CubeSmart (CUBE) Q3 2025: Move-In Rate Growth Hits 2.5% as Stabilization Trends Strengthen Portfolio Base
CubeSmart’s third quarter delivered a clear inflection in move-in rental rates, with stabilization trends broadening across key urban markets and expense discipline supporting improved guidance. While overall demand remains steady rather than accelerating, management’s conservative approach to pricing, acquisitions, and balance sheet leverage positions the company for gradual recovery heading into 2026. Investors should watch for further positive revenue inflection as portfolio churn dynamics and market-level supply headwinds ease.
Summary
- Urban Market Outperformance: Northeast and Mid-Atlantic markets continue to drive CubeSmart’s stabilization narrative.
- Expense Control Delivers: Discipline on operating costs offsets modest revenue pressure, underpinning improved NOI guidance.
- Recovery Timeline Stretches: Management signals positive same-store revenue growth may not materialize until late 2026.
Performance Analysis
CubeSmart’s Q3 results reflected a portfolio in transition, with stabilization in key customer and operational metrics but no sharp demand rebound. The company reported a 1% year-over-year decline in same-store revenue, driven by an 80 basis point drop in average occupancy to 89.9%. However, operating expenses grew just 0.3%, a testament to ongoing cost control efforts, especially in utilities and property insurance. This disciplined expense management helped limit the same-store net operating income (NOI) decline to 1.5%.
Management’s confidence in the underlying trend was reflected in guidance, with a modest increase in full-year FFO per share expectations and improved same-store revenue and expense growth ranges. Move-in rental rates turned positive year-over-year for the first time since Q1 2022, hitting 2.5% growth in Q3 and maintaining nearly 2% in October. While occupancy remains below prior-year levels, the gap is narrowing, and urban markets like New York City, Chicago, and Washington, DC continue to outperform Sun Belt regions, where supply headwinds and demand softness persist.
- Urban Core Strength: Urban Northeast and Mid-Atlantic assets continue to post stable or improving rate and occupancy metrics, supporting overall portfolio resilience.
- Expense Discipline: Utilities and insurance savings offset revenue headwinds, allowing for NOI outperformance versus peers.
- Third-Party Management Expansion: The platform added 46 stores in Q3, reaching 863 managed locations, though net growth is unpredictable due to owner churn and asset sales.
The company’s measured approach to acquisitions (three stores under contract for Q4) and conservative leverage (net debt to EBITDA at 4.7x) reflect a focus on risk-adjusted returns as the market stabilizes.
Executive Commentary
"It was a very solid third quarter for Cube, which resulted in guidance increases across our key same-store and earnings metrics... We foresee continued gradual improvement in operational metrics. We are not anticipating a catalyst for a sharp reacceleration."
Chris Marr, President and Chief Executive Officer
"Same store operating expenses grew just 0.3% over last year, again, reflecting our keen focus on expense control... Our leverage levels remain quite conservative with net debt to EBITDA at 4.7 times the quarter end."
Tim Martin, Chief Financial Officer
Strategic Positioning
1. Urban Market Leadership
CubeSmart’s portfolio concentration in urban markets such as New York City, Chicago, and Washington, DC is a clear competitive advantage. These markets are benefiting from limited new supply, stable demand, and a higher proportion of need-based customers, which supports both pricing power and occupancy. The company’s asset quality and scale in these regions enable it to outperform peers, particularly as Sun Belt markets continue to digest recent supply additions and softer homebuyer-driven demand.
2. Dynamic Pricing and Rate Management
Revenue management systems are actively balancing rate and occupancy, with a focus on maximizing revenue per customer while responding to local demand elasticity. The company’s ability to push move-in rental rates up 2.5% year-over-year in Q3, without increasing discounting, demonstrates pricing discipline. However, management is clear that the churn rate (4-5% monthly) means it will take several quarters for these improvements to fully flow through to portfolio-level revenue growth.
3. Expense Control as a Margin Lever
CubeSmart’s tight control over operating expenses is cushioning the impact of modest revenue declines. Key drivers include favorable utility and insurance renewals, as well as ongoing operational efficiency initiatives. This focus has allowed management to improve NOI guidance despite top-line pressures, distinguishing CubeSmart from competitors with less disciplined cost structures.
4. Disciplined External Growth and Capital Allocation
Acquisition activity remains measured, with three stores under contract and a clear focus on risk-adjusted returns. The company is not shying away from supply-challenged markets but is demanding higher returns to compensate for uncertainty. Balance sheet conservatism remains a priority, supported by the recent $450 million senior unsecured notes issuance and plans to refinance upcoming maturities through the bond market.
5. Third-Party Management Platform
The third-party management business continues to expand, adding 46 stores in Q3 and exceeding 130 annual additions for the eighth consecutive year. While net managed store growth is difficult to predict due to asset sales and owner churn, this platform remains a strategic hedge against supply and a valuable source of fee income and market intelligence.
Key Considerations
CubeSmart’s Q3 results highlight the importance of portfolio mix, operational discipline, and a conservative approach to external growth as the storage sector navigates a post-pandemic normalization. Investors should focus on the pace of revenue inflection, the durability of expense savings, and the company’s ability to capitalize on market dislocation without overextending risk.
Key Considerations:
- Urban Market Tailwind: Limited new supply and strong customer need in urban cores offer a buffer against broader demand softness.
- Churn-Driven Revenue Lag: Portfolio-level revenue growth will trail move-in rate gains due to slow customer turnover.
- Acquisition Discipline: Willingness to underwrite riskier markets only at higher returns reflects prudent capital allocation.
- Third-Party Platform Resilience: Continued growth in managed stores supports fee income and provides optionality for future acquisitions.
Risks
CubeSmart faces ongoing risks from uneven market-level supply absorption, especially in the Sun Belt, and the absence of a clear demand catalyst limits the pace of recovery. Low customer churn slows the translation of improved pricing to portfolio revenue, and the company’s outlook could be challenged by macroeconomic headwinds, shifts in consumer health, or renewed competitive discounting. Acquisition timing and underwriting remain sensitive to market volatility and interest rate fluctuations.
Forward Outlook
For Q4 2025, CubeSmart guided to:
- Negative same-store revenue growth, but an acceleration from Q3 levels
- Continued modest expense growth, supporting improved NOI guidance
For full-year 2025, management raised guidance:
- FFO per share midpoint increased by one cent
- Expense growth midpoint improved to 1.5%
- Same-store NOI decline revised to -1.25% at the midpoint
Management emphasized that stabilization trends are expected to continue through year-end, putting the company on firmer footing for 2026. The outlook remains conservative, with positive same-store revenue growth not anticipated until the back half of next year barring an unforeseen demand catalyst.
- Urban market strength and expense control drive improved outlook
- Revenue growth recovery will be gradual due to churn dynamics
Takeaways
CubeSmart’s Q3 results reinforce the importance of portfolio quality, operational discipline, and a measured approach to risk as the storage sector normalizes. The company’s urban concentration, expense control, and balanced capital allocation support gradual improvement, but investors should temper expectations for a rapid revenue rebound.
- Urban Leadership: Outperformance in urban markets is a durable advantage as supply headwinds fade and demand stabilizes.
- Expense Management: Operating cost control is cushioning revenue softness and supporting improved NOI guidance.
- Watch for Inflection: Investors should monitor the pace of revenue recovery and the impact of churn on portfolio-level growth, especially as move-in rates and pricing power improve.
Conclusion
CubeSmart enters the final quarter of 2025 with stabilizing fundamentals, improved guidance, and a clear focus on expense discipline and measured growth. While the path to positive revenue growth is gradual, the company’s portfolio mix and operational rigor position it well for a recovery cycle in 2026 and beyond.
Industry Read-Through
CubeSmart’s results signal that urban-focused self-storage operators are best positioned as supply headwinds abate and demand normalizes. Expense control is emerging as a key differentiator in a slow-growth environment, with companies able to contain costs outperforming peers. Market-level volatility remains high, particularly in the Sun Belt, where new supply and homebuyer-driven demand softness continue to pressure fundamentals. Third-party management platforms are proving resilient as a hedge against asset-level risk and a source of incremental fee revenue. Investors across the storage sector should focus on portfolio mix, churn dynamics, and the timing of revenue inflection as the industry transitions to a new normal.