Cubesmart · NYSE:CUBE
Cubesmart — FY2016 Earnings Presentation
31 slides from Cubesmart's earnings presentation, Mar 1, 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 Leading Demographics Strategy has Built an Industry-Leading Portfolio A Focus on Supply Constrained Markets (in ‘000) 1 ($ in ‘000) 1) Determined by ranking top 100 markets by net rentable square feet per person with “1” being the market with the low
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: 2016 Same-Store Results
6 INTERNAL GROWTH 2016 Same-Store Results1 Revenue Growth primarily driven by effective rent growth NOI2 +10.2% Revenue +7.0% Expenses (0.3%) Average Occupancy +92.9% (+80 bps YOY) Expense Growth is expected to remain inflationary, except for continued pressure on real estate taxes and increases in
Slide 6: Internal Growth: New Supply Impact
INTERNAL GROWTH: NEW SUPPLY IMPACT 7 New development in 2016 & 2017 will increase available supply in our top 12 markets by ~5% Note: Bubbles sized by 2015 population Source: 2016 Mini Store Messenger Self Storage Almanac, Company Research
Slide 7: Internal Growth: Performance Fueled by Innovation
INTERNAL GROWTH: PERFORMANCE FUELED BY INNOVATION 8 Enhancing the customer experience at all points of engagement through proprietary systems and processes. Constantly testing digital platforms, utilizing marketing advancements, sophisticated systems, and new programs that strengthen customer relati
Slide 8: Internal Growth: Understanding Our Customer
9 INTERNAL GROWTH: UNDERSTANDING OUR CUSTOMER 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-leading
Slide 9: Internal Growth: Internet Marketing
INTERNAL GROWTH: INTERNET MARKETING 10 Optimizing marketing efforts and efficiently attracting customers through use of industry leading analytics.
Slide 10: Internal Growth: Internet Marketing
INTERNAL GROWTH: INTERNET MARKETING 11 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 11: Internal Growth: Traditional Marketing
12 INTERNAL GROWTH: TRADITIONAL MARKETING Out-of-home placements in markets with high store concentration Hyper-targeted direct mail campaigns in select markets Customized local marketing efforts to target residential and commercial customers Supplementing internet marketing initiatives with a tradi
Slide 12: Internal Growth: Revenue Management
INTERNAL GROWTH: REVENUE MANAGEMENT 13 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 13: Internal Growth: Revenue Management - Fundamental Pricing Issues
INTERNAL GROWTH: REVENUE MANAGEMENT 14 Fundamental Pricing Issues Pricing optimization requires consideration of a multi-dimensional demand landscape and dynamic capacity constraints Substitutability CSoumbspteittuittiaobnility TCimominpgetition CTaimpaincgity / Economic Outcomes Capacity / Economic
Slide 14: Internal Growth: Long-Term Revenue Maximization Strategy
INTERNAL GROWTH: REVENUE MANAGEMENT 15 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 15: Internal Growth: Customer Service
INTERNAL GROWTH: CUSTOMER SERVICE 16 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 16: Internal Growth: An Award-Winning Service Culture
INTERNAL GROWTH: CUSTOMER SERVICE 17 An Award-Winning Service Culture
Slide 17: External Growth: Investment Strategy
18 EXTERNAL GROWTH Investment Strategy $334.2 million in 2016 acquisitions Focus on high-quality properties in high-barrier-to-entry markets $133.4 million in 2016 new development openings Leverage relationships with development partners to invest selectively in accretive development and built-to-su
Slide 18: External Growth: Focused Investment Strategy
EXTERNAL GROWTH: FOCUSED INVESTMENT STRATEGY 19 Focus on Adding Scale in Attractive, High-Barrier-to-Entry Markets 6 Acquisitions1,2 $2.6 billion Dispositions1 $460 million 147 Stores 242 Stores 1) Transactions closed from 2008 through December 31, 2016. 2) Includes investment in 35 properties throu
Slide 19: External Growth: Focused Investment Strategy
EXTERNAL GROWTH: FOCUSED INVESTMENT STRATEGY 20 Acquisitions 2008 – December 20162 Total Portfolio December 20162 Total Portfolio January 2008 Dispositions, 2008 – December 20162 Note: Bubbles sized by revenue. 1) Realized annual rent per occupied sq ft is computed by dividing rental income by the w
Slide 20: External Growth: High-Quality Assets
EXTERNAL GROWTH: HIGH-QUALITY ASSETS 21 Enhancing Our Portfolio by Adding Purpose-Built Class A Stores
Slide 21: External Growth: Development
EXTERNAL GROWTH: DEVELOPMENT 22 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 $145.7M Total 2Q18 Bronx, NY - $90.0M 4Q15 Queens, N
Slide 22: External Growth: Purchase at Completion
EXTERNAL GROWTH: PURCHASE AT COMPLETION 23 Acquire High-Quality, Purpose-Built Assets and Add to CubeSmart Platform Sophisticated Marketing and Revenue Management Systems with 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 -
Slide 23: External Growth: Impactful Third-Party Management Platform
EXTERNAL GROWTH: IMPACTFUL THIRD-PARTY MANAGEMENT PLATFORM 24 Third-party management allows us to leverage our operating platform and generate additional economies of scale Platform has grown to 316 properties since its inception in 2009 Purchased 63 properties from our managed million1 since 2010 p
Slide 24: Financial Strength
25 FINANCIAL STRENGTH 2016 Activity Raised $136.1 million in net offering proceeds through at-the-market equity program Approach Fund external growth in a manner consistent with our objective of maintaining our investment grade credit ratings Issued $300.0 million of 3.125% unsecured senior notes du
Slide 25: Financial Strength: Investment Grade Balance Sheet
FINANCIAL STRENGTH: INVESTMENT GRADE BALANCE SHEET 26 Investment Grade Ratings Conservative Metrics (As of December 31, 2016) Debt / Gross Assets Debt / EBITDA1 Secured Debt / Gross Assets 38.5% 4.9x 2.8% Baa2 (Stable) BBB (Stable) 1) Based on annualized 4Q16 EBITDA and average debt outstanding duri
Slide 26: Financial Strength: Disciplined Capital Allocation
FINANCIAL STRENGTH: DISCIPLINED CAPITAL ALLOCATION 27 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 27: External Growth: Key Credit Metrics
EXTERNAL GROWTH: KEY CREDIT METRICS 28 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 shar
Slide 28: Summary
29 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 29: Historical Company Data
HISTORICAL COMPANY DATA 30 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 30: Contact Us
31 Contact Us Contact Info Charles Place Director, Investor Relations Email: [email protected] Telephone Office Phone: 610.535.5700
Slide 31: Contact Us
Contact Us & Contact Info Charles Place Director, Investor Relations Email: [email protected] DP Telephone Office Phone: 610.535.5700 @ CuseSmart