CubeSmart

Hello and welcome to the KubeSmart third quarter of 2021 earnings call. My name is Elliot and I will be coordinating your call today. If you would like to register a question during the presentation, you may do so by pressing start followed by one on your telephone keypad. I'll now hand over to our host, Josh Shutzer. Josh, please go ahead when you're ready.

Thank you, Elliot. Good morning, everyone. Welcome to KubeSmart's third quarter 2021 earnings call. Participants on today's call include Chris Marr, 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 8K we filed this morning, together with our earnings release filed with the Form 8K, and the risk factors section of the company's annual report on Form 10K. 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 post on the company's website at www.cubesmart.com. I will now turn the call over to Chris.

Thank you, Josh, and good morning. We are pleased to wrap up a very successful quarter for the self-storage industry. Operating fundamentals continue to maintain their positive trajectory, supported by our sophisticated systems and solid consumer demands. We have been able to leverage that demand by growing occupancy and maximizing rates for both new and existing customers. The benefit of the positive consumer demand backdrop is evident in our same store metrics. The impact of the solid operating environment is also being experienced in our non-same store and recently developed properties. Physical occupancy, realized rent, revenue, and net operating income in our non-same stores and development properties well exceeded our expectations during the quarter. We are particularly pleased with the accelerating same-store revenue performance we have experienced when considering the positive same-store revenue growth we had produced in the back half of 2020 and the teeth of the challenges created by the pandemic. Our same-store revenue growth during the quarter and our outlook for the full year reflect our strategy of balancing marketing, occupancy, rental rate, and discounting to produce the maximum sustainable revenue growth over the long term. Looking forward, we remain bullish on fundamentals as evidenced by our increased guidance, which Tim will get into with more detail in his commentary. Our thesis on supply for the balance of 21 and 22 remains intact. Our current data supports our expectation that supply in our top 12 markets peaked in 2019. We continue to expect new supply in those markets will decline in 2022 compared to the 2021 expected deliveries. Specific to the outer boroughs of New York, we expect new deliveries to contract significantly from what we have experienced over the past three years. Currently, our data suggests three openings across Brooklyn, the Bronx, and Queens in each of the first and second quarter of next year dwindling to one in the third quarter of next year and no further openings after Q3 of 2022 currently on our radar. I want to take this opportunity to thank our store teammates for their dedication to customer service and tremendous resiliency in the face of what seems to be multiple once-in-a-lifetime events. Our team continues to navigate through the pandemic with grace, flexibility, and genuine care for our customers. I want to especially thank our team in the New York MSA for their customer service during and after Tropical Storm Ida. We experienced significant water intrusion at several of our stores in Queens, the Bronx, North Jersey, and Westchester County. Our teams did an outstanding job assisting our customers and navigating the operational challenges created by the flooding. I also want to recognize the collaborative efforts of our third-party management and information technology teams who introduced SmartView during the quarter. SmartView is our first of its kind proprietary mobile app. designed to connect our third-party customers seamlessly to key performance metrics for their stores. Yet another example of how we are serving our third-party management clients in innovative ways so that we may continue to keep ahead of the fast pace of change. The spotlight shining on our industry has increased investors' interest in owning self-storage. This has had a positive impact on our third-party management business as our pipeline of future opportunities remains solid. This wonderful operating environment has also had a positive impact on the acquisition environment and our deal flow is quite robust. We continue to evaluate our external growth opportunities with a focus on achieving attractive risk adjusted returns and maintaining our position as the highest quality portfolio in our business. Our balance sheet is well positioned to capitalize on opportunities. Finally, I wish to point out that we published our inaugural sustainability report this morning. We are proud of our work to date and are committed to continuous improvement as sustainability efforts play a key role in our long-term value creation.