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CubeSmart (CUBE) is a self-managed REIT focused on the ownership, operation, management, acquisition, and development of self-storage properties in the US. It owns 660 self-storage properties, totaling about 48.2 million rentable square feet across the District of Columbia and 25 states. It also manages 863 stores for third parties.

On Oct. 30, CubeSmart posted its Q3 results. Revenue increased by 5.2% year-over-year to $285.1 million. Higher revenue was primarily driven by property acquisitions and newly opened developments, which helped offset softer same-store performance.

CubeSmart (CUBE
 

Specifically, same-store revenue was down 1% due to same-store occupancy falling from 90.2% to 89%. Thus, same-store NOI fell 1.5% year-over-year, further impacted by a 0.3% increase in same-store property operating expenses.

Funds from operations (FFO) was $149 million, compared to $153 million last year. On a per-share basis, FFO was $0.65, modestly down from $0.67 in the prior-year period. For FY 2025, management raised guidance once again. The company now expects FFO/share between $2.56 and $2.60.

CubeSmart’s dividend is reasonably safe. At the midpoint of management’s AFFO per share outlook for 2025, the payout ratio is 81%, which is reasonable for a REIT. The fact that the company’s properties are located in prime markets with good visibility and robust growth potential is an advantage.

CubeSmart trades at a 14.5 P/AFFO, below our 15x fair value estimate. If the stock trades at our fair valuation level in five years, it will incur a 0.8% annualized valuation boost. Given 6% growth, a 5.6% dividend yield, and a 0.8% boost from valuation multiple expansion, we expect total returns of 11.5% per year over the next five years.

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