Recommendation: Buy
| Entry Date | Symbol | Recommendation | Entry Price (USD) | Target 1 (USD) | Target 2 (USD) | Holding Duration | Potential Upside* |
|---|---|---|---|---|---|---|---|
| 26 Feb, 25 | CUBE | Buy | USD 43.23 | USD 45.5 | USD 48.0 | 37 days | 11.0% |
*Potential Upside (%) indicates the expected percentage increase from the Entry Price to the Target 2 Price.
Data Powered by EOD Historical Data (“EODHD”).
CubeSmart is a self-administered and self-managed real estate investment trust. The Company's self-storage properties are designed to offer affordable, easily accessible and, in most locations, climate-controlled storage space for residential and commercial customers. According to the 2023 Self-Storage Almanac, CubeSmart is one of the top three owners and operators of self-storage properties in the United States.
Lower Interest Expenses: Interest expense decreased by $0.4 million year-over-year, from $23.2 million in Q3 2023 to $22.8 million in Q3 2024, due to a reduction in the average outstanding debt balance and a lower weighted average effective interest rate.
Expansion of Third-Party Management Platform: The company added 24 new stores to its third-party management platform in Q3 2024, bringing the total to 893 managed stores covering 58.3 million rentable square feet.
Lower Occupancy Rates: Same-store physical occupancy declined from 91.3% in Q3 2023 to 90.2% in Q3 2024, indicating reduced demand or increased competition in the market.
Decline in Same-Store NOI: Same-store net operating income (NOI) declined 3.1% year-over-year, driven by a 0.8% revenue decrease and a 5.3% increase in operating expenses.
The company faces key investment risks including declining same-store net operating income (NOI), rising operating expenses, competitive pressures impacting occupancy rates, and potential interest rate fluctuations affecting financing costs.
| Entry Price | Support* | Target 1 | Target 2 |
|---|---|---|---|
| 43.23 | 40.2 | 45.5 | 48.0 |
Data Source: REFINITIV, Analysis: StockNextt
*Support can be considered as an indicative stop-loss, and if prices move below that level on closing basis individuals may evaluate exiting the position depending on their risk appetite, previous holdings, and other factors considered. The support and resistance levels may need to be re-evaluated within 4-6 weeks’ time frame depending on the stock price movements from the date of recommendation on the stock.
Financial Performance Overview
The company reported diluted earnings per share (EPS) of $0.44 for Q3 2024, slightly lower than the $0.45 recorded in the prior year. Net income attributable to common shareholders totaled $100.8 million, compared to $102.6 million in Q3 2023. Funds from operations (FFO), as adjusted, stood at $153.0 million, a slight decrease from $154.0 million in the same period last year. Same-store net operating income (NOI) declined by 3.1% due to a 0.8% decrease in revenues and a 5.3% rise in operating expenses.
Investment and Development Activities
The company remains active in acquisitions, with two self-storage facilities under contract in Oregon and Pennsylvania, totaling $22.0 million, expected to close in Q4 2024. Additionally, the company has ongoing joint venture development projects in New York, with a total anticipated investment of $36.9 million, of which $9.1 million has been invested as of September 30, 2024. Both stores are scheduled to open in Q3 2025.
Expansion of Third-Party Management Platform
The company continues to expand its third-party management platform, adding 24 new stores in Q3 2024, bringing the total managed stores to 893, covering 58.3 million rentable square feet. Over the first nine months of the year, 131 stores were added to the platform, reflecting the company’s commitment to strategic growth in third-party management.
Same-Store and Operational Results
As of September 30, 2024, the company's same-store portfolio consisted of 598 properties, representing 96.7% of the company’s total rentable square footage. Same-store occupancy declined slightly to 90.2% from 91.3% in Q3 2023. Despite a 0.8% decline in same-store revenues and a 5.3% increase in expenses, the company remains focused on maintaining operational efficiency and long-term profitability.
Financing and Capital Market Activities
During Q3 2024, the company raised $32.8 million in net proceeds through its at-the-market (ATM) equity program, selling 0.6 million common shares at an average price of $54.20 per share. As of September 30, 2024, 5.2 million shares remain available for issuance under the existing equity distribution agreements. The company also reduced its average outstanding debt balance from $3.00 billion in Q3 2023 to $2.94 billion in Q3 2024, resulting in a lower weighted average effective interest rate of 2.99%.
Dividend Declaration and Financial Outlook
The company declared a quarterly dividend of $0.51 per common share, payable on October 15, 2024, to shareholders of record as of October 1, 2024. For full-year 2024, the company projects diluted EPS between $1.72 and $1.76, and FFO per diluted share, as adjusted, between $2.62 and $2.66. The same-store NOI is expected to decline between 1.0% and 3.0%, while same-store revenues are projected to range from a 0.75% decline to a 0.25% increase. The company remains focused on disciplined capital deployment and long-term value creation.
Considering recent key business, financial updates, current trading levels, and key business risks, a ‘Buy’ recommendation has been given on CubeSmart (NYSE: CUBE) at the closing market price of USD 43.23, as on February 25, 2025.
Data Powered by EOD Historical Data (“EODHD”).
Sector: Real Estate Industry: REIT - Industrial
| Company | Change (USD) | Price (USD) | Trailing PE (x) | Forward PE (x) | Price Sales TTM (x) | Price to Book Value (x) | Enterprise Value to Revenue (x) | Enterprise Value to EBITDA (x) |
|---|---|---|---|---|---|---|---|---|
| CUBE CubeSmart |
-0.21 0.53% | 39.50 | 27.44 | 25.32 | 9.71 | 3.61 | 12.54 | 18.75 |
| PLD Prologis Inc |
1.95 1.95% | 101.90 | 42.17 | 52.08 | 14.75 | 2.25 | 18.70 | 23.08 |
| PSA Public Storage |
-1.96 0.66% | 294.71 | 27.33 | 27.32 | 11.54 | 8.95 | 14.45 | 20.02 |
| PLDGP Prologis Inc |
- -% | 55.65 | 10.93 | - | 5.05 | - | ||
| EXR Extra Space Storage Inc |
-0.86 0.61% | 140.97 | 28.98 | 28.74 | 14.47 | 2.23 | 19.14 | 26.72 |
Data Powered by EOD Historical Data (“EODHD”).
Related Risks: This report may be looked at from high-risk perspective and recommendations are provided are for a short duration. Recommendations provided in this report are solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc.
Note 1: Past performance is not a reliable indicator of future performance.
Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is February 25,2025. The reference data in this report has been partly sourced from REFINITIV.
Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.
Target: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Target 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Target 2 may act as the crucial resistance level for the stock.
Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.
Disclaimer :
This report has been issued by StockNextt which has an Ontario Business Identification Number 1000958347 and British Columbia registration Number FM1051529 is a trade name under Kalkine Canada Advisory Services Inc. having Business Number 761925130BC0001. Kalkine Canada Advisory Services Inc. and StockNextt are collectively referred to as “StockNextt”, “we”, “us”, and “our”. The website https://stocknextt.com and associated pages are published by StockNextt. The information in this report and on the StockNextt website has been prepared from a wide variety of sources, which StockNextt, to the best of its knowledge and belief, considers accurate. StcokNextt has made every effort to ensure the reliability of information contained in its reports, newsletters, and websites. All information represents our views at the date of publication and may change without notice. The information in this report does not constitute an offer to sell securities or other financial products or a solicitation of an offer to buy securities or other financial products. Our reports contain general recommendations for investing in securities and other financial products. StockNextt does not offer financial advice based upon your personal financial situation or goals, and we shall not be held liable for any investment or trading losses you may incur by using the opinions expressed in our reports, publications, market updates, news alerts and corporate profiles. StockNextt does not intend to exclude any liability which it is not permitted to exclude under applicable law or regulation. StockNextt’s general advice does not in any way endorse or recommend individuals, investment products or services for your personal financial situation. You should discuss your portfolios and the risk tolerance level appropriate for your personal financial situation, with a professional authorised financial planner and adviser. You should be aware that the value of any investment and the income from it can go down as well as up and you may not get back the amount invested. Please also read our Terms and conditions for further information. Employees and/or associates of StockNextt and its related entities may hold an interest in the securities or other financial products covered in this report or on the StockNextt website. Any such employees and associates are required to comply with certain safeguards, procedures and disclosures as required by law.
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