CubeSmart

Hello everyone and welcome to the CubeSmart first quarter 2023 earnings call. My name is Charlie and I'll be coordinating the call today. You will have the opportunity to ask a question at the end of the presentation. If you'd like to register a question, please press star followed by one on your telephone keypads. I will now hand over to our host, Josh Schutzer, Vice President of Finance to begin. Josh, please go ahead.

Thank you, Charlie. Good morning, everyone. Welcome to CubeSmart's first quarter 2023 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.keepsmart.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 factor 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 first quarter financial supplement posted on the company's website at www.cubesmart.com. I will now turn the call over to Chris.

Thank you, Josh. Good morning, everyone. Our first quarter of 2023 can be characterized as solid performance across all of our key performance metrics. Funds from operations per share came in at the high end of our guidance. as steady occupancy trends coupled with our continued focus on expense control help to generate strong same-store net operating income growth. Our customers are resiliently navigating an uncertain post-COVID economy. While the Fed pushes up interest rates to cool inflation, the unemployment rate remains historically low. Volatility in mortgage rates has created an uncertain housing market as prices remain stubbornly high, resulting in a slowing single-family home purchases and sales. We believe our portfolio focus on top markets and strong demographics has us well positioned to perform throughout all macro environments. Low unemployment, continued wage growth, and solid household balance sheets translate into historically good credit metrics across our customer base. During the first quarter, Delinquency metrics such as late fees charged and receivables over 30 days past due are at levels below what we experienced in the first quarter of 2019. Another bright spot continues to be the stickiness of our existing customer base. Vacates during the quarter were down 3.3% to the first quarter of last year and down 9.5% on a comparable store basis to the first quarter of 2019. 47.9% of our customers have been with us longer than two years, up 230 basis points from this time last year. This results in a larger pool of customers to potentially receive a rate increase. Top of funnel demand trends have been less consistent with historical patterns than we expected. We had a solid first couple of months as same store rentals through February, were consistent with the same time period last year. In March, trends slowed as weather, bank failures impacting consumer confidence, and existing home sales weighed on March storage demand. March occupancy trends were mostly in line with last year, but that was driven by lower vacate activity offsetting slower than expected rental activity, which led us to a more cautious approach to rental rates. As we've moved into April, trends have been on a more normal trajectory. Rental and reservation activity has returned back in line with last year's levels as we've seen stabilizing signs in both the housing market and with consumer confidence. As a result, we have grown our occupancy, narrowing the gap to last year to 141 basis points, and we are moving up rental rates as the busy season begins to ramp up. We have experienced unusual trends so far this year. The demand momentum we saw in January and February slowed in March only to show signs of reigniting in April. Recent trends have us cautiously optimistic, but as we noted during our prior earnings call, the outlook for the back half of the year is heavily dependent on performance during the next few months of the rental season. Touching briefly on market level performance, the New York MSA was our most resilient MSA with our borough properties experiencing positive growth in both occupancy and net effective rents to new customers compared to the first quarter of last year. This was offset somewhat by softness and supply impacted North Jersey and Long Island markets within the overall MSA. While decelerating off of their tremendous 22 levels, We continue to experience above average revenue growth in our Florida, Texas, and Southern California markets. We experienced below average growth in the supply impacted DC, Virginia, Maryland markets and in Arizona where COVID induced migration has clearly waned. We continue to underwrite a good number of transactions, but sell our expectations for assets that meet the quality requirements of our portfolio strategy are still disconnected from our current cost of capital. We are finding ways to accretively deploy capital within our existing portfolio as full-scale redevelopments and cost-saving upgrades to high-efficiency building systems are proving to be the best opportunity for capital deployment in this part of the cycle. We remain a third-party partner of choice as our reputation in the industry has consistently maintained our robust pipeline of new management opportunities. Our operating platform is primed to maximize performance no matter the macro environment. Our differentiated strategic focus on quality across our portfolio and platform positions as well to generate shareholder value over the long term. Thanks for listening, and I will now turn the call over to Tim Martin, our Chief Financial Officer, for his remarks.