Cubesmart · NYSE:CUBE
Cubesmart — Investor Presentation (June 2017)
35 slides from Cubesmart's investor presentation, Jun 5, 2017
Slide 1: Safe Harbor Statement
2 Safe Harbor Statement The forward-looking statements contained in this presentation are subject to various risks and uncertainties. Although the Company believes the expectations reflected in such forward-looking statements are based on reasonable assumptions, there can be no assurance that its ex
Slide 2: Introduction to CubeSmart
INTRODUCTION TO CUBESMART 3 Self-Storage REIT with Expansive National Platform Owned Portfolio by Market New England 15 MN 1 NYC, No. NJ 58 CT 22 Chicago 40 No. CA 12 Ohio 20 Phila., So. NJ 19 CO, UT 15 Inland Empire 16 Balt., DC 28 Tenn 7 AZ, NV, NM 43 NC 9 So. CA 12 Atlanta 18 Major TX 63 Other FL
Slide 3: High-Quality Portfolio
HIGH-QUALITY PORTFOLIO 4 A Disciplined Investment Strategy has Built an Industry-Leading Portfolio (in ‘000) ($ in ‘000) 33.5 1) Determined by ranking top 100 markets by net rentable square feet per person with “1” being the market with the lowest supply and “100” being the market with the highest s
Slide 4: Long-Term Vision for Value Creation
LONG-TERM VISION FOR VALUE CREATION 5 INTERNAL GROWTH Maximize portfolio value through continued focus on customer service and operational enhancements. EXTERNAL GROWTH Continue to prudently build a portfolio of high-quality assets, with a focus on targeted markets. FINANCIAL STRENGTH Finance growth
Slide 5: Internal Growth: 2017 Same-Store Results
6 INTERNAL GROWTH 2017 Same-Store Results1 First Quarter Revenue +5.4% Revenue Growth primarily driven by effective rent growth NOI2 +6.0% Expenses +4.1% Average Occupancy +92.2% (+40 bps YOY) Expense Growth is expected to remain inflationary, except for continued pressure on real estate taxes and i
Slide 6: Internal Growth: New Supply Impact
INTERNAL GROWTH: NEW SUPPLY IMPACT 7 This new development cycle (2016-2018) will increase available supply in our top 12 markets by approximately 6.9% over three years Note: Bubbles sized by 2015 population Source: 2016 Mini Store Messenger Self Storage Almanac, Company Research
Slide 7: Internal Growth: Value-Add Capital Investments
INTERNAL GROWTH: VALUE-ADD CAPITAL INVESTMENTS 8 We constantly review our portfolio looking for opportunities to undertake capital projects that add meaningful value to existing stores Before After Parsippany, New Jersey Completed December 2016 25,000 SF of Climate Controlled Units Project Cost - $3
Slide 8: Internal Growth: Performance Fueled by Innovation
INTERNAL GROWTH: PERFORMANCE FUELED BY INNOVATION 9 Enhancing the customer experience at all points of engagement through proprietary systems and processes. Constantly testing digital platforms, utilizing marketing advancements, and deploying sophisticated systems that strengthen customer relationsh
Slide 9: Internal Growth: Understanding Our Customer
INTERNAL GROWTH: UNDERSTANDING OUR CUSTOMER 10 Our Customers have a spectrum of needs. And it’s not always an easy time for them when they come to us. Our goal is to understand what’s meaningful to each and every person, provide an attractive offer, and exceed their expectations with industry-leadin
Slide 10: Internal Growth: Internet Marketing
INTERNAL GROWTH: INTERNET MARKETING 11 Optimizing marketing efforts and efficiently attracting customers through use of industry leading analytics.
Slide 11: Internal Growth: Internet Marketing
INTERNAL GROWTH: INTERNET MARKETING 12 D EXPERIENCE 1 PERSONA 1 PERSONA 2 D EXPERIENCE 2 VISITOR DATA AND BEHAVIOR PERSONA 3 D EXPERIENCE 3 VISITORS Adjusting to evolving marketing ecosystems and engagement mediums Continued focus on capturing and leveraging insights about customers to create experi
Slide 12: Internal Growth: Traditional Marketing
INTERNAL GROWTH: TRADITIONAL MARKETING 13 ®------------------------------------------------------
Slide 13: Internal Growth: Revenue Management
INTERNAL GROWTH: REVENUE MANAGEMENT 14 Revenue Management Landscape Multi-Family Residential Self Storage Airlines Hotels Supply Constraints Competition Seasonality Low Transaction Volume Unpredictable Length of Stay Historically, advanced revenue management techniques have boosted revenue in a numb
Slide 14: Revenue Management: Fundamental Pricing Issues
INTERNAL GROWTH: REVENUE MANAGEMENT 15 Fundamental Pricing Issues Pricing optimization requires consideration of a multi-dimensional demand landscape and dynamic capacity constraints Substitutability Competition Economic Outcomes Capacity / Economic Outcomes Pricing Decisions Optimal Pricing
Slide 15: Revenue Management: Long-Term Revenue Maximization Strategy
INTERNAL GROWTH: REVENUE MANAGEMENT 16 Long-Term Revenue Maximization Strategy Demand Forecast/ Revenue Optimization Price optimization requires consideration of a multi-dimensional demand landscape & dynamic capacity constraints Balance between Street Rates, Discounts, and Concessions Goal of provi
Slide 16: Internal Growth: Customer Service
INTERNAL GROWTH: CUSTOMER SERVICE 17 Striving to fulfill our mission of simplifying organizational challenges through unparalleled customer service. Focus on customer service throughout all touch points (store, sales center, and website) to create a fully-integrated interaction with each customer Mo
Slide 17: Internal Growth: Customer Service
INTERNAL GROWTH: CUSTOMER SERVICE 18 An Award-Winning Service Culture
Slide 18: External Growth: Investment Strategy
19 EXTERNAL GROWTH Investment Strategy $22.0 million in year-to-date acquisitions1 Focus on high-quality properties in high-barrier-to-entry markets $20.9 million openings in year-to-date new development Leverage relationships with development partners to invest selectively in accretive development
Slide 19: External Growth: Platform Scale
EXTERNAL GROWTH: PLATFORM SCALE 20 Significant equity investments coupled with the rapid growth of our Third Party Management program has increased the size of our operating platform, improving efficiencies and scale 1 1) As of March 31st, 2017
Slide 20: External Growth: Manhattan Market Entrance
EXTERNAL GROWTH: MANHATTAN MARKET ENTRANCE 21 On May 3rd, we opened the ground floor of our first store in Manhattan, expanding our footprint into all five boroughs of New York City In the first four weeks of operation1: Rented 33% of approximately 7,000 square feet of available space Leased units a
Slide 21: External Growth: Focused Investment Strategy
EXTERNAL GROWTH: FOCUSED INVESTMENT STRATEGY 22 Focus on Adding Scale in Attractive, High-Barrier-to-Entry Markets Acquisitions1,2 $2.6 billion Dispositions1 $460 million 147 Stores 243 Stores 1) Transactions closed from 2008 through March 31, 2017. 2) Includes investment in 35 properties through HH
Slide 22: External Growth: Focused Investment Strategy
EXTERNAL GROWTH: FOCUSED INVESTMENT STRATEGY 23 Acquisitions 2008 – March 20172 Total Portfolio March 20172 Total Portfolio January 2008 Dispositions, 2008 – March 20172 Note: Bubbles sized by revenue. 1) Realized annual rent per occupied sq ft is computed by dividing rental income by the weighted o
Slide 23: External Growth: High Quality Assets
EXTERNAL GROWTH: HIGH QUALITY ASSETS 24 Enhancing Our Portfolio by Adding Purpose-Built, Class A Stores
Slide 24: External Growth: Development
EXTERNAL GROWTH: DEVELOPMENT 25 Leverage Local Market Expertise of Partners to Generate Highest Returns 2015 2016 2017 2018 $49.3M Total 2Q15 Arlington, VA - $17.1M $64.0M Total 1Q16 Queens, NY - $31.8M $159.2M Total 1Q17 N. Palm Beach, FL - $9.7M $161.7M Total 2Q18 Bronx, NY - $90.0M 4Q15 Queens, N
Slide 25: External Growth: Purchase at Completion
EXTERNAL GROWTH: PURCHASE AT COMPLETION 26 Acquire High-Quality, Purpose-Built Assets in Select Markets 2016 2017 2015 $69.4M Total $61.1M Total $15.8M Total 2Q17 Chicago, IL - $11.2M 2Q15 Dallas, TX - $15.8M 1Q16 Brooklyn, NY - $48.5M 2Q17 Chicago. IL - $11.3M 2Q16 Fort Worth, TX - $10.1M 4Q17 Miam
Slide 26: External Growth: Impactful Third-Party Management Platform
EXTERNAL GROWTH: IMPACTFUL THIRD-PARTY MANAGEMENT PLATFORM 27 Third-party management allows us to leverage our operating platform and generate additional economies of scale Platform has grown to 356 properties since its inception in 2009 Have purchased 63 properties from our million1 since managed p
Slide 27: Financial Strength: Recent Activity
28 FINANCIAL STRENGTH Recent Activity Issued $50.0 million of 4.375% unsecured senior notes due December 2023 on April 4, 2017, priced at 105.04% to yield 3.495% to maturity. Approach Fund external growth in a manner consistent with our objective of maintaining our investment grade credit ratings Is
Slide 28: Financial Strength: Dividend Growth
FINANCIAL STRENGTH: DIVIDEND GROWTH 29 Strong cash flow growth has allowed for meaningful increases in distributions to shareholders 1 1) Based on current dividend payout and midpoint of FFO per Share guidance as provided in the Company’s Earnings Release dated April 27, 2017 Year-over-Year Growth 2
Slide 29: Financial Strength: Investment Grade Balance Sheet
FINANCIAL STRENGTH: INVESTMENT GRADE BALANCE SHEET 30 Investment Grade Ratings Conservative Metrics (As of March 31, 2017) Debt / Gross Assets Debt / EBITDA1 Secured Debt / Gross Assets 38.4% 5.2x 2.6% Baa2 (Stable) BBB (Stable) Well-Staggered Debt Maturity Schedule (Pro Forma As of March 31, 20172)
Slide 30: Financial Strength: Disciplined Capital Allocation
FINANCIAL STRENGTH: DISCIPLINED CAPITAL ALLOCATION 31 Access to the full spectrum of capital has helped finance $2.9 billion of total investment since 2010 Annual Investment Activity Annual Financing Activity
Slide 31: Financial Strength: Key Credit Metrics
FINANCIAL STRENGTH: KEY CREDIT METRICS 32 Strong Operating Performance Coupled with Conservative Balance Sheet Management Continues to Improve Credit Metrics 1) Source: Company Filings. 2) Source: SNL, Company Filings. 3) Dividend payout ratio calculated as annual common distributions declared per s
Slide 32: Summary
33 Summary Robust organic growth fueled by a focus on customer service, continued enhancement of our operational infrastructure, and a widening divide between large and small operators Meaningful external growth through a disciplined investment process supplemented by a competitive and expanding thi
Slide 33: Historical Company Data
HISTORICAL COMPANY DATA 34 Same-Store Performance 1 2010 2011 2012 2013 2014 2015 2016 External Growth Trading & Valuation Metrics 1) Performance as reported for the same-store pool as it was constituted at the end of the respective year. 2) Year-ending values as detailed in Company’s supplemental p
Slide 34: Contact Us
35 Contact Us Contact Info Charles Place Director, Investor Relations Email: cplace@cubesmart.com Telephone Office Phone: 610.535.5700
Slide 35: Contact Us
Contact Us & Contact Info Charles Place Director, Investor Relations Email: cplace@cubesmart.com DP Telephone Office Phone: 610.535.5700 @ CuseSmart