent compared with last year to $14.17 per occupied square foot.

Alexander Harris