MALVERN, PA — CubeSmart (NYSE: CUBE) raised its full-year earnings outlook after third-quarter profit increased 14% and occupancy improved across its self-storage portfolio, signaling stronger rental demand as the real estate investment trust prepares to transfer 15 properties into a $197 million joint venture.
The Malvern-based company reported net income attributable to common shareholders of $94.4 million for the quarter ended Sept. 30, up from $82.9 million a year earlier. Diluted earnings per share rose to 42 cents from 36 cents.
Revenue increased 3.1% to $294 million from $285.1 million, supported by higher occupancy, rental rates and property-related income.
Adjusted funds from operations, a key measure of real estate investment trust performance, increased to $150.3 million from $149 million. Adjusted FFO per diluted share rose to 66 cents from 65 cents.
CubeSmart raised the lower end of its 2026 adjusted FFO guidance to $2.58 per share from $2.54, while maintaining the upper end at $2.60. Its revised earnings forecast calls for diluted earnings per share of $1.60 to $1.62, compared with the previous range of $1.58 to $1.64.
The company also improved its full-year operating projections, forecasting same-store revenue growth of 1% to 1.4%, compared with its previous estimate of 0.5% to 1.25%.
Same-store net operating income is now expected to range from flat to 0.8% growth, replacing an earlier forecast of a 1% decline to 0.25% growth. Projected expense growth was reduced to 2.8% to 3.8% from 3.25% to 4.5%.
“The strength of our year-to-date performance supported improvements to all of our full-year same-store and FFO guidance ranges,” Chief Financial Officer Tim Martin stated.
For the third quarter, same-store net operating income increased 2.1% to $172.6 million, reflecting revenue growth of 1.9% and operating expense growth of 1.3%.
Average occupancy across the company’s 623 comparable properties reached 90.5%, compared with 89.9% a year earlier. Quarter-end occupancy increased to 89.9% from 89%.
Realized annual rent per occupied square foot increased 0.5% to $22.81.
Property taxes and personnel costs remained sources of expense pressure, increasing 4% and 4.3%, respectively, across comparable stores. Advertising expenses declined 10.7%, while property insurance costs fell 10.9%.
The company’s broader portfolio included 662 consolidated properties totaling 48.5 million rentable square feet at quarter-end, with physical occupancy of 89.7%.
CubeSmart is also restructuring part of its property ownership through an agreement with an affiliate of Heitman Capital Management.
Under the transaction, CubeSmart will contribute 15 wholly owned storage properties to a newly formed joint venture at an agreed value of $197 million.
Heitman will hold an 80% interest, while CubeSmart will retain 20% and receive cash. The properties encompass approximately 900,000 square feet across Connecticut, Georgia, North Carolina, Ohio, Texas, Utah and Virginia.
The venture is expected to carry a $99.7 million loan maturing in November 2033. The transaction is scheduled to close during the fourth quarter.
CubeSmart continued expanding its third-party management business, adding 32 properties during the quarter and 90 during the first nine months of 2026.
Its third-party management platform reached 882 stores representing 58.2 million rentable square feet as of Sept. 30.
The company also had one joint venture development project under construction in New York, with a planned investment of $28 million. CubeSmart had invested $10.8 million by quarter-end and expects the property to open in the third quarter of 2027.
Capital allocation activity included the repurchase of approximately 2.1 million common shares for $83.9 million during the quarter, at an average price of $39.09 per share.
Another 8 million shares remained authorized for repurchase at Sept. 30.
CubeSmart also redeemed $300 million in unsecured senior notes due in September using borrowings from its revolving credit facility and repaid three mortgage loans totaling $40.3 million.
After the quarter ended, the company obtained a $300 million unsecured term loan maturing Jan. 10, 2031, with an effective interest rate of SOFR plus 0.80 percentage points at its current credit rating and leverage level.
Proceeds were used to repay outstanding revolving credit borrowings.
Interest expense rose to $31.1 million during the quarter from $29.4 million a year earlier, reflecting higher average debt balances and borrowing costs.
Average outstanding debt increased to $3.55 billion from $3.44 billion, while the weighted average effective interest rate rose to 3.37% from 3.32%.
For the first nine months of 2026, CubeSmart reported revenue of $862.4 million, compared with $840.4 million a year earlier. Net income attributable to common shareholders increased to $266.8 million from $255.1 million, although adjusted FFO declined to $437.6 million from $446 million.
The company paid a quarterly dividend of 53 cents per common share on Oct. 15 to shareholders of record as of Oct. 1.
CubeSmart is among the three largest self-storage owners and operators in the United States, according to the 2026 Self-Storage Almanac.
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