Good day, and welcome to the CubeSmart 4th Quarter 2020 Earnings Call. All participants will be in listen only mode. After today's presentation, there will be an opportunity to ask questions. Please note this I would now like to turn the conference over to Josh Schutzer, Senior Director of Finance. Please go ahead.
Thank you, Grant. Good morning, everyone. Welcome to CubeSmart's Q4 2020 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 and 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 atwww.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 8 ks we filed this morning, coupled with our earnings release filed with the Form 8 ks and the Risk Factors section of the company's annual report on Form 10 ks. In addition, the company's remarks include reference to non GAAP measures. Reconciliation between GAAP and non GAAP measures can be found in the Q4 financial supplement posted on the company's website at www.cubesmart.com.
I'll now turn the call over to Chris.
Thanks, Josh. Good morning. I'll begin by recognizing and thanking our over 3,000 CubeSmart teammates across the country who have worked tirelessly and passionately during the past 12 months as the pandemic has altered our business and our lives in so many challenging and difficult ways. Our team has innovated and adapted as our traditional means of operating often changed overnight. Throughout, we maintained our focus on delivering outstanding customer service with genuine care.
Our focus and our investment in the highest quality assets, balance sheet and platform continued to pay dividends in 2020, as evidenced by our solid same store revenue and NOI growth, in spite of the first half of the year that began with headwinds from new supply and then a very difficult operating environment in the 2nd quarter. The Q4 continued the momentum from our very strong third quarter performance and our state of the art systems balanced price and occupancy and our results in a volatile year proved out our flexibility in a rapidly changing environment. Looking at our performance across our markets, we experienced broad based demand and strength in pricing across our entire diversified portfolio. We had similar solid growth in both our urban and our suburban stores. The New York MSA, inclusive of the outer boroughs, the rest of the Accella Corridor and our Arizona, Nevada and California properties were particularly strong performers.
Positive results were a bit more muted in the Southeast and Texas as there remains a bit of a supply overhang, but overall, we had strong performance across the board. Our investment team was extremely busy during the quarter as we successfully leveraged our relationships and closed on attractive transactions in our core markets. Our results were headlined by the Storage Deluxe transaction, but we also closed on an additional 10 stores across 5 states, furthering our strategy of maintaining a high quality diversified portfolio. We continue to be a 3rd party manager of choice, adding over 150 stores to the platform for the 4th consecutive year. We are entering the stage of the development cycle where many of our owners whose stores opened, particularly in 2017 'eighteen, are ready to monetize their asset and we expect a degree of churn in the managed portfolio this year.
During 2020, in addition to enhancing our quality platform and quality portfolio, we continued to enhance our quality balance sheet, attractively raising capital and utilizing our joint ventures to provide us capacity as we look to the future. The positive trends from our 4th quarter continue thus far into 2021, and we expect a constructive operating environment this year as evidenced by our earnings guidance. I will now turn the call over to Tim, who will provide more details on our 4th quarter and full year performance and our 2021 outlook. Tim?
Thanks, Chris, and thank you to everyone
on the call for your continued interest and support. As Chris touched on, the 4th quarter was a very productive quarter for us in many ways. Consumer demand self storage continued to be unseasonably strong into the 4th quarter, and our platform and portfolio continued to perform exceptionally well. In store performance included headline results of 3.4 percent revenue growth and negative 0.8 percent expense growth, yielding NOI growth of 5.1 percent for the quarter. Average occupancy in the 4th quarter was 93.8 up 2 20 basis points year over year and quarter ending occupancy was also up 2 20 basis points over last year at 93.4%.
Same store expense growth for the Q4 came in a little better than our expectations, down 0.8% year over year. We have a constant focus on appealing and challenging assessed values that drive our real estate taxes, and we benefited from a few successful real estate tax appeals in the quarter, which is certainly welcome news in a line item that has seen plenty of growth in recent years. We also experienced strong performance across our non same store portfolio and our 3rd party management business during the quarter. Combining all of that internal growth along with external growth, we reported FFO per share as adjusted of $0.47 for the quarter, representing an 11.9 growth over last year. We remain active and disciplined in our pursuit of external growth opportunities, and the Q4 was a very busy quarter for our team on that front.
During the Q4, we invested 661,200,000 dollars as we acquired 18 stores across 5 states. This total includes our previously announced transaction with Storage Deluxe in New York, which closed in December. During the quarter, we also completed the sale of 1 store in New York for a total sales price of 12,800,000 dollars On the 3rd party management front, we finished off another productive year, adding 38 stores in the 4th quarter, bringing our 2020 total to 168 new stores added to our program. We ended the year with 7 23 managed stores, allowing us to enhance our market position and expand the CubeSmart brand. On the balance sheet, we continue to focus on funding our growth in a conservative manner, consistent with our BBB, Baa2 investment grade credit ratings.
And as you'd expect, with the levels of external growth I just walked through, we were quite busy during the quarter on the capital raising front. On October 6, we closed on a $450,000,000 unsecured bond issue with a long 10 year term maturing in 2,031 with a yield to maturity of 2.1%. This offering demonstrates our ongoing commitment to this market and represents our 7th bond offering. Proceeds from the bond deal were partially opportunistic from a refinancing perspective and partially to fund external growth. On the opportunistic side, we redemption of our debut $250,000,000 bond deal from back in 2012 that had a coupon of 4.8%.
That redemption was completed on October 30 and included an $18,000,000 charge. The balance of the proceeds provided funding for a portion of the external growth we've talked about. As part of the Storage Deluxe portfolio acquisition, we assumed $154,100,000 of secured debt, of which $33,200,000 of that was repaid at closing or post closing rather. We were also active during the 4th quarter raising equity capital. As part of that Storage Deluxe transaction, we issued operating partnership units valued at $175,100,000 for an average price of 33.21 per unit.
Additionally, we were busy utilizing our at the market equity program as we sold 3 point 6,000,000 common shares at an average price of $33.69 per share, raising net proceeds of $120,700,000 So that's a lot of moving pieces. Obviously, all of this detail is included in our supplemental package that we released last evening. But importantly, it all adds up to us being in a great position from a balance sheet perspective entering 2021. We funded the meaningful growth we experienced at the tail end of 2020, we're prepared to be opportunistic in 2021 if we can identify attractive opportunities that allow us to continue to execute on our disciplined growth strategy. In December, we announced a 3% increase to our quarterly dividend, bringing our dividend to $1.36 per share on an annualized basis.
And based on the midpoint of our 2021 guidance, the increased dividend suggests an FFO payout ratio of 75.6%. And speaking of guidance, details of our 2021 earnings guidance and related assumptions were included in our release last night. Our 2021 same store property pool increased by 36 stores. Consistent with prior years, our forecasts are based on a detailed asset by asset ground up approach and consider the impact at the store level, if any, of competitive new supply delivered 19 2020, as well as the impact of 2021 deliveries that will compete with our stores. Embedded in our same store expectations for 2021 is the impact of new supply that will compete with approximately 40% of our same store portfolio.
So from a trend line perspective, you'll recall back in 2017, we had 25% of same stores impacted by supply. That grew to 40% in 2018, then grew again to 50% in 2019. We then started to see the impact decline as impacted stores fell then to 45% in 2020 and now again in 2020 we see that number come back further down to 40%. So, we're continuing to see signs of a lessening impact from new supply as we move forward. Our newly developed stores and acquired stores in lease up continue to make really solid progress from an occupancy standpoint.
We believe our development pipeline and non stabilized store acquisitions will create meaningful NAV accretion and stabilization. But of course, in the short term, those investments create a drag to our FFO per share. Our FFO guidance for 2021 is impacted negatively by $0.05 to $0.06 per share as a result of that dilution. You'll note that the dilution in 2021 though is down on about $0.02 per share compared to 2020 as the stores are continuing to lease up and less has been added to our development pipeline. Our FFO guidance does not include the impact of any speculative acquisition or disposition activity as levels of activity and timing are difficult to predict.
So, we're certainly glad to report 2020 results and bring a close to 2020. We're quite proud of our team's accomplishments during a year that provided so many challenges. I believe these challenges gave us the ability to demonstrate the strength of our team, our systems, our platform, our portfolio quality and our ability to be nimble and react quickly and efficiently in a changing environment. That said, it's nice to reinstate earnings guidance, have increased visibility, and again, nice to close out 2020 and move on to a new and promising year in 2021. So with that, thanks again for joining us on the call this morning.
At this time, operator, let's open up the call for some questions.
Our first question comes from Aloha Azcar back with Bank of America. Please go ahead.
Good morning. Congratulations on a great and active quarter. So I just wanted to kind of talk a little bit more about your opportunistic commentary for 2021. Given what is going on in your strong balance sheet, it seems like your acquisition guidance is a little bit low. Is that just mainly what you guys are thinking is currently in the pipeline?
Just how are you guys thinking about the guidance there? Yes.
It's a great question and thank you for the compliment on a strong quarter. That is much appreciated. It's a difficult year to predict ultimately where we think we're going to be a participant in some of the activity. But it's competitive. Cap rates are aggressive.
There are a lot of people that are bidding on assets that come to market. So at the range that we provided and looking at past experience, it would appear to be a little bit low. I think we feel confident that by looking at our 3rd party managed platform, thinking about our existing relationships, we feel pretty comfortable that we'll be able to transact in that level and find attractive opportunities. Beyond that, certainly, we'll be opportunistic if and when we find opportunities that are attractive to us, but visibility into ultimately where we will fit into certainly on broker transactions is a little bit cloudy as we sit here today.
Got it. Okay. And then I guess just a little bit more on the developments. I know development starts have been trending down, but do you think that there is any opportunity to start something new this year?
Hey there, it's Chris. So we put a few more specifically Vienna, Virginia is in the pipeline now. So we are looking again in the markets that we focus in on that Boston to Washington, D. C. Corridor for opportunities and we will be selectively adding.
I think for those markets in general, where our portfolio sits. We're looking for unique opportunities to be able to enhance the stores that we own and operate today that are in underserved pockets or pockets where we think we can take advantage of demand and a low square foot per capita. Those are becoming increasingly more challenging to find at this stage of the cycle. So it isn't off the table, but I would say we, in all likelihood, will see a little bit less activity in that area than we would have seen at the beginning of the cycle.
Okay, got it. Thank you. Thanks.
Our next question will come from Juan Santobreux with BMO Capital Markets. Please go ahead.
Hi, good morning. Hoping you guys could speak a little bit to the guidance assumptions first half versus second half. I don't know if you could provide where spot occupancy is relative to last year? And any color on how rates have trended, I guess, through 4th and earlier to 1st would be helpful.
Sure, happy to. So I'll start with thinking about the how we see things playing out in 2021. Certainly, as we enter the year, we are doing so at occupancy levels that are seasonably high. And so we would expect that first half performance, certainly relative to first half performance in 2020, is going to continue to be pretty robust as we saw in the Q4. 2nd quarter obviously being the quarter that is going to have the easiest comp for us and more broadly in the sector given that was the height of the impact from the pandemic.
I think then when you get into the back half of the year, what we expect is a start to a return to normal, return to normal levels of demand and normal levels of seasonality as we get in the back half of the year. And so once we get to the back half and in particular into the quarter of 2021, certainly from an occupancy standpoint, we're going to have a pretty difficult comp as the quarter that we're reporting on today, again, had a very, very strong occupancy levels and we just saw demand that was on that came to us at a different part of the year than it more typically does. So that's broadly how we think about as we sit here today, how we think about how 2021 plays out. Chris, I don't know if you had anything to add on any color on rates or demand or supplement anything that I just walked through.
Yes. Thanks, Tim. So, Juan, as we sit here today, the same store pool is 270 basis points higher than today last year. In physical occupancy, we continue to see great opportunity on the REIT side, widespread and broad and deep across the country. We're starting to push on average across the country up into the 20% year over year type growth range for net effective rents for new customers.
So really optimistic. And as Tim described, Q1, Q2 are going to have their unique year over year comparisons. Obviously, Q1 last year for the most part was relatively normal, although impacted by supply. And then as you move into Q2, obviously, it was a very, very challenging quarter for everyone last year. So the comp there is going to be unusual.
And then underpinning our thesis today for the back end of the year, July through December, is that gradual slow return to sort of a more normal process. So hopefully that's helpful.
That is. Thank you. And one more for Chris, if you don't mind. You kind of alluded to maybe some attrition in the 3rd party management business. Any more color there or the potential quantum?
Do you still expect that business in terms of the number of stores managed to grow in 'twenty one or maybe more flat? Any guidance would be helpful or color.
Sure. So we do expect that business to grow in 'twenty one. The pipeline remains very healthy, and we've got a lot of optimistic outlook on the additions to the platform. The question is just going to be, as I alluded to, and we saw a little bit of this in the Q4. I think we had 8 or 9 assets that were bought by well, 9 that were bought by Cube out of that program, 8 in the deluxe deal and one additional.
We had another group where owners took the assets to market and the buyer was not Cube and the buyer self manages. So I think you're just going to see some monetization of those assets, particularly those that are starting to get closer to stabilization. Again, I think the tailwind for all of us coming out of 'twenty is the fact that physical lease up on the assets that were not stable entering 'twenty certainly also benefited from high levels of demand. So occupancies have moved up pretty nicely. I think that's going to help the stores that are competing against those new stores.
But the other side of that is it's going to provide some owners an impetus to bring stores to the market. We're not, as Tim said, we're pretty diligent in our underwriting and in what fits into our portfolio. So we will not always be the buyer for those stores. But if we are or we aren't, they still come out of the 3rd party numbers. So I think we'll be again, to summarize long winded answer, net positive in '21 continues to be really good pipeline, but I think we'll just continue to see some of the developed assets being brought to market.
Our next question will come from Todd Thomas with Key Bank Capital Markets. Please go ahead.
Hi, good
morning. Chris, the 20% higher net effective rents that you're experiencing across the portfolio, as the peak leasing season gets started here in the next few weeks, do you anticipate being able to raise street rates further and similar to what you would normally do seasonally as demand potentially picks up a little bit? Or do you think that there are some pressure points with renters or other reasons that might hold Cube and or the industry back from raising rents further?
Hey, Todd. Good morning. The anticipation as we sit here on the 26th February at the occupancies that we're at, we're trying to we're keenly focused on that balance between occupancy and rate. We do believe that there's an opportunity for a more traditional busy season within the industry that will create the typical demand of movement. I think what's going on in the housing market is a positive for the industry, self storage industry.
We have the unique opportunity here where you've got folks who are selling their home because the market is very positive for that. There are challenges in the homebuilding someone sell their home, the new home is not ready yet and they need to use our product. So I think that's going to be a positive factor for us. So again, long winded today, but the answer is, we're focused on not renting today at too low of a rate and filling up because we do think we're going to have an opportunity to gain additional customers over the late spring summer and likely at a higher rate.
Okay.
And then I guess circling back to the guidance and following up on Juan's question, Does the guidance contemplate lower year over year occupancy in the 3rd and 4th quarters for of 2021? And what are you anticipating in terms of net effective rates in the back half of the year?
Yes, great question and a question that we don't guide to specifically. So, directionally, as we mentioned and the color within the range of our expectations is that as things return to a more normal seasonal trend line as we get into the back half of the year, that would imply that we would expect occupancy levels in the back half of the year if they return to a more normal seasonality. Certainly by the time you get to the Q4, we would think that occupancy levels in 2021 at this point are probably more likely to be a little bit lower in the Q4 of 'twenty one than they were in 'twenty. But we embedded in our guidance, we don't provide specific guidance on the components, be it occupancy or
rate. What about New York relative to the overall portfolio, same store assumptions that are underlying guidance. How are you underwriting New York? Can you comment on that?
Yes. Very similar to the rest of it. The stores in the markets that are kind of closer to Manhattan and our Manhattan store are performing very consistent with the stores in the boroughs that are a little bit further away from Manhattan. We also obviously have not only in New York, but in Washington, D. C, Boston, Philadelphia, a significant amount of exposure in the outerlying suburbs.
So we're benefiting there as well from movement. So I think again, New York, Washington, D. C, Boston, Philadelphia will all continue to perform tire corridor there will continue to perform pretty consistently with the rest of the overall portfolio in 'twenty one.
Okay. And just one last one on, you mentioned that physical occupancy was higher by 2 70 basis points year over year today. Is there any difference is there a meaningful difference at all between physical and economic occupancy today relative to where it normally is? I understand there's still some regulation in place in maybe New York and some other locations around auctioning off units. I was just curious if you could talk about that and sort of the non paying occupancy that you have in the portfolio today?
Yes.
I will say much like there is no real meaningful difference right in line with where it has been historically. One of the again, one of the things that is shining about the industry as it has often done in varying cycles, our customer base is extremely solid right now. We have historically low receivables. We have historically low write offs. We aren't seeing any actually seeing a positive change, much like we did during the recession.
And I think it goes to the fact that we are a, again, a need based product for folks who are in transition and they value what they have placed in our care and they have been paying us on time. The downside to that, unfortunately for us, is we have less and less folks paying late. And as a result, as you can see in the disclosure, the other income is flattish, which is largely due to lower late fees than we would have experienced in the past.
Next question will come from Ki Bin Kim with Trist. Please go ahead. Thanks. Good morning. So in your view, when
you look at the demand influx that you've seen across your portfolio, has the nature of the demand been different in New York City than other cities?
No. We try we continue to look at that. Is it a little bit different at our one store on 55th Street in Manhattan? Likely, however, the unit mix there is one that is really, really skewed towards the smaller units. So if you're a customer of ours there, you're more likely than not storing the contents of your entire apartment.
So when dig into that question and look for trends, we really don't see anything different in the New York stores that are Park Slope, those closer to Manhattan, Long Island City, Queens, for example, than we do in some of the stores out in Astoria or Coney Island, nor do we see a significant difference from the North Jersey, Long Island and Westchester portfolios.
Okay. And maybe you already answered this question, but as the country continues to return back to normalcy, I'm curious on your thoughts on New York City's return to normalcy and how that might look different. Part of that's because of the net migration issues that I think people are concerned about. Just curious about your overall thoughts there.
Yes. We're bullish on the return. I think it's going to create some good demand for us. You have folks who want to either return or move into the workplace for the first time. You think about all of the folks who graduated from college or got their MBAs last spring and have yet to be able to return or enter the workforce in the physical location they thought they were going to as entertainment and shopping and dining reopens.
All of that change, I think is going to be a net positive. I think we're also going to find that again the work from home phenomena is not changing. And so perhaps you go back into the office 4 days a week or one day a week, but I don't think everybody assumes you're going back in 5 days a week from 9 to 5. So the space you needed to create to have work from home is going to continue to be used and the customer is going to continue to be sticky in our opinion. So I think we are well situated within our all of our urban top 10 MSA portfolios because as I noted before, we not only have stores in the urban core, but we also have a fairly concentrated position in the first and second rings around in the near end suburbs.
And I think that balance is going to serve us quite well. Okay. Thank you.
Thanks.
Our next question will come from Smedes Rose with Citi. Please go ahead.
Just keeping with New York for a moment, I just wanted to ask you a little bit on the supply side. Have you started to see anything actually start to drop out of the pipeline, given some of the changes in the tax laws that happened last year?
Hey, Smedes, it's Chris. Yes, we've seen a combination of nothing new and a few drops. So for example, this year there was 0 new supply in the Bronx. We expect next year one new store at most. Overall, we think we'll see a few more stores come in that again either we're supposed to open in November December of 2020 that move into 2021 or a few stores that were on the docket pre changes in Queens and Brooklyn.
But as we get through 'twenty one, our expectation and what we're seeing out there is that new supply in the boroughs drops to next to nothing.
Okay. Thanks. And then I just wanted to ask you, you talked about your acquisitions outlook a little bit, but it does seem like there's sort of a more pronounced number of properties coming to market. Some have cited potential changes in the tax law that maybe are bringing folks. But I'm just wondering, are you seeing a breakdown between properties that are still lease up versus stabilized, that the spread is becoming maybe wider than it would have been or anything along those lines that might present opportunities for you if you're willing to kind of push through, I guess, remaining lease up time?
I don't think there's really a lot of changes as to what we've seen recently in the market versus what we've seen over the past 12 months as it relates to the mixture between stable and non stable or any different view on how we would think about underwriting the risk that comes with lease up. I do think that part of what we're going to experience here over the next 12 months is because of the strong fundamentals that we've seen over these past 6 months in particular, we end up talking a lot on calls and in meetings about same store performance. I think what we've seen across our portfolio, both owned and managed, is things that are in lease up have certainly accelerated the pace at which they're gaining physical occupancy. And so, if we think about the peak of the supply here, this last development cycle being about 3 years ago, those stores now, because of the demand that we've seen over these last couple of quarters, have probably gotten to a point from an occupancy standpoint that if the owner is not a long term owner, when combining where they are from a physical occupancy standpoint, where they are from the standpoint of rates, I've seen a nice push here, along with a pretty constructive environment for them to bring their store to market.
I do think you'll see a lot of those opportunities. But again, those are going to be things that are near stable. They might not be fully stabilized, but they're getting pretty close to stabilization. So it's just going to be a really interesting year to think about how people look at all of those variables in their underwriting and how people look at their cost of capital and how they think about bidding on the other side of that transaction.
The next question will come from Todd Stender with Wells Fargo. Please go ahead.
Thanks and thanks for your comments on New York City. Just to stay in that theme, New York City rents are the highest in your portfolio by far. Can you share what your revenue management systems are saying about the boroughs? Have you experienced any friction in raising rents? I know now you're getting them towards $30 rents.
Any color there, I guess, on the rate side?
Hey, Todd. No friction at all. Again, given overall cost structure in the boroughs, obviously, the rates change are different in Queens than they are in Brooklyn than they are in the Bronx. It's a little bit asset specific. But we have we are not in every property anywhere near where pre supply rates had been on a few of our assets.
So the customer base is accustomed to the cost of storage. The in place customers are used to the process of rate increases on an annual basis. And so no concerns from our perspective. We have quite a few markets a significant influx of supply, most of that from us. Coney Island is a great example of that, where our original store in Coney Island is still a bit away from getting to where its rents were before we opened Neptune and Cropsey II.
So comfortable with where we are, still believe we have room to continue to grow.
All right. That's helpful. And then same store expense growth guidance, looks like you can get as high as 5.5%, but you've had pretty good experience keeping expenses in check, especially in Q4. What could drive that towards the high end of the range?
Well, I think you have a number of things that are largely driven by tough comps in 2020. You had some periods in the height of the pandemic where you had lower expenditures that create a tough comp. I think the good news that I talked about in my opening remarks as it relates to real estate taxes here in the Q4 of 2020 is great news for this quarter, creates a tough comp as you roll that forward then into 2021 because it's hard to have real estate tax refunds be a recurring event at times. So certainly, there are some areas of good news. We continue to find very good ways to spend marketing dollars that we think on a return basis are very attractive to to drive the top line.
So marketing expense will continue to look at that on a daily basis to find good opportunities. And we expect we'll continue to find some of those opportunities in 2021. So it's a combination of a lot of those things. It's obviously snowed here a little bit in the 1st part of the year and it didn't last year. And so a lot of small things that drive our expectations to be within the range that we've put in the release.
Okay. Thanks, Tim.
Thanks.
Our next question will come from Michael Lehman with Evercore ISI. Please go ahead.
Hey, guys. Congrats on the quarter. Just a quick one for me on acquisitions. Can you maybe speak a bit more about the types of opportunities that you're looking at within guidance, whether it's more stabilized or it's more lease up and maybe the kind of cap rates that are around those buckets?
Yes. We try to have a pretty we have a pretty open view what we look at as it relates to stabilized versus non stabilized. Where we don't have a particularly open view is that we are we have a long stated strategy of where we want to grow and the quality of the assets that we want to have on balance sheet to represent our own balance sheet portfolio. So we'll be looking for those opportunities that fit from that standpoint. And then when it comes down to whether it's stabilized or not stabilized or whether there are opportunities for expanded performance under our platform, all of that goes into the underwriting and ultimately comes down to where we're comfortable transacting based on a risk adjusted return.
So we're still looking for opportunities across the gamut. We would still consider a ground up development. We're certainly slowing that down, but we're not close to looking at that all the way to something that's fully stabilized. And again, we'll price those opportunities differently across that spectrum. But in the guidance that we've provided, at least the range of where we think we can comfortably transact, There's nothing embedded in that that's that we're focused on one particular type of acquisition as it relates to stable versus non stable.
Hey,
this is Chris. I think one thing that's fascinating to me and now I'm just going to be the old guy from UP. You used to look at an asset that was stable and as part of your upside, it was putting it on your platform and all the sophistication that comes along with that. The marketing of those assets for sale has shifted a bit to say, well, the operator is not very sophisticated or there's all this opportunity on savings or you can do marketing more efficiently, but with an expectation that the buyer is going to pay for that. So this is where we get into a bit of perhaps differing ways to think about the underwriting.
That embedded growth is what we're entitled to because we're going to earn it. And so that's a little bit of a challenge on stabilized deals today is this movement to where you ought to pay to work hard to get all the upside that the current operator isn't achieving.
Our next question will come from Mike Mueller with JPMorgan. Please go ahead.
Yes. Hi. May have missed this, but I think you said move in rates were up 20% year over year today. And I'm just curious, what was that comp in the Q4?
High teens. So it continues to push up across the country.
Got it. And then I guess on the development front, can you talk about what you're underwriting now for a timeframe to stabilize a project and if it's changed at all from pre pandemic? It hasn't really changed. I think if you had a smaller opportunity, smaller in square footage, something that was closer to 50,000 feet, I think you could still look at getting to a stabilized level of physical occupancy 3 rental seasons and then fully stabilize in 4. I think if you look at a larger store, if you get something that's 150,000 feet or larger, I think you can add at least a year to that, if not 2.
So part of it depends on where it is and part of it depends on how big it is. But those numbers that I just gave you haven't changed. I would have answered that question the same way a year ago or 2 years ago.
This will conclude our question and answer session. I would like to turn the conference back over to Christopher Marr for any closing remarks.
Okay. Thanks everybody for participating in the call. I know it's been a long earnings season and we're getting to the end here. So we appreciate your focus on CubeSmart. Thank you for the recognition of the high quality results we posted in the quarter.
We look forward to a very constructive 'twenty one. Hope you all remain safe and we look forward to speaking to those of you on the call who are participating in upcoming conferences and then we'll talk
to you again at the end
of the Q1. So it'll be here before you know it. Hang in there and talk to you soon. Bye bye.