CubeSmart Narrows Property-Income Decline, Raises Outlook
Net income rose to $89.6 million as rental rates and occupancy improved.
CubeSmart (CUBE), a self-storage real estate investment trust, narrowed its same-store net operating income decline to 0.7% in the second quarter from 1.5% in the first, as revenue growth accelerated and expense growth moderated.
The quarter marked a turn in operating momentum. Same-store revenue rose 0.8% from a year earlier, up from 0.6% growth in the prior quarter, while new-customer pricing strengthened after CubeSmart had described first-quarter trends as stable.
Revenue increased $4.2 million from a year earlier, primarily because of higher same-store rental rates. Diluted earnings rose to $0.39 a share from $0.36 a year earlier and $0.36 in the first quarter, reversing the prior quarter’s year-over-year decline.
Occupancy also improved. Average same-store occupancy increased to 90.4% from 89.0% sequentially, while quarter-end occupancy rose to 91.0% from 89.3%. Ending occupancy was unchanged from a year earlier after declining 30 basis points year over year in the first quarter.
Higher personnel costs and property taxes lifted property operating expenses by $7.0 million from a year earlier. Still, same-store expense growth slowed to 4.4% from 5.8% in the first quarter, helping contain pressure on property income.
Adjusted funds from operations held at $0.63 a share sequentially, though the year-over-year decline widened to 3.1% from 1.6% in the first quarter. Adjusted FFO fell to $143.1 million from $148.9 million, and the payout ratio rose to 84.1% as the quarterly dividend increased to $0.53 a share.
CubeSmart raised the midpoints of its 2026 same-store revenue, same-store NOI and adjusted-FFO forecasts following its first-half performance. The company now expects full-year diluted earnings of $1.58 to $1.64 a share and adjusted FFO of $2.54 to $2.60 a share.
The company also agreed to contribute 15 wholly owned stores valued at $197.0 million to a joint venture with Heitman, retaining a 20% stake after the expected fourth-quarter closing. CubeSmart expanded its revolving-credit capacity to $1.0 billion and repurchased 1.1 million shares for $42.5 million during the quarter, giving it additional balance-sheet flexibility as the operating recovery took hold.