CubeSmart (NYSE:CUBE) reported third-quarter financial results on Friday. The transcript from the company’s third-quarter earnings call has been provided below.
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Summary
CubeSmart reported solid financial performance for Q3 2026, with positive growth in net operating income (NOI) and funds from operations (FFO) per share, driven by effective management of rates and occupancy.
Seventeen of the top twenty markets showed accelerating revenue growth, particularly in urban Northeast and Midwest markets, benefiting from reduced supply pressure and stable demand despite a sluggish housing market.
AI deployment and digital strategies are seen as key future growth drivers, enhancing revenue maximization and operational efficiency.
The company executed $83.9 million in share repurchases during Q3, finding compelling value in its existing portfolio, and continued its capital allocation strategy with a new $300 million unsecured bank term loan.
Full-year guidance was raised slightly, indicating strong momentum into 2027 with anticipated revenue growth of 1% to 1.4% and same-store NOI growth now expected to be positive for the full year.
Full Transcript
OPERATOR
Thank you for joining us and welcome to the CubeSmart third quarter 2026 earnings call. After today’s prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. To withdraw your question, press star one again. I will now hand the call over to Josh Schuster, Senior Vice President of Finance. Josh, please go ahead.
Josh Schuster (Senior Vice President of Finance)
Thank you, Sarah. Good morning, everyone. Welcome to CubeSmart’s third quarter 2026 earnings call. Participants on today’s call include Chris Maher, 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 strategy 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 third quarter financial supplement posted on the company’s website at www.cubesmart.com. I will now turn the call over to Chris.
Chris Maher (President and Chief Executive Officer)
Thank you, Josh. Good morning, everyone. A very solid quarter for CubeSmart as we emphatically delivered on our forecasted inflection to positive growth in both net operating income and funds from operations per share. 2026 has demonstrated both the resilience of the self storage business and the strength of CubeSmart’s operating platform and portfolio strategy. The wide range of need-based use cases for our product has supported stable demand despite a sluggish housing market, while reduced new supply pressure has created a more constructive operating backdrop across most markets.
Throughout the year, our systems have effectively balanced rate and volume at the individual store level, producing higher revenue from move-ins, strengthening occupancy, and driving meaningful acceleration in same-store revenue growth. At the same time, strong customer service and a compelling value proposition have supported lower vacate activity, longer lengths of stay, and stable customer credit metrics. The breadth of the improvement is particularly encouraging. Seventeen of our top twenty markets generated accelerating revenue growth, led by strong absolute performance across our high-quality urban markets in the Northeast and Midwest, while many previously supply-impacted Sun Belt and West Coast markets are showing meaningful second derivative improvement. That combination highlights the value of a portfolio designed to provide durability in more stable markets and growth as challenged markets recover.
Rental volume was positive in five of the last six months, helping to drive occupancy acceleration from flat year over year at the end of June to 90 basis points over last year at the end of September, as we’ve seen less seasonal occupancy decline from the summer peak this year compared to prior years. As anticipated, move-in rates were down modestly year over year in Q3 as our system saw an opportunity to drive incremental volume by not pushing rates up further in July, ultimately generating higher revenue from move-ins in the quarter. We saw nice momentum through the end of the quarter as move-in rates returned to positive year over year growth by the end of September and improved further in October, now up low single digits. The strong results demonstrate the dynamic nature of our systems responding to market and store-specific signals, with the objective of maximizing revenue rather than any individual operational KPI.
We are also converting that top line momentum into stronger cash flow growth through disciplined expense management. Our five-year record of sector-leading expense performance reflects a sustained focus on operating efficiency, and expenses again performed better than our forecast without compromising the customer service and property quality that support long-term revenue. We view AI as a tailwind for our business. We have deployed generative AI across the company and are in the early stages of agentic AI use cases. We see a significant volume of potential opportunities to enhance revenue maximization, improve efficiency, and speed up the deployment of software development. In addition, we believe that our sophisticated digital tactics position us to be a brand of choice as consumers are shopping. The strength of our digital content, brand, and customer reviews will remain valuable as generative and agentic AI become a larger part of the shopping process.
Finally, our capital allocation activity demonstrates the flexibility and value embedded in the CubeSmart platform. We accelerated share repurchases because of the compelling relative value in our existing high-quality portfolio, while the Heightman recapitalization allows us to monetize non-core assets at attractive private market pricing, retain participation in future upside, and establish another avenue for external growth. Our ability to access the term loan market further reinforces the breadth of our capital relationships and provides liquidity and flexibility in a volatile macro environment.
Together, the momentum in our operating business, the quality of our portfolio, and the flexibility of our capital allocation platform provide multiple avenues to create shareholder value as we enter 2027. Now I’d like to turn the call over to our Chief Financial Officer, Tim Martin.
Tim Martin (Chief Financial Officer)
Thanks, Chris. Good morning, everyone. Thanks for joining us today. Our third quarter came in at the high end of our expectations, and as Chris mentioned, our results delivered on what we pointed to last quarter, which was our expectation for a return to positive growth in both NOI and FFO per share. Same-store revenue growth accelerated again this quarter after posting 0.8% growth last quarter. In the third quarter, our revenue growth was 1.9%. Our systems are designed to maximize the revenue generation from our portfolio without a focus on any individual operating metric, and our results reflect growth across the key underlying revenue components. We saw growth in occupancy—60 basis points of growth on our average occupancy during the quarter.
We saw growth in realized rent—50 basis points of growth during the quarter. So occupancy and rate combined to grow our RevPAF 1.2% for the quarter, which is an acceleration from the 0.5% growth we saw in Q2. On top of those, we saw growth in other property-related income of 16.8%. This line item includes a variety of things: merchandise sales, including locks and boxes; a variety of fees, including admin fees, late fees, convenience fees, other fees; truck rental income; etc. We continuously look at the entirety of our offerings to our customers and have made adjustments over the past several quarters, which has led to some outsized growth on that line. We expect that growth to continue for a bit and then moderate once we’ve lapped some of those changes. But there’s nothing one-time in nature that’s driving this quarter’s results.
Our strong third quarter performance and improvement in move-in rates late in the quarter and into October led to our improved full-year same-store revenue guidance range of 1% to 1.4%, which is up 33 basis points at the midpoint. For the fourth quarter, that implies slight moderation to 1.5% growth at the midpoint and further acceleration to 2.3% at the high end of the range, which really sets up to be a strong footing heading into 2027. We expected expense growth to moderate in the second half of the year given the timing of personnel and marketing spend as well as some difficult first quarter snow comps, and our performance has been even better than our expectations. Same-store operating expenses grew 1.3% over last year during the quarter, and we improved our full-year expectation for same-store expense growth to a new range of 2.8% to 3.8%, a 58 basis point improvement at the midpoint.
We’re benefiting from successful property tax appeals, a better-than-expected insurance renewal, and a continued focus on managing controllable expenses and utilizing technology initiatives across a number of operational areas, which has led to reduced growth across a range of items in the other expense category. So revenue growth of 1.9% combined with 1.3% expense growth yielded 2.1% same-store NOI growth for the quarter, which is that positive inflection point we were pointing to last quarter. We reported FFO per share as adjusted of $0.66 for the quarter, which was at the high end of our guidance entering the quarter. We allocate capital based on the best available risk-adjusted return, and so far this year the relative valuation of CubeSmart shares has made share repurchases attractive, as investing in our own high-quality portfolio has been more attractive than acquiring lower-quality assets at private market valuations.
Our JV with Heitman that we discussed last quarter remains on track to close in the fourth quarter. That transaction allows us to monetize the public-private valuation disconnect, advances our portfolio strategy, preserves participation in future upside, and establishes another avenue for future external growth. We continued our share repurchases in the third quarter, buying back 2.1 million shares for $83.9 million at an average purchase price of $39.09 per share. That brings our year-to-date share buybacks to $159.8 million at an average price of $38.52. During the quarter we repaid our $300 million bond that matured in September as well as three secured loans that totaled $40.3 million, and subsequent to quarter-end, earlier this week we closed on a new $300 million unsecured bank term loan that floats at SOFR plus 80 basis points.
We had great support again this year from our bank group on that transaction, and it demonstrates the flexibility provided by our balance sheet, and our banking relationships also allowed us to access attractively priced capital during a volatile period while retaining the flexibility to return to the unsecured bond market when conditions are more favorable. So we ended the quarter with $850 million drawn on our revolver. With the $300 million of proceeds from the term loan and the upcoming expected net proceeds from the Heitman venture of approximately $170 million, we expect to end the year with around $400 million drawn on the line absent any additional capital deployment or capital raising. We would expect to term out that balance sometime in 2027 through our more traditional unsecured bond market, with our next debt maturity not until December of 2028. We’re in great shape and can be patient and opportunistic.
On the third-party management front, we added 32 stores to the platform in the third quarter and ended the quarter with 882 third-party stores under management. As always, details of our 2026 earnings guidance and related assumptions were included in our release last evening. We’re really excited about this quarter’s results and the positive momentum we’re seeing across the board. Same-store revenue growth: we’re getting positive contributions from all components.
Same-store expense growth: our continuous focus on controlling expenses has led not only to sector-leading expense control over the past five years, but has led to an improved outlook for the remainder of 2026 as well. Same-store NOI: this quarter saw an inflection to positive growth, and our revised annual guidance improved to now seeing positive NOI growth for the full year at the midpoint. FFO per share also inflected to positive year-over-year growth during the quarter and also now is expected to be positive for the full year at the midpoint of our improved guidance range.
Investments: continued execution of our strategic plan of creating shareholder value with a continued focus on having the highest quality portfolio in the sector. Our JV and share repurchases demonstrate our ability to execute on that front even in a volatile environment with a disconnect in private and public market valuations. Balance sheet: we’ve demonstrated continued access to the full spectrum of capital-raising alternatives and have low leverage levels and a maturity schedule that has nothing to address until the very end of 2028.
We feel great about the setup to close out a transitional year in 2026 and even better about the foundation we’ve established to set up an even better year in 2027. Thanks again for joining us on the call this morning. At this time, Sarah, why don’t we open up the call for some questions?
OPERATOR
Thank you. We will now begin the question-and-answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press Star 1 on your telephone keypad. To withdraw your question, press Star 1 again. Please pick up your handset when asking a question. If you’re muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Samir Khana with Bank of America.
Your line is open. Please go ahead.
Samir Khana (Analyst at Bank of America)
Yeah. Good afternoon, everybody. I guess, Chris, maybe on the comments of move-in rates you talked about in October being up in low single digits, I guess how should we think about pricing move-in rates as we look ahead into next year? Thanks.
Chris Maher (President and Chief Executive Officer)
So through October, we’ve seen fairly consistent demand trends to what we had experienced in the third quarter. Rates have moved back, as I said, positive year over year, low single digits, rental volume in line with last year. And, you know, we’re maintaining occupancy levels nicely ahead of last year. We would expect that that will create a backdrop going into 27, again absent any improvement in demand fundamentals, that will lead to continued growth in rents for new customers and I think continued opportunities to take more than our fair share of that demand.
So I think the backdrop, as Tim said, entering into the beginning of 27 should be pretty positive for CubeSmart.
Samir Khana (Analyst at Bank of America)
Okay. And then I guess my second question is around supply, and I guess with new supply moderating here, how much of that benefit are you seeing in your markets today, and when would you expect it to translate into more meaningful pricing power here? Thanks.
Chris Maher (President and Chief Executive Officer)
I think you can kind of look market by market there over time and see how the impact of new supply, you know, swings from negative to positive. I would point to the MSA data over the past, you know, eight quarters or so for Washington, D.C., as an example. I think we’re seeing it today in the North Jersey segment of our New York portfolio. There you had a significant amount of an impact from new supply, and that was dragging down those results; that has now swung the opposite direction, and those stores in the North Jersey markets are outperforming relative to the overall MSA.
So I think it’s going to end up being pocket by pocket. But when you see 17 of our 20 largest markets performing, as I said in the opening remarks, so well, and then when you look at, you know, the commentary around the Sun Belt and the Southwest, while those haven’t quite gotten yet to the levels of performance we’ve seen in other markets, those markets are moving in a positive direction. And I think that, you know, ties back to the absorption of the supply there.
So I think supply, as you said, will continue to come down. Certainly at this point, we have pretty good visibility for the deliveries in next year. And I just think the way the market is set up right now, it’s hard to justify putting a shovel in the ground in many places. So I think the supply backdrop is going to continue to be helpful and constructive to more positive results.
Samir Khana (Analyst at Bank of America)
Thank you.
OPERATOR
Your next question comes from Michael Griffin with Evercore ISI. Your line is open. Please go ahead.
Michael Griffin (Analyst at Evercore ISI)
Great, thanks. I was wondering if you could expand a bit on how you, how Cube is able to win greater as it relates to the market share of total customer demand. Is this more effective marketing spending, dynamic pricing, maybe different promotional strategies? It just seems to me if the top-of-funnel demand isn’t expanding, you’re really going to need to emphasize those customer wins and market share. So if you can talk about that a little bit, that’d be great.
Chris Maher (President and Chief Executive Officer)
So I think it is really across the board everything that you threw out there in your question. We have scale in market, and we do believe that scale in market creates competitive advantage. We have a recognized brand and a brand that’s appreciated for customer service, and I think that then translates into very positive reviews, which then translates into—certainly helpful on the digital marketing side—getting that customer from an inquiry to a reservation to a rental.
I think on the pricing side, you know, again, the tools and techniques that our data scientists have are on the cutting edge, and I think they are doing a great job continuously improving the quality of that analysis and that data, which is resulting in us having a better and better revenue maximization model. And I think when you look across all of that, I think it gives Cube a big competitive advantage. And in a world where, as the supply is being absorbed, those newly opened stores or more recently opened stores have less inventory to offer.
So now it really doesn’t come down as much to price; it comes down to who can get that customer in the door. And I think we’re outcompeting on that front, and therefore you’re seeing it in the results. Yeah, great question. Obviously there has been a tremendous amount of volatility here over the past, in particular the past four or five weeks. It’s going to have an impact mostly in the short term on levered buyers and their interest and ability to be competitive and aggressive in the market. We have seen a handful of transactions that had been tied up come back. Perhaps that creates some additional opportunities for us. I think the timeframe here for this recent volatility is likely a little bit too short to see if it ultimately changes cap rates and pricing expectations, but it could.
From a positive, from a CubeSmart standpoint, it could take some buyers away from the table and bring things to levels that make sense for us. We continue to see a lot of opportunities. We’re underwriting a lot of opportunities and think we’re going to be able to find some things that are going to be really good value-add for us once they get on our platform. And so we’re more optimistic today than we were over the last couple quarters.
OPERATOR
Your next question comes from the line of Brad Heffern with RBC Capital Markets. Your line is open. Please go ahead.
Brad Heffern (Analyst at RBC Capital Markets)
Yeah, thanks. Good morning, everybody. I was thinking back to your expectations for this year when you originally gave guidance, which I think was basically similar to 2025 unless there was some sort of housing catalyst. Obviously haven’t gotten that, but it does seem like the year’s shaping up better than you expected. Can you just talk broadly about what is different versus how you saw the year playing out originally?
Tim Martin (Chief Financial Officer)
I think the biggest impact to us is that things have just trended towards the positive side of the range that we had anticipated. The impact of waning supply has certainly turned from a headwind to feels like a tailwind, because in a lot of those markets that were more supply impacted that Chris referenced earlier, I think those markets we’ve seen better performance than we would have expected at the beginning of the year. I think overall levels of demand have been on the more positive side of where we would have expected.
As you mentioned, when we established guidance, we were expecting no incremental customer coming from any change in the housing market. And so overall I think things have just trended towards the higher end of our expectations, largely because of supply-impacted markets not being the drag that we would have anticipated.
Brad Heffern (Analyst at RBC Capital Markets)
Okay, got it. Thanks for that. And then on occupancy, obviously a pretty impressive inflection there, and you talked about seeing less seasonal decline than in prior years. I just wanted to be clear on that. Is that just versus the past couple years that were weak, or was that a broader comment? And then what do you think the difference is that’s held occupancy up for longer?
Chris Maher (President and Chief Executive Officer)
I think broadly we’re just seeing trends that look much more like pre-COVID trends than the trends that were experienced from ’22 to ’25. And again, I think that’s back to the helpful impact from the declining supply. I also think a part of it is the strength of our platform in that we’re seeing great conversion and great return on investment in a lot of the marketing initiatives. I don’t think there’s been a dramatic change in how our customers find us, but there have been some changes at the margin that we’ve been able to take advantage of.
So I just think it’s a more healthy overall kind of backdrop. And, as Tim said, on a range going into the year, I think we’ve just found ourselves at the more healthy end of our expectations. And then I think, third quarter-specific, you had a comparison that last year in the third quarter our systems were trying to maximize— the result of the output from the systems was maximizing our revenue growth through pushing a little bit more on rate and sacrificing perhaps a little bit on the occupancy side. This year in the third quarter, it flipped because we’re not solving for either one. And we got a little bit more occupancy this third quarter and a little bit less rate on the asking side.
And so that’s going to ebb and flow as the systems try to solve for the best answer to maximize top-line revenue.
Brad Heffern (Analyst at RBC Capital Markets)
Okay, thank you.
OPERATOR
Your next question comes from the line of Spencer Glimsher with Green Street. Your line is open. Please go ahead.
Spencer Glimsher (Analyst at Green Street)
Thank you. Just in terms of your share repurchase program, I know you guys still have 8 million shares remaining, but just given more, have you guys discussed increasing the shares available for repurchase, and are there any outright dispositions being considered for future funding of buybacks?
Tim Martin (Chief Financial Officer)
Good morning, Spencer. Great question. So our program, to the extent that we find a compelling opportunity to continue our share repurchases, it’s not difficult to get an approval from the board to authorize more shares, so I don’t really view that as a limit. We have continued to explore opportunities, such as we did with the Heitman venture, to the extent that the current environment—or the environment that we’ve seen year to date here—is still disconnected, and it makes sense for us to find assets that check all those boxes that, if we were to dispose or contribute those to a joint venture, the result being an overall improvement in the quality of our portfolio, and to take those proceeds, take advantage of the disconnect between public and private market valuations, and turn those proceeds into additional share repurchases, that is certainly something that is in the playbook and, if that environment persists, is something that we would look at doing more of.
Spencer Glimsher (Analyst at Green Street)
Okay, great. And then on the property tax front, we’ve been talking about the appeals for some time. I’m just curious, how much longer do you envision having to engage in these, and what is the magnitude of the appeals on average? Just maybe on a percentage basis, or, you know, maybe there’s a wide range, but just trying to get a sense of how substantial these are.
Tim Martin (Chief Financial Officer)
I think real estate tax appeals and the process that we go through has been that way forever. There are many municipalities that it’s just the way it works. They send along a tax increase and you fight it, and in many cases that takes multiple years. And so it is a little bit choppy and it’s a little bit hard to predict. We tend to start a year with an expectation that we’re going to get some, because we always get some. There’s always a little bit of variance between what we expect from a successful appeal standpoint and what we ultimately achieve.
The timing and the magnitude of that is very, very difficult to predict. Even by looking at what has happened in the past, it’s hard to get a whole lot of confidence around that being the best predictor of what’s happening in the future. But there is no process that’s coming to an end. The nature of this is that’s always the way it works and it’ll always be part of our process.
Spencer Glimsher (Analyst at Green Street)
Thank you.
OPERATOR
Your next question comes from the line of Michael Goldsmith with UBS. Your line is open. Please go ahead.
Michael Goldsmith (Analyst at UBS)
Good morning. Thanks a lot for taking my question. The guidance range implies a pretty wide range of outcomes for the fourth quarter, so I was kind of wondering what gets you to the low end, what gets you to the high end? And then also, what are the assumptions for street rates, move-in rates for the quarter that get you to the low or the high end? Thanks.
Tim Martin (Chief Financial Officer)
It’s always interesting when you get to this part of the year and you’re providing an annual guidance range that implies a fourth quarter range. It’s one of the reasons why we don’t provide individual components on same-store revenue or same-store expenses or same-store NOI on a quarter-by-quarter basis, but you’re kind of forced there in the fourth quarter. So it does imply a fairly wide range. I kind of focus on the midpoint of those ranges we talked about in the prepared remarks.
The revenue guide implies at the midpoint a slight deceleration in the growth from the third quarter. At the high end of that range, it implies actually a nice little further acceleration. So on the revenue side, that’s just going to be a combination. We’re not going to get into exactly where we think move-in rates are going to be. They’re going to change tomorrow from what they are today, so hard to predict exactly what’s going to underlie that.
But we do have confidence, given what’s already kind of in the books for rentals through today, and feel pretty good about where operating fundamentals are and demand levels are, that the range that we have provided is going to capture all of that. I think the negative end of that range implied for the fourth quarter would be somewhat difficult to envision, but we have to establish a range. So that would be some pretty bad stuff. On the expense side, the mid part of the full-year guidance implies 1.7% expense growth for the fourth quarter, and the entirety of the range is really consistent with all of the feedback that we’ve provided throughout the year: that expense growth is to be heavy in the first half; it’s going to moderate in the back half for all the reasons that we’ve discussed. And then implicit in that is an NOI range at the midpoint of 1.6% for the quarter and 3.2% for the year.
The most important thing about all those ranges is that—I’d like to say again, because you gave me a chance to—is that the great news there is that for the full year now we expect that at the midpoint of our provided ranges that revenue growth is positive not only for the quarter and third quarter, but positive for the full year. And NOI growth is now projected to be positive for the full year at the midpoint of our range. And so that is clearly an inflection point and I think is kind of the period on the end of the sentence of, we thought this was going to be a transitional year, and in fact it’s played out that way.
Michael Goldsmith (Analyst at UBS)
Thanks for that, Tim. And maybe moving on, Chris, you highlighted that 17 of your top 20 markets are accelerating revenue growth. Maybe looking at the handful that are decelerating, is there a common theme? Are these markets that benefited from lower supply earlier and have now kind of peaked and moderated? And if so, what kind of learnings does that imply for the markets that are accelerating now driven by supply? Does that just kind of mean, absent an incremental demand driver, that the way we’re heading is back to improvement but then ultimately back to moderating growth?
Chris Maher (President and Chief Executive Officer)
So when you look at those small number of markets—three—that are not in the same bucket as the 17. You know, you take a market like Tucson, it’s a very small market. It was a market we owned for a long period of time. Success creates copycats. And so you had a lot of development of new stores in that market and a large percentage of that then was third-party managed by the larger brands. And so our nice position we had there for a while, where we were owning that market and flying under the radar, is going to go through a churn as it becomes a more competitive and mature and somewhat typical market for us where we have a degree of competition across the stores.
It will at some point absorb and it will stabilize and then it will inflect and you’ll see a few quarters of some outsized top-line growth and then things should revert back to the mean. So I think all the markets are generally moving in a good direction. We have a few like Tucson that are just behind the curve a little bit.
OPERATOR
Your next question comes from the line of Juan Sanabria with BMO Capital Markets. Your line is open. Please go ahead.
Juan Sanabria (Analyst at BMO Capital Markets)
Hi, good morning. I just hoped you could talk a little bit about the other income and the fees there. You’ve kind of had step-function changes in, I guess, what you’re charging—kind of double-digit growth a couple times over the last couple of years. Just curious on what drove the decision to pull that lever, and have you seen any consumer price sensitivity that we read about as you push these fees, or what’s the lesson from those initiatives?
Tim Martin (Chief Financial Officer)
Good morning, Juan. I went through all the things that are in that bucket, and it’s merchandise sales, a variety of different fees, truck rental income, and the like. We just think about it from the standpoint of we have an entirety of our customer offerings, and they include everything that’s in revenue. And we’re always trying to tweak and modify and have a presentation of our full array of offerings, that the mix and match of those is all intended to maximize revenue. Sometimes they end up in the rent line items, sometimes they end up in the fee line items. And so there are a number of initiatives that we have undertaken.
You see those flow through the results. The thing that I was trying to point out in the prepared remarks is that they’re not one-time in nature; they’re things that we have done. Ultimately those high levels of year-over-year growth will start to moderate when we’ve lapped each of those changes, but I would expect to have continued outsized growth in that line item, at least for a little bit longer until we do lap it sometime next year.
Juan Sanabria (Analyst at BMO Capital Markets)
Okay. And then just curious if you can comment on New York. I’m not sure if I heard correctly, but I think northern New Jersey was mentioned as leading the MSA performance for same-store revenue, but hoping you could kind of break out the components of same-store revenue across the different major geographies within the New York MSA and how those should trend going forward, with New York kind of continuing its impressive run overall as an MSA.
Chris Maher (President and Chief Executive Officer)
Yeah, Juan, if you start with the MSA as a whole, in the disclosure, quarterly revenue was up 5.4% on a year-over-year basis. If you think about New York City itself, it was basically right at that MSA average, just a skosh behind. And then you think about Long Island—slightly ahead of that 5.4. Northern New Jersey led the pack for the quarter. And then you saw Westchester, where we have a small number of stores, only four, and so not statistically all that helpful, but that would have been the laggard—Westchester County as it relates to the individuals in the quarter.
So the boroughs continue to do well, really led by, at this point, Brooklyn, but all of the boroughs are performing quite nicely. And now we are seeing in the suburbs what had been a little bit of a pull-down on that overall MSA—certainly last year and earlier this year—has now kind of caught up to the boroughs.
Juan Sanabria (Analyst at BMO Capital Markets)
Thank you.
OPERATOR
Your next question comes from the line of Victor Fetich with Scotiabank. Your line is open. Please go ahead.
Victor Fetich (Analyst at Scotiabank)
Good morning. Thank you. I have a question about the competitive environment. So how has that environment evolved over the last few months, particularly around the promotions and new customer pricing, and also to what extent has a more rational competitive backdrop you were talking about during the Vegas conference contributed to your occupancy gains in Q3? And does it give you greater confidence in your building rate in 2027?
Chris Maher (President and Chief Executive Officer)
So, I think you really touched on the answer there. Yes, the entirety of this year, I would say the overall competitive environment has been constructive. I think a contribution to that—certainly going back to the theme—is, as that new supply has been absorbed over the last couple of years and those stores are starting to get to a level of physical occupancy where the owner-manager is more comfortable on the rate side, that certainly helped market pricing for new customers.
We see that continuing here into the fourth quarter. Our expectation is that environment will remain constructive as we go into 2027. And I think all of that is one component, as Tim has articulated, as to why we’re so optimistic about the direction that fundamentals are going and why we’re so optimistic about 2027. And I think, again, whether that’s rate or occupancy, as Tim has said, we’re just focused on how do you maximize revenue, how do you grow revenue in the most effective way to get the results that we’ve put up, which are very good. And I think that’s our promise: we’ll continue to focus on how do we maximize the opportunities that we see every day.
Victor Fetich (Analyst at Scotiabank)
Okay. And then I appreciate the details you provided on different markets, but where are you seeing the clearest leading indicators of improvement for 2027? So which markets are you the most excited about in 2027 to outperform?
Chris Maher (President and Chief Executive Officer)
You know, in this backdrop, the expectation is that the demand drivers remain consistent in ’27 as they have been in ’26. You will see our dominant markets in the Northeast and in the Midwest continue to lead. And our expectation is that, again, as I said in my opening remarks, those Sun Belt and Southwest markets will continue to show improvement. And I think you’ll continue to see that improvement quarter by quarter as we go through the end of this year and through 2027.
Victor Fetich (Analyst at Scotiabank)
Thank you.
OPERATOR
Your next question comes from the line of Rabi Videa with Mizuho. Your line is open. Please go ahead.
Rabi Videa (Analyst at Mizuho)
Hi there. Good morning. Thanks for taking my question. Apologies if I missed this, but I think you said earlier that move-in rates for October are up mid-single digits. I wanted to get a sense of how occupancy has trended throughout October on a year-over-year basis and compared to September.
Chris Maher (President and Chief Executive Officer)
Yeah, so through October we’ve seen the fairly consistent demand trends of what we have seen in the third quarter. Rates have moved back positive, low single digits year over year. Rental volume remains in line with last year. And we’re maintaining occupancy levels that are nicely ahead of last year. So I would say, obviously October is not finished, but the trends have continued that positive direction that we saw in the third quarter.
Rabi Videa (Analyst at Mizuho)
Got it. That’s helpful. And maybe can you please offer some comments on length of stay? How has that trended throughout the year, and how has that driven your ECRI strategy going forward if customers are using the service longer and staying longer?
Chris Maher (President and Chief Executive Officer)
So the median length of stay and what we’re seeing on those customers is fairly consistent throughout the year. When you think about the number of customers who have been with us over two years, it continues to stick in that about 40% range. And those long-term customers clearly are in the portfolio for that long because A) we’re providing a valuable service, but B) we’re providing excellent customer service, which is certainly a component of that desire to stay longer.
I think when you think about that relative to the ECRI program, there hasn’t been a significant change in how we think about rates from that perspective to the existing customer base. Those trends and that philosophy and strategy have been fairly consistent now throughout the year.
Rabi Videa (Analyst at Mizuho)
Got it. Thank you. Congrats on a good quarter.
OPERATOR
Your next question comes from the line of Todd Thomas with KeyBanc Capital Markets. Your line is open. Please go ahead.
AJ (Analyst at KeyBanc Capital Markets)
Thank you. Good morning. This is AJ on for Todd. So real quick, the improvement, Chris, as you mentioned in your opening remarks, kind of just broadened across the portfolio this quarter. How much of that reflects stronger underlying demand versus easier comps or a change in your pricing strategy?
Chris Maher (President and Chief Executive Officer)
Yeah, thanks for the question. So not easier comps. I think it is a reflection of, again, stable demand fundamentals against the backdrop of less inventory for that customer to choose from, which then has led to more constructive market pricing. But B) this just plays right into the sweet spot of CubeSmart, having a higher focus on that customer who is now looking for the specific cube size that they’re interested in renting. And our ability to both get those eyeballs on us at their beginning of the stage and then convert them first into a reservation and then a rental is a competitive advantage that we have in the markets in which we operate, mostly due to the fact that A) we’re incredibly good at it and B) we have the best quality portfolio. So it’s all kind of playing right into the playbook of CubeSmart, and as a result, we’re seeing the kind of positive results that certainly the data shows in the third quarter.
AJ (Analyst at KeyBanc Capital Markets)
Okay, I appreciate the added color. And then Tim, maybe one for you. I appreciate the information just around the other property income. Was that included in prior guidance—that strategy—and was it generated across the portfolio, or was the strategy more concentrated in certain markets?
Tim Martin (Chief Financial Officer)
I would describe those initiatives as being broad-based across the entirety of the portfolio, and we certainly anticipated some benefit from those initiatives in our guidance. And I would say, relative to those expectations, we have been in line, maybe a little bit—maybe a little bit better on that line item than we would have thought, but mostly in line.
AJ (Analyst at KeyBanc Capital Markets)
Perfect. Thank you guys.
OPERATOR
Your next question comes from the line of Eric Wolf with Citi. Your line is open. Please go ahead.
Eric Wolf (Analyst at Citi)
Hey, thanks. Within New York, your expense growth stepped up a bit. I was wondering if some of that was due to the new licensing requirements, and if you see any change in expenses in that market due to the new requirements. And I guess more broadly, as you look to next year, maybe talk about some of the expense tailwinds or headwinds that you see.
Tim Martin (Chief Financial Officer)
Yeah, Eric, thanks for the question. So the licensing requirement and the cost to get those licenses—not a super material impact in the quarter or really even in the full year in New York. The other costs around some of the changes in the boroughs also not moving the needle at the moment that significantly. So I think the change tends to just be quarter-to-quarter fluctuations in things. Some of it could be timing, but nothing in any individual line item to point at for that.
I think it’ll all kind of balance itself out over the course of the year. And then on the expectations, obviously we’re not providing guidance quite yet for next year, but from an expense standpoint, there weren’t really any one-time items in 2026 that we need to point out. I think the—I think hopefully we have a milder winter in the Northeast in ’27 than we did in 2026, but can’t think of anything other than that that was one-time in nature in ’26 that would create an easy or a difficult comp. We talked about taxes earlier in the call. That’s always a little bit of a wild card from a timing perspective, but overall nothing to point out that you should need to think about when trying to forecast out what might happen next year at this point.
Certainly it does. I mean, I think it impacts everybody in that way. I think ultimately our strategy around share repurchases has not been to lever up the balance sheet to do so. As we started the year, as we ended last year and started this year, our expectation was to effectively focus on our free cash flow and think about what the best use of that free cash flow would be. And as we started the year, the best use of that free cash flow was to fund share repurchases.
We started to think about how then could we, on a leverage-neutral basis, supplement the share repurchases—that led to the joint venture. I think the challenge in the execution of that venture is it takes time to put all that together and close, and you have a period of time where you have a little bit of a mismatch of certainty of something like that closing versus accelerating share repurchases in anticipation of it. So we lived through this year already the real-world example of trying to match proceeds and to do that in a volatile market. Certainly these past four, five, six weeks have taken that volatility and pushed down on that pedal a little bit more.
So I think it’s a challenge for everybody to think about how to evaluate their cost of capital, both in the short and the medium term. I think long term you still have some pretty good conviction. But when evaluating alternatives to deploy capital, whether it’s share repurchases, incremental investment activity either on balance sheet or through joint ventures, I think all of those things are considerations and it does make it a little bit harder, not easier.
OPERATOR
Your next question comes from the line of Brendan Lynch with Barclays. Your line is open. Please go ahead.
Annabelle (Analyst at Barclays)
Hi, thank you for taking the question. This is Annabelle on for Brendan. Maybe just to follow up on that last question, you guys have done a great job of taking advantage of the difference in private and public valuations so far. Can you just give some color on the spread between those and how that spread has trended over the past year?
Chris Maher (President and Chief Executive Officer)
I would say just generically, everybody defines their cap rates a little bit differently, but I tend to generalize it to say most things that are attractive to us that would be kind of at the average of the quality of our portfolio, I would say cap rate for those types of assets, stabilized, have been and for the moment remain at that kind of five and a quarter to five and a half cap rate. And for much of this year, the implied cap rate on where our shares have been trading has been north of 6 and at times, you know, kind of mid-6.
And so that was really quantifying what we’ve been talking about as the disconnect between public and private market valuations. You know, certainly we’re looking very much forward to the day when those inflect like they should, but we’re not quite there yet. So that’s how we think about it from a high level.
Annabelle (Analyst at Barclays)
Okay, great, that’s helpful. And then it’s been kind of a slow multi-year deceleration in industry fundamentals. But now that dynamics are inflecting positive, how do you think about the pace of recovery and what could drive the recovery to accelerate faster than kind of the last few years where it took to decelerate?
Chris Maher (President and Chief Executive Officer)
So yes, we are very optimistic that we’re on track for a nice recovery here. I think when you think about demand, one opportunity that could certainly create acceleration in the positive trajectory is the housing market. We’ve talked about that ad nauseam. I think the other driver that will continue to create positive momentum—and, you know, if this trend of less supply continues further—then you can just look at the time kind of post-GFC as to the positive impact that can have on more accelerated top line growth.
So I think probably those are the two items to look at if you’re thinking about what could have an even more positive impact on trends.
Annabelle (Analyst at Barclays)
Great, thank you.
OPERATOR
Your next question comes from the line of Linda Tsai with Truist Securities. Your line is open. Please go ahead.
Linda Tsai (Analyst at Truist Securities)
Hi, thank you. Just a couple questions on expenses. How much of the down 11% advertising decline reflects better conversion versus spending timing?
Tim Martin (Chief Financial Officer)
It’s mostly going to be due to timing—just when we, you know, when we pushed on certain things this year relative to when we pushed on it last year. You saw that show up in spades early this year, especially in the first quarter, when our year over year in the first quarter was up, I think, north of 50%. So it’s mostly timing-related. On the margin, you know, we’re going to push the pedal a little bit harder, a little bit softer depending on where we see good returns and good value.
But the majority of that variance year over year is just going to be timing in nature.
Linda Tsai (Analyst at Truist Securities)
Thanks. And then on quarterly G&A being roughly flat year on year, how much platform growth can you support before overhead steps up?
Tim Martin (Chief Financial Officer)
Well, that’s a loaded question. There’s certainly a lot that we can leverage with the existing platform. So, you think about the incremental things that happen when you add 100 stores. You know, you add 100 stores, you need to add some operational support, and when you get to that level of growth, you need to add some marginal additions from the corporate office. But when you think about all of the platform things in nature, adding 50, 100 stores doesn’t really change how we think about staffing for the pricing team and for our business intelligence team and for our marketing team.
So there’s a good bit of leverage. We certainly, though, are always mindful of the R&D portion of G&A and our consistent focus on continuing to build an even better mousetrap. And so we consistently spend on areas of improvement from that perspective, and you should expect us to continue to do that.
Linda Tsai (Analyst at Truist Securities)
Great, thank you.
OPERATOR
Your next question comes from the line of Omotayo Okusanya with Deutsche Bank. Your line is open. Please go ahead.
Omotayo Okusanya (Analyst at Deutsche Bank)
Yes, good morning, and congrats on the quarter. Curious—you raised the low end of guidance a couple of times right now. Clearly fundamentals are inflecting. How do we kind of think about—again, it’s close to the end of the year—but less so, you know, raising the high end of guidance, although it’s close to the end of the year? And how do we kind of think about, you know, the setup into ’27, specifically in regards to earnings growth? You’ve turned positive for the year, which is great.
But as you kind of think about ’27, some of the puts and takes there.
Chris Maher (President and Chief Executive Officer)
Well, that’s a difficult one to answer. What do you think? I’ll tell you if I agree with you or not.
Omotayo Okusanya (Analyst at Deutsche Bank)
I think you’re definitely going to accelerate, just kind of given what’s happening with fundamentals. So that’s good to see. I think the question most of us and investors are asking is—and I think it’s come up a couple of times with some of your peers—is, you know, can we ever kind of get back to, quote, unquote, the good old days, you know, of storage having some of the best earnings growth profiles in the entire REIT space?
Chris Maher (President and Chief Executive Officer)
I think absolutely you can get back to that. I think the million dollar question is when? And I think what we and others in the sector have been trying to consistently convey is that things are moving in the right direction. The operating fundamentals are solid. It’s showing up in the results. That improvement has been slow and steady. It takes time for it to churn through. And that said, that’s the cautionary part of it. The positive part of it is everything is moving in the right direction, and the pace in which that happens is the million dollar question.
I don’t think anybody in the sector is anticipating a hockey-stick recovery where things just all of a sudden go through the roof, short of another pandemic or something like that. You know, I think it’s still slow and steady, and I think the underlying question for 2027 for the sector is going to be: at what rate does that improvement continue? I think improvement is anticipated by everybody, certainly including the large operators. I think the pace of that is still the wild card.
And we’ll obviously have some thoughts on that when we provide our initial guidance here next quarter.
Omotayo Okusanya (Analyst at Deutsche Bank)
That’s helpful. But if I may ask one more, just around the mark-to-market within the portfolio—again, hasn’t been a huge drag this year just because, again, move-out rates, you know, have been pretty constrained. But how do we kind of think about, again, not large negative mark-to-market in the portfolio not impacting earnings on a going-forward basis? Like is there a way it kind of cleans up without necessarily having a huge impact on numbers down the line?
Chris Maher (President and Chief Executive Officer)
I think that negative gap certainly has gotten a lot of focus here over the past 12 to 18. I think the thing to keep in mind that we always try to point out is that historically, even in those good old days that you refer to, there was always a negative gap, right? The in-place customer is always higher than the new customer coming in, throughout—very few exceptions to that. And so the magnitude of that gap certainly widened. And it widened for all the reasons that you would anticipate with the accelerated demand that came with the pandemic.
I think it’s also widened because there’s more sophistication around maximizing revenue throughout the customer life cycle, and so rate increases to existing customers have also contributed a little bit to that gap. And so I think when it lands and we get back to the good old days, I think that gap will be larger than it used to be, but will be less than it is today. And so I don’t think about it—again, that’s not a KPI for us. We’re focused on trying to attract, and I think we do a really good job of attracting, long-term customers, and I think we do a really good job of maximizing the revenue opportunity from those customers on the front end and throughout their life cycle. I just think the way that shows up in that particular indicator is that gap is going to narrow, but it’s always going to be negative.
Omotayo Okusanya (Analyst at Deutsche Bank)
Thanks again. All the best.
Chris Maher (President and Chief Executive Officer)
Appreciate it.
OPERATOR
We have reached the end of the Q&A session. I will now turn the call back to Chris Maher for closing remarks.
Chris Maher (President and Chief Executive Officer)
Thank you, everybody, for participating in the call. Clearly the optimistic spirit that was conveyed on the second quarter call continues here into the third quarter, and we’re confident in that optimistic spirit. As we move into 2027. We’ve moved from a time period where the questions were, will fundamentals get back to normal? We then moved to, when will fundamentals get back to more normal? And now we’re in the fun part of that where the questions are, as you’ve heard today, more, how will this recovery shape as positive fundamentals continue to trend in a very good way.
So great place to be in relative to certainly where we were and a great sense of optimism here at CubeSmart that we’re on the right track. So thanks, everyone, and we look forward to speaking with you all again at the end of the year. Take care.
OPERATOR
This concludes today’s call. Thank you for attending. You may now disconnect.
Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company’s SEC filings and official press releases. Corporate participants’ and analysts’ statements reflect their views as of the date of this call and are subject to change without notice.
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