CubeSmart's Q3 Revenue Up, But Net Income Dips on Higher Costs

Ticker: CUBE · Form: 10-Q · Filed: Oct 31, 2025 · CIK: 1298675

Sentiment: bearish

Topics: REIT, Self-Storage, Earnings, Operating Expenses, Interest Rates, Profitability, Real Estate

Related Tickers: CUBE, PSA, EXR, LSI

TL;DR

**CUBE's revenue growth is overshadowed by surging expenses and interest costs, making it a hold as profitability takes a hit.**

AI Summary

CubeSmart reported total revenues of $285.08 million for the three months ended September 30, 2025, an increase of 5.2% from $270.89 million in the same period of 2024. Rental income rose to $243.40 million from $230.95 million, a 5.4% increase. However, net income attributable to the company decreased by 17.8% to $82.93 million in Q3 2025, down from $100.80 million in Q3 2024. This decline was primarily driven by a significant increase in operating expenses, which jumped 18.1% to $174.04 million from $147.34 million, and a 29.1% rise in interest expense on loans to $29.38 million from $22.75 million. Depreciation and amortization also increased substantially by 30.2% to $66.69 million. The company's total assets grew to $6.76 billion as of September 30, 2025, from $6.39 billion at December 31, 2024, largely due to an increase in storage properties, net, to $6.38 billion from $6.04 billion. Unsecured senior notes, net, increased by $443.23 million to $3.22 billion, indicating increased leverage.

Why It Matters

CubeSmart's Q3 2025 results show a concerning trend for investors: while revenue is growing, profitability is eroding due to rising operating and interest expenses. This could signal a challenging environment for REITs, particularly in the self-storage sector, where competition and inflation are driving up costs. For employees, increased operational efficiency demands might arise. Customers could face higher rental rates as the company seeks to offset these rising expenses. In the broader market, this performance could indicate a tightening in the real estate sector, potentially impacting other REITs and their ability to maintain margins amidst higher interest rates and operational pressures.

Risk Assessment

Risk Level: high — The risk level is high due to a significant 17.8% decrease in net income attributable to the company, from $100.80 million in Q3 2024 to $82.93 million in Q3 2025. This decline is exacerbated by an 18.1% increase in total operating expenses to $174.04 million and a 29.1% rise in interest expense on loans to $29.38 million, indicating substantial pressure on profitability and increased leverage with unsecured senior notes rising by $443.23 million.

Analyst Insight

Investors should closely monitor CubeSmart's expense management and interest rate exposure. Consider holding existing positions but deferring new investments until there's clear evidence of expense control and improved net income margins, as rising costs are significantly impacting profitability despite revenue growth.

Financial Highlights

debt To Equity
1.39
revenue
$285.08M
operating Margin
39.3%
total Assets
$6.76B
total Debt
$3.43B
net Income
$82.93M
eps
$0.36
gross Margin
68.5%
cash Position
$108.39M
revenue Growth
+5.2%

Revenue Breakdown

SegmentRevenueGrowth
Rental income$243,400,000+5.4%
Other property related income$31,730,000+8.4%
Property management fee income$9,950,000-6.7%

Key Numbers

Key Players & Entities

FAQ

What were CubeSmart's total revenues for the third quarter of 2025?

CubeSmart's total revenues for the three months ended September 30, 2025, were $285.08 million, an increase from $270.89 million in the same period of 2024.

How did CubeSmart's net income attributable to the company change in Q3 2025 compared to Q3 2024?

Net income attributable to CubeSmart decreased by 17.8%, falling from $100.80 million in Q3 2024 to $82.93 million in Q3 2025.

What factors contributed to the decline in CubeSmart's net income?

The decline in net income was primarily due to an 18.1% increase in total operating expenses to $174.04 million and a 29.1% rise in interest expense on loans to $29.38 million in Q3 2025.

What was CubeSmart's basic earnings per share for the third quarter of 2025?

CubeSmart's basic earnings per share attributable to common shareholders for Q3 2025 was $0.36, down from $0.45 in Q3 2024.

Did CubeSmart's total assets change from December 31, 2024, to September 30, 2025?

Yes, CubeSmart's total assets increased to $6.76 billion as of September 30, 2025, from $6.39 billion at December 31, 2024.

How much did CubeSmart's unsecured senior notes increase by?

CubeSmart's unsecured senior notes, net, increased by $443.23 million, rising from $2.78 billion at December 31, 2024, to $3.22 billion as of September 30, 2025.

What is the primary business structure of CubeSmart?

CubeSmart operates as a Maryland real estate investment trust (REIT) and conducts its operations through CubeSmart, L.P., a Delaware limited partnership, in which the Parent Company holds a 99.5% interest.

What are the key risks identified by CubeSmart in its forward-looking statements?

Key risks include adverse economic conditions, increased competition, failure to execute business plans, impacts from inflation and rising interest rates, reduced capital availability, and cybersecurity breaches, among others.

What was the change in property operating expenses for CubeSmart in Q3 2025?

Property operating expenses for CubeSmart increased to $90.85 million in Q3 2025 from $81.87 million in Q3 2024, representing an increase of $8.98 million.

How many common shares of CubeSmart were outstanding as of October 29, 2025?

As of October 29, 2025, there were 228,035,931 common shares, $0.01 par value per share, of CubeSmart outstanding.

Risk Factors

Industry Context

The self-storage real estate investment trust (REIT) sector is characterized by stable demand driven by life events such as moving, downsizing, or natural disasters. However, it faces increasing competition and is sensitive to interest rate environments due to its capital-intensive nature and reliance on debt financing.

Regulatory Implications

CubeSmart operates under various real estate and financial regulations. Changes in accounting standards, tax laws, or environmental regulations could impact its operations and financial reporting. Compliance with SEC reporting requirements is also a key aspect.

What Investors Should Do

  1. Monitor expense growth closely.
  2. Analyze debt levels and interest coverage.
  3. Evaluate the impact of increased depreciation.
  4. Assess rental income drivers.

Key Dates

Glossary

Storage properties, net
The value of the company's storage facilities after deducting accumulated depreciation. (Represents the core asset base of CubeSmart, showing growth in its property portfolio.)
Unsecured senior notes, net
Debt instruments issued by the company that are not backed by specific collateral, representing a significant portion of its long-term financing. (An increase indicates higher leverage and financial risk for the company.)
Depreciation and amortization
The systematic allocation of the cost of tangible (depreciation) and intangible (amortization) assets over their useful lives. (A significant non-cash expense that impacts net income; its increase suggests substantial investment in assets.)
Noncontrolling interests
The portion of equity in a subsidiary that is not attributable to the parent company. (Reflects ownership stakes in entities consolidated by CubeSmart, impacting reported net income.)
VIE
Variable Interest Entity. An entity that is not controlled by its equity holders due to contractual arrangements. (Indicates that CubeSmart consolidates assets and liabilities of these entities, affecting its balance sheet.)

Year-Over-Year Comparison

Compared to the prior year's comparable period, CubeSmart reported a 5.2% increase in total revenues to $285.08 million, primarily driven by a 5.4% rise in rental income. However, net income attributable to the company declined significantly by 17.8% to $82.93 million. This was largely due to an 18.1% surge in operating expenses and a 29.1% increase in interest expense, alongside a 30.2% jump in depreciation and amortization, indicating a substantial increase in costs and leverage.

Filing Stats: 4,413 words · 18 min read · ~15 pages · Grade level 19.8 · Accepted 2025-10-31 16:35:57

Key Financial Figures

Filing Documents

FINANCIAL INFORMATION

Part I. FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements 7

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 33

Quantitative and Qualitative Disclosures About Market Risk

Item 3. Quantitative and Qualitative Disclosures About Market Risk 44

Controls and Procedures

Item 4. Controls and Procedures 45

OTHER INFORMATION

Part II. OTHER INFORMATION

Legal Proceedings

Item 1. Legal Proceedings 46

Unregistered Sales of Equity Securities and Use of Proceeds

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 46

Other Information

Item 5. Other Information 46

Exhibits

Item 6. Exhibits 47 Filing Format This combined Form 10-Q is being filed separately by CubeSmart and CubeSmart, L.P. 4 Table of Contents

Forward-Looking Statements

Forward-Looking Statements This Quarterly Report on Form 10-Q, or "this Report", together with other statements and information publicly disseminated by the Parent Company and the Operating Partnership, contain certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, or the "Exchange Act." Forward-looking statements include statements concerning the Company's plans, objectives, goals, strategies, future events, future revenues or performance, capital expenditures, financing needs, plans or intentions relating to acquisitions and other information that is not historical information. In some cases, forward-looking statements can be identified by terminology such as "believes", "expects", "estimates", "may", "will", "should", "anticipates", or "intends" or the negative of such terms or other comparable terminology, or by discussions of strategy. Such statements are based on assumptions and expectations that may not be realized and are inherently subject to risks, uncertainties and other factors, many of which cannot be predicted with accuracy and some of which might not even be anticipated. Although we believe the expectations reflected in these forward-looking statements are based on reasonable assumptions, future events and actual results, performance, transactions or achievements, financial and otherwise, may differ materially from the results, performance, transactions or achievements expressed or implied by the forward-looking statements. As a result, you should not rely on or construe any forward-looking statements in this Report, or which management or persons acting on their behalf may make orally or in writing from time to time, as predictions of future events or as guarantees of future performance. We caution you not to place undue reliance on forward-looking statements, which speak only as of the date of this Report or as of the dates

FINANCIAL INFORMATIO N

PART I. FINANCIAL INFORMATIO N

FINANCIAL STATEMENTS

ITEM 1. FINANCIAL STATEMENTS CUBESMART AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands, except share data) September 30, December 31, 2025 2024 (unaudited) ASSETS Storage properties $ 8,108,076 $ 7,628,774 Less: Accumulated depreciation ( 1,730,103 ) ( 1,590,588 ) Storage properties, net (includes VIE amounts of $ 375,821 and $ 363,315 , respectively) 6,377,973 6,038,186 Cash and cash equivalents (includes VIE amounts of $ 4,783 and $ 2,907 , respectively) 108,393 71,560 Restricted cash (includes VIE amounts of $ 4,313 and $ 4,439 , respectively) 6,364 6,103 Loan procurement costs, net of amortization 1,781 2,731 Investment in real estate ventures, at equity 74,320 91,973 Other assets, net 188,827 183,628 Total assets $ 6,757,658 $ 6,394,181 LIABILITIES AND EQUITY Unsecured senior notes, net $ 3,223,866 $ 2,780,631 Revolving credit facility — — Mortgage loans and notes payable, net (includes VIE amounts of $ 112,306 and $ 111,728 , respectively) 204,681 205,915 Lease liabilities - finance leases 65,612 65,668 Accounts payable, accrued expenses and other liabilities 246,162 229,581 Distributions payable 119,676 119,600 Deferred revenue 42,723 38,918 Total liabilities 3,902,720 3,440,313 Noncontrolling interests in the Operating Partnership 44,858 51,193 Commitments and contingencies Equity Common shares $ .01 par value, 400,000,000 shares authorized, 228,035,275 and 227,764,975 shares issued and outstanding at September 30, 2025 and December 31, 2024 , respectively 2,280 2,278 Additional paid-in capital 4,295,941 4,285,570 Accumulated other comprehensive loss ( 270 ) ( 330 ) Accumulated deficit ( 1,515,815 ) ( 1,415,662 ) Total CubeSmart shareholders' equity 2,782,136 2,871,856 Noncontrolling interests in subsidiaries 27,944 30,819 Total equity 2,810,080 2,902,675 Total liabilities and equity $ 6,757,658 $

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