CUBE - NYSE

Thank you for standing by. My name is Jordan, and I'll be your conference operator today. At this time, I'd like to welcome everyone to the CubeSmart Fourth Quarter 2025 Earnings Call. [Operator Instructions] I'd now like to turn the call over to Josh Schutzer, Senior Vice President of Finance. Please go ahead.

Thank you, Jordan. Good morning, everyone. Welcome to CubeSmart's Fourth Quarter 2025 Earnings Call. Participants on today's call include Chris Marr, President and Chief Executive Officer; and Tim Martin, Chief Financial Officer. Our prepared remarks will be followed by a Q&A session. In addition to our earnings release, which was issued yesterday evening, supplemental operating and financial data is available under the Investor Relations section of the company's website at www.cubesmart.com. The company's remarks will include certain forward-looking statements regarding earnings and strategies that involve risks, uncertainties and other factors that may cause the actual results to differ materially from these forward-looking statements. The risks and factors that could cause our actual results to differ materially from forward-looking statements are provided in documents the company furnishes to or files with the Securities and Exchange Commission, specifically the Form 8-K we filed this morning, together with our earnings release filed with the Form 8-K and the Risk Factors section of the company's annual report on Form 10-K. In addition, the company's remarks include reference to non-GAAP measures. A reconciliation between GAAP and non-GAAP measures can be found in the fourth quarter financial supplement posted on the company's website at www.cubesmart.com. I will now turn the call over to Chris.

Good morning, and thank you for joining us today. We are encouraged heading into 2026 that fundamentals have stabilized, and we are positioned to return to growth. Operating metrics have seen improvement over the last couple of quarters. And now that's beginning to flow through to financial metrics. Our more stable urban markets in the Northeast and Midwest continue to outperform, while our more transient supply-impacted markets across the Sunbelt and the West Coast are beginning to see green shoots in the form of second derivative improvement. Across all our markets, our existing customer metrics remain strong with no change to attrition rates or credit. 2025 was a year of stabilization for demand trends. Overall demand patterns were more consistent throughout the year and the environment has been more constructive, leading to move-in rates in the back half of the year moving positive year-over-year. The trend in move-in rates has been very encouraging with year-over-year quarterly growth improving from minus 10% in the fourth quarter of 2024 improving to minus 8.3% in the first quarter of 2025, improving again to minus 4% in the second quarter of last year, continuing to improve and turning positive at plus 2.5% in the third quarter of 2025 and increasing that positive momentum at plus 2.8% in the fourth quarter of 2025. In the early part of 2026, we have seen similar trends with the occupancy gap continuing to narrow with positive move-in rates. Specifically, the occupancy gap at the end of January of this year improved from year-end when it was down 70 basis points to end January at 88.7%, 40 basis points below January of 2025 with rental and vacate trends consistent with our experience during '25. With a few days left here in February, overall trends continue to be encouraging, with the occupancy gap continuing to narrow and the quarter-to-date move-in rate trend continuing to be positive with year-over-year move-in rates growing generally in line with what we reported with fourth quarter results. The improvement in operating fundamentals is beginning to show up in the financial results. It will be steady, gradual improvement as we typically turn over approximately 5% of our cubes in any given month. We started to see that momentum play through in the fourth quarter and would expect that gradual improvement to continue through 2026. Demand does vary across markets and submarkets with continued outperformance from 4 urban markets in the Northeast and Midwest and more supply impacted through the Sun Belt and Southwest. However, we saw improvements in fundamentals across many markets. With over 75% of our top 25 markets seeing revenue growth accelerate from the third quarter to the fourth quarter of 2025. As trends in our markets have been quite positive over the last 4 or 5 months, I am optimistic that we are inflecting and see a path to return to more historical levels of revenue and net operating income growth. In 2026, only 19% of our same stores are projected to face an impact of new supply, the lowest percentage since we began articulating this metric back in 2017. The magnitude of the impact of this competitive supply continues to lessen as more of the delivery is in that 3-year rolling impact from 2 or 3 years ago, and those stores are beginning to reach their first level of occupancy stabilization. Our highest quality portfolio and best-in-class operating platform, along with a seasoned management team with senior leadership having multiple decades of experience across cycles against the backdrop of declining impact of new supply and more constructive operating fundamentals has us well positioned to take on any challenges and maximize all opportunities through 2026. Now I'd like to turn it over to Tim Martin for insight on our thoughts on capital allocation and guidance for 2026.

Thanks, Chris. Good morning, everyone. Thanks for taking a few minutes out of your day and spending it with us. I'll provide a quick review of fourth quarter results, discuss our recent investment activity and then jump in and provide some additional color on our '26 expectations and guidance. Same-store revenue growth accelerated from the third quarter to just shy of flat at negative 0.1% for the quarter, reflecting the continued stabilization of trends that Chris touched on and moving us to an improved starting point for 2026. Same-store expenses grew 2.9% during the fourth quarter, helped by some good news in real estate taxes and property insurance, offset by increases in marketing and R&M spend which are mostly timing related as compared to spend in those areas last year. Same-store then resulted in declining 1.1% for the fourth quarter. We reported FFO per share as adjusted of $0.64 for the quarter. And during the quarter, we announced a 1.9% increase in our quarterly dividend, up to an annualized $2.12 per share. On yesterday's close, that represents a 5.3% dividend yield. On the external growth front, it's been a challenging couple of years to find accretive on-balance sheet opportunities to deploy capital especially on marketed transactions. We had success with structured transactions in late '24 and then early into '25 when we were able to accretively invest a combined $610 million on a pair of transactions. One was a recap and one was a JV buyout. Since then, we've seen very limited opportunities to invest on balance sheet, given the disconnect in public and private market valuations but we've been focused on other creative avenues for capital deployment. We recently announced a new joint venture with CBRE IM with a $250 million mandate to invest in high-growth markets. This allows us to expand our JV relationships and provides another avenue to continue to grow the portfolio with enhanced returns. We also closed on two on-balance sheet acquisitions for $49 million during the quarter. In the fourth quarter, we also executed on our existing share repurchase program as the relative value for our portfolio made it a very attractive investment option. When considering, we own the highest quality portfolio of self-storage assets and combining that with the disconnected valuation reflected in our share price during the fourth quarter, repurchasing shares was compelling for us on a risk-adjusted basis compared to private market values for lower quality assets. Our Board has recently expanded the share repurchase authorization giving us approximately $475 million in capacity to repurchase shares based on current valuation levels. We generated approximately $100 million in free cash flow annually so we could execute under the share repurchase program on a leverage-neutral basis up to those levels. We're also looking at potentially selling some assets or contributing assets to a joint venture and using those proceeds to fund additional share repurchases should the public-private valuation gap persist further into 2026. Our balance sheet is in great shape with credit metrics very favorable to our existing investment grade credit ratings. Leverage ended the year at 4.8x net debt to EBITDA. We do have a few things on the to-do list for 2026. We may look at opportunistically accessing the bond market in the first half of the year and use proceeds to repay amounts currently drawn on our revolver. And then in the back half of the year, we may look to go again and use the proceeds to repay our existing bonds that mature in September. Looking forward, details of our '26 earnings guidance and related assumptions were included in our release last night. Overall, our FFO per share expectation for '26 is a range of $2.52 to $2.60 per share. For same-store guidance, our 2026 same-store pool increased by 16 stores. The midpoint of our guidance range for same-store revenues assumes a generally similar macro environment to last year, a lasting impact from competing new supply in our markets, a continuation of steadily improving competitive pricing, and a narrowing of our year-over-year occupancy gap as the year progresses. On the impact of supply, embedded in our same-store expectations for '26 is the impact of new supply that will compete with approximately 19% of our same-store portfolio, as Chris touched on. For context, that 19% is down from 24% of stores impacted by supply last year, and down from the peak of 50% of stores impacted back at the peak in 2019. We've been keenly focused on expense controls for several years. In fact, we've led the sector with the lowest expense growth over the last 3 year, 4 year, 5 year and 6-year period. So a bit of our growth overall in 2026 is in the context of us setting a really challenging comp for ourselves given our expense controls over the past several years. Areas that are pushing up our expectation for year-over-year growth include real estate taxes, especially late in the year as some of the good news in late 2025 creates a tough comp for us late in '26. Personnel costs coming off, again, a multiyear period of very, very low growth. And of course, the biggest impact is going to come from the winter-related costs from the storms over recent weeks, pretty impactful storms compared to really not much at all in early 2025 from weather events. Thanks again for joining us on the call this morning. At this time, Jordan, why don't we open up the call for some questions.

[Operator Instructions] Your first question comes from the line of Michael Goldsmith from UBS.

Maybe first, can we just start with supply? It seems like supply is coming down or at least new deliveries are. But I guess, at the same time, the demand environment has remained kind of stable, but not particularly strong. So how do you think about like how do you think about supply? Is it just kind of new deliveries? Is it the cumulative buildup over the last several years that's influencing it? And in the numbers that you quote, is that a reflection of expected deliveries this year? Or is that kind of like a multiyear number?

Thanks, Michael. So the numbers that I quoted of the 19% of stores being impacted, what we have consistently disclosed over time is we look at supply and the impact of supply on our existing stores over a 3-year rolling period. So for the 19% of our stores that are impacted by supply in 2026, those are stores that within their trade ring are going to compete against something that is delivered in 2024, 2025 or 2026. And as Chris touched on, the stores that were delivered in 2024 are going to be less impactful from a headwind perspective than stores in '26 because they will be -- in the third year, they will be starting to approach higher levels of occupancy and tend to start pricing more competitively within the market. So it's not only the 19%, it's kind of the nature of the 19% is going to be a little bit less of a headwind, we believe, than certainly than when we were at the peak back in 2019. So it's a combination of those things, but all the numbers that we quote are on a 3-year rolling basis.

And as a follow-up, the New York City Department of Consumer and Worker Protection filed a lawsuit over predatory practices in the New York market. So I just want to -- you have a large presence there. I just wanted to get your take on it. Has that influenced the way that you operate? And then obviously, this is a lawsuit against you guys, but just kind of how you're reacting to it?

Michael, we're certainly aware of recent announcements, that specific one out of New York. There's been some similar attempts at legislation in other states around not only for storage, but just in general, pricing and transparency. We continue to monitor those and make sure we're in compliance. We are always focused on providing our customers with the optimum experience, and we'll continue to be flexible in terms of focusing in on that and doing that to the best of our ability.

Good luck in 2026.

Thanks.

Your next question comes from the line of Viktor Fediv from Scotiabank.

I have a question regarding your operating expenses outlook for this year. And it's a bit higher versus, for example, your peers. Just trying to understand what are the key pieces impacting that difference. Probably New York, I see that in 2025 had probably a bit higher operating expenses growth. So can you provide some color on what's driving that?

Yes. As we touched on in the introductory remarks, you have a couple of things going on. You have, again, having led the sector in expense controls and expense growth over the past several years, I do believe we have created a pretty high bar for ourselves from the standpoint of a baseline from which to compare. I think then the individual drivers of where we're getting a little bit of pressure, again, I mentioned, were on real estate taxes. In particular, in the later part of 2026, we're going to have some tough comps because we had some good news here in the fourth quarter of '25. And then the big one that I mentioned is the weather-related. We're going to have pretty significant year-over-year growth in weather-related expenses in the first quarter as we have a significant portion of our self-storage portfolio in the Northeast states. And frankly, the winter storms were impactful far beyond just the northeastern part of the country. So real estate taxes, weather-related costs are the big ones. And then even on a line like personnel, we've been able to manage personnel at flat to negative growth over a multiyear period of time. This year, we're looking at more inflationary or maybe just a little bit north of inflationary type growth in that line item. So those are the areas that are driving the thought process behind our same-store expense guidance.

Understood. And then as a follow-up, if you think about the new reform JV with CBRE, what is actually like your opportunity set? And what should we think about what is achievable for 2026 in terms of incremental investments there?

Yes. So we're super excited to expand our JV relationship. And now we have what we had disclosed with our new venture with CBRE Investment Management. We've been working together with them for several years on the operational side and have established a great working relationship through our third-party management platform. The venture that we announced is focused on investing across the spectrum of core, core plus value-add opportunities. And ideally, that will result in us being able to assemble a portfolio of geographically diversified assets in high-growth markets. So fairly broad mandate and the $250 million mandate is hopefully #1, and then we're successful there, and we can move on and create additional venture opportunities with CBRE and then, of course, continue to look at creating additional joint venture opportunities with others, including some long-standing relationships that we have.

Your next question comes from the line of Brad Heffern from RBC.

Can you talk about the assumption for move-in rates during the year? Are they just sort of steady during the year at the levels we see now? Do they decline as comps get more difficult? Maybe do they go up because of supply?

Yes. So we don't guide to the specific components. We guide to an overall revenue growth range expectation. I think what we have seen is what Chris touched on a little bit, which is we have seen a more constructive environment for pricing to new customers. And so we flipped to positive, and it's a good place to start the year. And then as I touched on, at least on the baseline of our expectations, would be in an environment where we're able to steadily close the occupancy gap throughout the year. That would be at the baseline of our expectation. The reality is busy season is going to come and market conditions are going to be what they're going to be, and our systems are designed to maximize revenue. And so could you get a little bit more rate and a little bit less occupancy, a little bit more occupancy, a little bit less rate? Could you move towards the higher end of the range, the lower end of the range? All that we'll see. But overall, we just guide to the overall number, which you see in our release.

Okay. Got it. And then sort of sticking with that, you said in the prepared comments, you see a path back to historical growth levels. If we see move-in rates stay flat around where they are now, call it, 3%, when should we see same-store revenue get to 3%? I know there's a huge number of moving pieces, but just wondering, generally, is it quarters? Is it a year? Is it 2 years, et cetera?

Yes. I think if you operate under the assumptions that you just described, then you see that gradual upward trajectory throughout the first year, which in this instance would be 2026, and then you would see yourself returning to more historical levels as you get into the second half of 2027 on a quarterly basis. And then ultimately, you would roll into that on an annual basis as you go out then another year.

Your next question comes from the line of Todd Thomas from KeyBanc.

First, just on New York, revenue growth improved from the third quarter, continued to outperform, as you mentioned, with -- along with some of your other sort of core coastal infill markets. Are you assuming that momentum persists in '26? And what's driving the strength in New York City in your view? Is it more the supply backdrop? Or are you seeing better demand? Any sense regarding the outperformance?

Todd, it's Chris. I would think about New York broadly as continuing to be the MSA that we would expect to be among our top-performing MSAs in 2026 as it was in '25. I think you have 2 things moving in our favor. One is North Jersey and to a lesser extent, Westchester County and Long Island are recovering from the headwind of supply. So when Tim talked about that and I talked about that 19%, a good market that is benefiting from that is that North Jersey, Westchester and Long Island markets as part of the MSA. And then in the city itself, we continue to see very positive trends that we've experienced over the last several years. You have good lengths of stay. Again, folks using the product as an alternative to their living spaces, not as a market that's as reliant on that buying and selling of existing homes. We obviously have extremely good brand awareness there, and we would expect that positive performance in the boroughs to continue.

Okay. And then, Tim, you talked about buybacks and the buybacks completed in the quarter, potential dispositions, some potentially seeding assets into the joint venture. The stock price is higher by almost 15% relative to the price that you executed at in the fourth quarter. I guess, how actionable are buybacks today? And how do buybacks stack up against some of the other opportunities that you discussed?

Yes. I think we obviously have a share price, which is a little bit more favorable for us today than where we were repurchasing back in the fourth quarter. But who knows what tomorrow brings or next week brings or next month brings. I think the point trying to make is that we're not sitting around waiting for the day where we get back to having a green light to grow and our share price is such that we can get back to buying $400 million, $500 million, $600 million worth of assets and do so accretively. We haven't seen that environment now for a couple of years. And to the extent that we are in a continued prolonged period of time where private market valuations are very disconnected from public market valuations, then what's actionable for us. To continue to execute on our long-term strategic objectives would be to perhaps improve the overall quality of our portfolio by trimming some things that would have us improve the overall quality of the portfolio and turn around and redeploy that capital to buy back shares because implicit in that is it's an awfully good opportunity when you think about the implied cap rate, even at the levels we're trading today, while not as compelling from a share repurchase as where they were, still pretty compelling relative to opportunities to buy things on balance sheet. So we'll see. It will be great. It would be great for us if share repurchases were never attractive again and the share price continues to get back and we get back to where we believe we should be valued, which is at a premium to the value of our underlying assets. But to the extent we don't get back there and the disconnect remains, we're going to keep working to execute on our strategic objectives, and that might be a path for us to do it.

Your next question comes from the line of Ravi Vaidya from Mizuho.

I saw that in 4Q, your fee income line item as part of your same-store revenue was a bit elevated. Is this primarily from late fees or any other type of fees? And what is your assumption for this particular line item when considering your '26 guide?

Thanks for the question. So that line, the other property income line in same stores includes a variety of things. So it includes merchandise sales, which would include sales of locks and boxes and other items. It includes fees. It includes truck rental income, among some other things. And so we're always looking at ways to enhance growing our cash flows, and we look at every opportunity, and we've been able to, over time, be successful in finding ways to grow that line item along with growing other revenue line items and controlling expense line items. And so what you're seeing there is the fruits of all of those efforts. Our 2026 expectations would be based on our expectation to continue to build upon what we -- what you see coming through the results in '25 and continue at those levels and perhaps find even additional opportunities as we go forward.

Got it. That's helpful. And I wanted to kind of think about AI here. But from a demand perspective, some of the announcements that we've seen is some of the layoff activity, it seems to be coming in bulk and a little bit faster than what people might have initially anticipated. How do you think about these announcements and how it could reflect demand for self-storage and moving and displacement as part of your portfolio right now?

So I think the resiliency of our business, and I think it shines through when you think about the last few years pressures on some of the demand drivers for our business and yet the -- in context, really solid results the sector has been able to put up. I think just speaks to the fact that we are a solution to a need for our customers regardless of the pleasurable or unpleasurable circumstances that create that need. So never want anyone to lose employment. -- certainly want an economy that is humming on all cylinders where there are plenty of opportunities for jobs and opportunities for advancement, what's made this business work so well for so long. But the reality is in an instance of displacement, we are a solution to help solve some of the related problems that come along with that.

Your next question comes from the line of Michael Griffin from Evercore ISI.

Maybe on the revenue side to start, I appreciate kind of the commentary as we've been through about 2 months of the year so far. But as you think about the interplay of rate versus occupancy, clearly, move-in rates are improving, but your occupancy is still kind of below your historical levels even pre-COVID. Give me a sense, does it make sense to maybe push on one of those levers over the other? I realize you're solving for revenue maximization at the end of the day. But in today's environment, does one feel more opportunistic or applicable to drive relative to the other?

I think in today's environment, given where we've been over the last several years, I think if the opportunity is there, and it clearly has been over the last 5 months or so to be able to focus on maximizing the value of that customer as opposed to focusing in on the volume of customers, I think that's been our focus. I think we obviously, as an industry, need to get -- need to continue this momentum of having positive growth in rates in order to generate those more historic levels of overall revenue growth that we've experienced over time. So that's kind of where the mindset is. But as Tim articulated, those are decisions that are made on a daily, weekly basis, and we're constantly looking at that interplay between volume and rate.

Thanks, Chris, that's certainly some helpful context. And Tim, I know you touched in the prepared remarks on some debt market activity. Curious what's contemplated in the guide as it relates to interest expense. And if you were to go out and refi those '26 maturities, what you think the interest rate on that would be?

Yes. So I mean the guide has a range for a reason, and it's a little bit tricky because you're not only thinking about where we might execute from a -- if we were in the market today, is not super relevant for the guidance because it comes down to when do we go, what tenor do we go with and what does the world look like at that time. And so what I was mentioning was kind of at the plan today would be a consideration of going first half of the year, using those proceeds to pay down the line, which would then give us a lot of flexibility and capacity as we look at the back half of the year because if we found a compelling market to go again, that would be our preference and just term out the maturity. But by freeing up all of the capacity under the line, when our bonds mature in September, we would have capacity to use the line of credit if we didn't think that there was a good window for issuance at that time. So the range contemplates a variety of things when we go, how many times do we go, what tenor do we go with and what does the world look like at that time.

Your next question comes from the line of Juan Sanabria from BMO Capital Markets.

Chris or Tim, maybe just hoping you guys could expand a little bit on dispositions. You mentioned maybe pruning some noncore assets or markets presumably. So just curious on how you think about that if the eventuality were to come to pass, would you want to sell out of kind of the current underperformers, whether it's certain Sunbelt or Southwest markets? Just curious on how you're thinking about that, recognizing it's kind of a fluid discussion or thought exercise.

Yes. It is a very fluid discussion and exercise. I think it could it could end up presenting itself in a variety of ways. The reality is we like our portfolio. And so we don't have a long list of assets that we're anxious to get rid of. I think the reality is, as I mentioned, if there's a persistent environment in which there's a disconnect in valuations, then the opportunity for us to execute our strategic plan and to create shareholder value may be to find opportunities to trade assets and repurchase stock. I think the reason I wasn't specifically saying dispositions or necessarily joint venture contributions, the joint venture concept is pretty attractive because we could maintain an ownership position in some of these assets that, frankly, we don't want to sell. And we could also get a little bit of additional economics through a joint venture structure, through management fees, that type of thing. So it is a fluid -- as you -- it's a great word to say it's a fluid discussion. It's just the reality of where we are and just sitting on our hands and hoping for a better day is not what we're doing.

Understood. I appreciate that. And just a quick follow-up on the ECRIs. Just kind of curious on the expectation built into '26 guidance and/or the kind of recent history. Has there been any change in cadence and/or the percent increases you're passing through and/or customers' acceptance of those?

Yes, not much of a change in the contribution that we're expecting going forward is very consistent with the contribution that we've been receiving. So nothing really from a modeling standpoint or an expectation standpoint that it's going to have a meaningful impact from ECRIs one way or the other.

Your next question comes from the line of Spenser Glimcher from Green Street.

Yes. Sorry not to beat a dead horse here, but maybe just a follow-up on the share buyback discussion. So I appreciate the rationale you shared regarding your view of the disadvantaged cost of equity. But given you did buy 2 assets in the quarter and while I realize that the purchase price is only $50 million, what is it you're looking for in acquisition opportunities that would sway you to invest versus that simultaneous desire to shrink the asset base and buy back shares?

Yes. Great question. The horse is not quite dead yet, but let's kick it a few more times. The 2 assets that we bought, it is a process. And so we had those under contract at a value that made sense to us. Inherent in those 2 opportunities are -- there's growth embedded in those opportunities that when they come on to our platform, we get some nice growth out of those. So we're still very excited about those 2 opportunities as the year progressed and the quarter progressed and the disconnect became even larger and more pronounced, then the share buyback was something that we focused on. So it is -- there are still -- there have been a lot of assets that have traded this year that were very attractive to us and would have been very complementary and attractive on our platform. Just the valuation didn't make a lot of sense for us at this time. So the world changes pretty quickly. I was going back to my notes from our year-end call a year ago, and we talked about selling shares on the ATM for an average of $51. So things change pretty quickly. And so next quarter or the quarter after, we could be talking about contributing some assets to a joint venture and repurchasing some more shares. We could be talking about buying a big portfolio and issuing shares under the ATM. We need to be prepared for any of those scenarios. Our investments team is working hard. Fortunately, for us, we do have other options, as we touched upon earlier, with co-investment strategies and the like. And so we're still looking at both. We're certainly not closed for business. We're very involved in underwriting a lot of different opportunities. And to the extent that we found something even on balance sheet that had a compelling enough return that we believe created shareholder value, then that's where we're focused.

Okay. That's great insight. And then would you mind providing some color on the stabilized cap rates that you underwrite on those 2 assets?

Yes. So they weren't stabilized cap rates. I mentioned last quarter that those -- the assets that we had under contract that then we closed 2 of the 3 going in were in the low 5s, and they were stabilizing into the 6% range in year 2, 2.5.

Your next question comes from the line of Brendan Lynch from Barclays.

The commentary around 19% of markets facing new supply in 2026 was really helpful. If the pace of new starts doesn't accelerate, what percent of your portfolio do you think would be facing new deliveries in 2027?

Yes. So one point of clarification, it's not markets. It's not 19% of our markets. It's literally 19% of our assets. You can have assets within a market, some of which are competing with new supply and some are not. So just that is a point of clarification. We just disclosed the 19% and now you're asking for what is it going to be next year. We're never good enough. But the -- I think if you think about that 3-year rolling period for this year, it's deliveries in '24, '25, '26. So next year, when we disclose this number, it will shift to be deliveries in '25, '26 and '27. So you'll add '27 deliveries and you'll drop off '24 deliveries. I would think across our markets and across our portfolio that deliveries in '27 will be a little bit lower than deliveries were in '24. And so my expectation as we sit here today is that, that 19% would trend downward a little bit more.

Okay. That's helpful commentary. And then just on the CBRE joint venture, you mentioned that some value-added assets might be contributed as well. My sense is that value-added assets were something that you wanted to kind of hold on balance sheet for the upside that you get as you improve those assets relative to maybe some more stabilized assets being better candidates for joint ventures. Can you just walk us through the kind of the nuances of how you think about which assets are good candidates versus not with your JV partners?

Yes. Sorry, we're covering a lot of different things. I think we might have mixed 2 things together there. So the venture that we have with CBRE is focused on external opportunities, nothing that we would contribute. So the value-add opportunities that, that venture is seeking are value-add opportunities that we can find that are maybe earlier stages on our third-party management platform or going out and trying to identify those opportunities. So they are external opportunities that would be across the spectrum of value-add, core, core plus. The concept of contributing assets is completely separate from that and is more -- is not as actionable here in the near term as the venture that we announced with CBRE.

Your next question comes from the line of Eric Luebchow from Wells Fargo.

So maybe you could touch on the New York MSA a little more. It had some nice acceleration in the quarter. Could you kind of disaggregate where that strength is coming from between the boroughs, North Jersey, Long Island or anywhere else?

Sure. So really, the acceleration was across the board in each of those contexts. I think when you think about it by borough, Queens has been pretty consistent Q2, Q3, Q4 in terms of its revenue growth, in terms of its occupancy stability, a little bit of supply. 1 or 2 stores, I think, have opened there over the last year or 2, but really not that impactful, seeing good growth in asking rent there. in a little pressure in Long Island City when I mentioned supply because we've had some competitors open some very large stores in the last 2 or 3 years, and they're very close by to the cubes. Brooklyn -- Brooklyn has been the leader through the year, putting up overall same-store revenue growth quarter in and quarter out north of 5% occupancies there, also pretty steady. So a good driver is good length of stay. So able to continue to focus on the existing customer and then seeing some good move-in rate growth there as well. And that's pretty much across the board with the neighborhoods in Brooklyn from East New York through Quantas. Bronx, pretty nice acceleration there throughout the year. That's somewhat going to be just a year-over-year comp. Occupancies there have been pretty steady, growing a little bit in the back half of the year. And when looking at that again by area, saw some strength throughout the year in getting better quarter in Riverdale, also the same a little bit in that Bronx River area. South Bronx, Calo City have stayed pretty consistent. And then I think, as I said, in our store in Manhattan continues to perform consistently and well. Staten Island recovering a bit from supply, which is the same story for the rest of the MSA, which would be that Westchester, Long Island, North Jersey, where new supply has become much less of a headwind than it was certainly in '24 and the first couple of months of '25. So hopefully, that color is helpful.

Yes. Very comprehensive. I guess just one for Tim. I know you called out some tough comps and expenses this year. Maybe could you provide us a little more color on some of the expense growth you expect across some of the key line items like real estate taxes, personnel, anything else to call out that we should keep in mind for this year?

No, I called out the big ones. Those are the ones that were notable that I've discussed a couple of times here.

Your next question comes from the line of Eric Wolfe from Citigroup.

You mentioned that your solutions of a displacement can occur during periods of job losses. So I was just curious if when you see accelerated layoffs or job losses in a certain market, how long that increased demand tends to last? And along with that, D.C. has definitely been one of your strong markets the last year, but I did notice that it decelerated a bit this quarter. So I was curious if that was just noise in the numbers, tough comps or maybe the lower employment is catching up there a bit.

Great question. Thanks. When you think about storage, we're a neighborhood small trade ring business. And then when you think about displacement. Oftentimes, that can either be so broad in terms of where the employees displaced come from. So I'll use DC as that example. You have folks who work in the federal government in Bethesda at NIH in Washington, D.C. proper at other agencies who live as far away as Culpeper, Virginia or Frederick, Maryland or West Virginia, parts of Prince George's County. So when we have our general managers focus on demand and try to inquire from the customer as we always do, what's going on in your life. It's just so dispersed that you just never really see an impact on any particular store there. So the DC overall performance is comps. We just had been on a run there for many, many quarters, and we're -- we just saw a little bit of that tough comp in Q4. But otherwise, it will continue to be a market we expect in '26 to be a leader of the DC, the DMV and a very good market for us. We also saw the ebb and flow of supply there again, just given the broad nature of that MSA. But I think when you think about layoffs, then that might be within a plant or a business where the majority of the workers tend to be concentrated in a fairly tight geographic area, you would have a more correlated demand to the self-storage opportunities in that area. But in terms of like some historic trend, I don't have anything off the top of my mind and that would be super insightful.

That was very helpful. And I guess you talked about this a lot today, so I don't need to get too much more into it. But I guess one of the things that I'm trying to figure out is you talked about things improving throughout last year. They've stayed very strong recently improving some more. Is there some kind of common reason as to why? I mean, is it demand that's gotten better? Is it lower supply impact in the markets that are accelerating the most, just easier comps? Like what is actually driving that improvement? And I guess what gives you the confidence to know that you've actually reached an inflection in whatever is going to drive it going forward?

I think it is all of the above. I think you've really touched on all of the drivers. So what we've seen over the last 4 or 5 months demand and throughout all of '25, frankly. We now have a new but fairly consistent demand profile for the business throughout the 12 months and that baseline of what we've seen in kind of '24, but really in '25 is the baseline that we're expecting here in '26. So if that's your baseline, but the impact of vacant space, new supply continues to ramp down very helpfully. Well then you're just in a better position than from, as Tim alluded to, from a pricing perspective because those new stores that had opened in '24 are reaching a better level of physical occupancy. And typically the savvy operators in our space then start to focus in on getting rate. So that's helpful for the submarket in which we operate. We still see a pretty healthy consumer for our product. And so that's helpful. So I think it's kind of all of the above that is embedded in sort of that range that Tim talked about, and that's been consistent now, as I said, for months. And so we're feeling pretty optimistic as we go into 2026. Obviously, we have a range, and we're comfortable within that. I think the one item that we do not have factored in, and this is more recent news but when you think about, is there an opportunity here for those pent-up homeowners, home buyers, animal spirits to be unleashed as the 30-year fixed rate dropped yesterday below 6% for the first time in 3 years, you sit here and realize that today, more homeowners have a mortgage rate above 6%, then a rate below 3% for the first time in 5 years. So we're not counting on it, it's not in guidance at all, but certainly, the kind of news over the last few days here on that front could be very helpful and would just be pure upside.

Your next question comes from the line of Samir Khanal from Bank of America.

I guess, Chris, I just wanted you to expand on -- you talked a little bit about the transaction market. Maybe talk about pricing. And the reason I'm asking is, there was a big portfolio that traded in New York, right? And I'm not sure how this is the Carlyle storage [ mark one ]. I'm not sure how that -- how should we think about that portfolio compared to your portfolio in New York? And if that was complementary to your portfolio, do we think about that disconnect, right, between sort of private market valuation and kind of where your stock trades today?

Yes. Thanks for the question. So the portfolio that you're referencing, we were a manager of some of those assets. So we're a very good partner. And therefore, we don't talk about transactions that we weren't involved in, you can certainly get more take on pricing, et cetera, from the buyer. New York is a great market. We continue to look for good opportunities there in that particular instance. There just wasn't transaction that made sense for CubeSmart, but it made sense for another operator there, and I'm sure they'd be happy to give you insight as to how they thought about what that pricing was, whatever in their mind, they think it was.

Your final question comes from the line of Mike Mueller from JPMorgan.

Sorry to drag it out. Most stuff has been answered, but just a quick one. Are you likely to only sell assets if you see an opportunity with the stock being cheap or if there is something to buy? Or are there likely some assets you're just going to cycle out of no matter what?

Yes. I think the last part of that cycle out of assets, no matter what was what I was trying to cover before that. That list is very, very short for us. We like our existing portfolio. So the focus for us and, frankly, the difficulty on executing on the concept that I'm putting out there is the timing piece, right? You can't sell something in a week and by the time you would sell it or contribute something to a venture, public market valuations change awfully quickly. And so the objective for us would be to, again, further the strategic objective, improve the overall quality of the on balance portfolio and doing so accretively, which would combine dispositions or contributions of assets to raise the capital and repurchase shares. So the execution of that is a challenge given the timing. And I'm back to Spenser's question earlier, we did -- we bought some properties and repurchased share in the same quarter. We didn't do them in the same week. But things change, and sometimes they change pretty quickly. So it comes down to if there's a prolonged period where there's a disconnect then -- and there has been the execution of that, we believe would make a lot of sense.

And that concludes the question-and-answer session. I'd now like to turn the call back over to Chris Marr for closing remarks.

Thank you, everyone, for your insightful questions. We've enjoyed the dialogue here this morning. We certainly are looking forward to the upcoming seasonal busy season for our industry. We've been off to a very solid start here in January and February notwithstanding the unappetizing weather that we've seen here on the East Coast, but spring is strong and sun is coming and the busy season for storage will be here before you know it, and we look forward to continuing our dialogue after we report first quarter earnings. Thank you very much. Have a great day.