Good morning. Thank you for attending today's CubeSmart third quarter 2022 earnings call. My name is Foram, and I will be your moderator for today's call. All lines will remain muted during the presentation portion of the call with an opportunity for questions and answers at the end. If you would like to ask a question, please press star one on your telephone keypad. It is now my pleasure to pass the conference over to our host, Josh Schutzer, Vice President of Finance. Mr. Schutzer, please proceed.
Thank you, Foram. Good morning, everyone. Welcome to CubeSmart's third quarter 2022 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 on 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 8-K we filed this morning, together with our earnings release filed with the Form 8-K and the Risk Factors section of the company's annual report on Form 10-K. 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 posted on the company's website at www.cubesmart.com. I will now turn the call over to Chris.
Thanks, Josh. Welcome, everyone. Thanks for participating in our third quarter call. I'd like to start off by thanking and recognizing all of our CubeSmart teammates who led by example and demonstrated genuine care in serving our customers during the hurricane. Thankfully, all of our teammates are safe, and we are working diligently to repair the physical damage that we experienced. I know all stakeholders of CubeSmart are CubeSmart proud of our truly world-class customer service teams, and we're deeply appreciative of all their hard work. Turning to the quarter and business, I would say it was a very positive quarter across all segments of our company. Our markets are experiencing the expected gradual return to more normal seasonality. I will say, albeit at a slower pace than we would have expected as we entered the year, so that's a positive.
While conditions have normalized, the baseline is so much higher, and operating metrics and cash flows are a substantial leg up over pre-pandemic levels. If you look at a few facts comparing same store in the third quarter of 2022 to the pre-pandemic third quarter of 2019, our occupancy is up 130 basis points. Our asking rates are up 36%. The percentage of our customers who have been with us for more than two years is up about 640 basis points, and the percentage of our stores impacted by new supply has declined by about 15%. Our customer behavior continues to be quite positive. Our receivables and write-offs in the third quarter have continued to normalize but still remain at or below our Q3 2019 levels.
Turning to look at specific major markets, the MSAs in Florida continue to be very strong. Given the timing, the third quarter results did not see any impact from customers as a result of the hurricane. However, overall demand trends during the quarter were very solid. The New York MSA benefited from a relatively easier comp comparing to the third quarter of 2021, and consumer demand trends remain very solid. The Washington, D.C. MSA continues the battle with new supply, and it is certainly weighing on results. Overall, as embedded in our guidance for the balance of the year, as we continue to normalize and the quarter-over-quarter comps become more challenging, we expect same-store revenues to decelerate across all of our markets in Q4 and throughout 2023.
The highlight of our investment activity during the quarter was the significant shareholder value that we delivered through the sale of the assets in one of our joint ventures. Acquisition activity was muted during the quarter, and we expect it to remain so for the balance of the year as buyers and sellers are in a period of price discovery. Our balance sheet is in excellent shape, plenty of capacity and low leverage, and we believe this sets the table nicely for us to take advantage if and when opportunities are presented to create accretive external growth. Certainly, economic conditions are unsettled.
CubeSmart is lean and agile with a great balance sheet and an experienced management team who has been cycle tested. Historically, self-storage has been a relative outperformer during a weak economy, and we are confident we are well positioned entering 2023. With that, I'll turn the call over to our Chief Financial Officer, Tim Martin, to go into some more detail about the quarter. Tim.
Thanks, Chris, and thank you to everyone on the call for your continued interest and support. As Chris touched on, results in the third quarter continued to reflect a very constructive backdrop for strong operating fundamentals, all of that in the context of a slow return to more normal seasonality. Our results for the quarter were a bit better than our expectations, leading to an improved outlook for performance through the end of the year. Headline results included same-store revenue growth of 12.2%, expenses grew 4.3%, and NOI growth was 15.4% for the quarter. This quarter marks the sixth consecutive quarter of double-digit same-store revenue and same-store NOI growth. Same-store occupancy levels remained very healthy while continuing to return to more normal seasonal patterns throughout the year, averaging 94.4% in the third quarter and ending the quarter at 93.8%.
Same-store expense growth at 4.3% for the quarter was in line with our expectations and continues to be driven by pressure on real estate taxes, utilities, and property insurance, offset by efficiencies in personnel costs and lower advertising spend. We reported FFO per share adjusted of $0.66 for the quarter, representing 18% growth over last year. On the external growth front, no surprise and not unique to our sector, we've certainly seen a slowdown of transaction activity over the last couple of months given interest rate volatility and macroeconomic uncertainty. That said, our investments team remains very busy underwriting a good number of opportunities. We acquired one store in Atlanta during the quarter for $20.7 million.
From a transactional perspective, as Chris mentioned, the most notable activity for us during the quarter was related to the sale of the assets in one of our joint ventures. Back in March 2020, we were looking at a 14-store portfolio that was on the market and determined that it wasn't a great fit for our on-balance sheet investment strategy given the markets and asset quality. We did see a good bit of upside that we could capture by bringing those stores onto our platform. As we've done many times, we looked for a creative solution and ended up acquiring the stores along with a partner, with CubeSmart being the minority 10% of the equity in a structure that gave us a promoted interest opportunity. Roll the calendar forward then to this past summer.
Our partner agreed that it was a good time to bring the portfolio back to market as we had repositioned the assets, pushed rents, and improved occupancy levels. Ultimately, we closed on the sale of all 14 assets to an unaffiliated third-party buyer in August. From a return standpoint for our position in the transaction, we invested back in March 2020 $5.6 million. Ultimately, we received $51.5 million of distributions through and including the sale in August 2022 for net cash to us of $45.9 million over a 2.5-year period. Of course, those gains don't show up in our same-store results. They don't show up in our reported FFO numbers.
Obviously, it's a transaction that created a meaningful, tangible value for our shareholders and provides additional capacity for us to be opportunistic as we look forward. On the third-party management front, we added 39 stores in the third quarter and ended the quarter with 663 third-party stores under management. Our balance sheet position remains strong as we continue to focus on funding our growth in a conservative manner that's consistent with our BBB/Baa2 credit ratings. Subsequent to quarter end, actually just two days ago this Wednesday, we closed on a new expanded revolving credit facility. The size of the revolver grew to $850 million. The maturity was extended to February 2027, and the pricing improved from our standpoint 17.5 basis points based on our current credit ratings and our current leverage levels.
The new revolver further improves what was already a really solid balance sheet position as this pushes the revolver maturity from 2024 to 2027, leaving only about $30 million of maturities in each of 2023 and 2024. And then we don't have another maturity until the very end of 2025 when our 2025 Senior Notes are scheduled to mature. The revolver recast went smoothly, and we genuinely appreciate the support we received and for the relationships that we have with the banks in our bank group. Details of our 2022 revised earnings guidance and related assumptions were included in our release last evening. Based on continued strong operating fundamentals, we've increased our guidance range for full year FFO per share by $0.02 at the midpoint.
We also provided an improved outlook for our same-store revenue growth for the year with a new midpoint of 12.5% growth over 2021 levels and an improved same-store NOI range with a new midpoint of 16% growth. We believe we're set up really well to wrap up a strong 2022 and are really well positioned heading into the uncertainties that 2023 might bring, with our high-quality platform, our high-quality portfolio, and our high-quality conservative balance sheet. Thanks again for joining us on the call this morning at this time. Foram, why don't we open up the call for some questions?
Certainly. If you would like to ask a question, please press star followed by one on your telephone keypad. If for any reason you would like to remove that question, please press star followed by two. Again, to ask a question, press star one. As a reminder, if you are using a speakerphone, please remember to pick up your handset before asking your question. Our first question comes from the line of Michael Goldsmith with UBS. Michael, your line is now open.
Good morning. Thanks a lot for taking my question. Same-store revenue growth in the quarter was strong, but you accelerated about 180 basis points from second quarter. That's a tad more than what you saw in the deceleration from the first quarter to the second quarter. The guidance for the fourth quarter implies anywhere between, you know, 8%-9%. That implies a larger deceleration of the same-store revenue growth. I'm just trying to better understand kind of the cadence and magnitude of the deceleration in some of the operating metrics going forward.
Yeah, Michael, good question. I'll take the beginning part of that. Obviously, for 2023, we're not at a point here to delve into details of expectations, but your math is correct. You're gonna see that decel embedded in our guidance across all of our markets from the third quarter to the fourth quarter. It's driven by the fact that while occupancies are down and our expectation, you know, I think as of yesterday, we were 85 to somewhere between 85 and 90 basis points below last year at this time. Occupancy has stayed pretty consistent in that range. We've talked before, we don't guide the occupancy, but our expectation by the end of the year is, you know, somewhere between 100 and 150 basis points below last year.
You're seeing that occupancy come down, which causes some of the deceleration. From a rental rate perspective, net effective rates for new customers year-over-year during the third quarter across all markets, we were down, you know, high single digits. I think the good news is that's about where we were as of this week, so it really hasn't deteriorated further. You would expect that as the comps become more difficult given that, you know, last year was the abnormality in terms of limited seasonality, that deceleration will continue. I think the pace will not be consistent. I think you'll see some quarters, again, you're looking at growth rates, so some quarters will be a little bit higher than others.
You know, we're optimistic because we're gonna start 2023, as you implied, you know, in that high single-digit same-store revenue growth, so that momentum will continue into the first quarter and I guess to some degree into the second quarter of next year. We're still working through the details and our expectations and what's gonna happen with the economy, etc. Macro, you know, if you think about a 20-year average of same-store revenue growth, I think there's a case that can be made that, you know, 2023 results, when they're all in will, you know, very possibly be higher than the 20-year average, but certainly decelerating from where we've been, you know, this year and last year.
I made a point just to pile on Chris. I made a point in my prepared remarks to talk about our sixth consecutive quarter of double-digit same-store revenue growth, because I might not get a chance to say a seventh. Those levels of growth, double-digit for six consecutive quarters are clearly not sustainable. I think the question is a great one, and it's the question probably on everybody else's mind that's on the call is trying to delve into 2023 guidance and try to figure exactly the pace of that. I would say that looking back and Chris touched on it in his opening remarks, I think looking back, the pace of deceleration throughout this year has been a pleasant surprise to us, and I think for the balance of the industry.
That's really helpful color, guys. Just as a follow-up, right, we've seen street rates moderate. The revenue growth has recently been driven a lot by ECRI. I guess, like, the question here is, can we continue to push ECRIs at a similar intensity that you have been, you know, if in a more moderating, you know, maybe pressured street rate environment? Thanks.
Yeah. I mean, again, another great question then comes into the inputs as we try to get our minds around 2023 here and do our bottoms up budgeting. All these things we're thinking about. You know, the consumer, as I mentioned, the health of the consumer today remains very good. And all of our key metrics that we use to evaluate that remain in a very good spot. I think as we look out, you know, part of the question is going to be household savings. Obviously, you can listen to the CEOs of the major banks who believe that that savings is going to be there at least through the third quarter of next year.
If that's the case, and we continue to see strong employment, and we look backwards at how storage has performed during brief recessions, I think the industry is pretty well positioned to put up results that on a relative basis will be very good. You know, that's kinda where we are at this point, but plenty of data yet to come here for November and December, as we continue to refine our expectations for next year. Operator, I think we're ready for the next question.
Perfect. Our next question comes from the line of Juan Sanabria with BMO. Juan, your line is now open.
Hi. Just hopping on the back of Michael's last question just on the ECRIs. How do you think about street rate growth and ECRI as the interplay between those two? It seems like over the last couple of years, ECRIs have been larger than average, given you had some room to catch up existing customers, given the big increase in street rates, but that seems to be waning. Just curious, kind of trying to take a second go here at the ECRI question. Will ECRI naturally come down just because you've closed that gap and street rate growth has slowed and therefore that will be part of the normalization looking out 12, 18 months? Or any color you could provide there would be helpful.
Great question, Juan. Historically, you know, we would think about decoupling the street rate environment from the existing customer rate increase environment. It is an input. It is not an overweighted input and not certainly the only input. You think about that specific customer in that specific cube and how long they've been with us, what the occupancy is at the store, the market in that cube size, the pattern of their behavior as it relates to payment. You think about the size of the cube they're in, and so the absolute dollar amount that they're paying on a monthly basis and there are various other factors that go into the algorithms to determine the most appropriate, timing and amount of increase for that specific customer.
Certainly what adjoining customers may be paying or what a new customer coming in may be asked is an element. But with pricing strategies related to potential length of stay, related to the varying types of discounts or incentives we may provide, it's challenging for a customer to do a pure kind of apples to apples comparison. Obviously, as we've talked about ad nauseam, customers are not particularly inclined to move from one storage facility to another.
I think the thesis that as economic conditions potentially tighten, as household savings are depleted, as we have the potential for, you know, perhaps some increased unemployment, the current, you know, ECRI levels may naturally start to come down, but I think it is too soon to say that, and I don't think its magnitude. As we sit here today, we would not expect that magnitude to be, you know, to be overly material in any given, you know, sequential month.
Thanks. Just as a follow-up, could you just talk about geographic performance? I'd assume you're getting some benefit from Hurricane Ian in the Southeast, in particular the middle of the state of Florida. That would be part one of the second question. Secondly, are you seeing any impact in the slowdown in the housing market in some of the hot markets cooling off at all? I think Boise is like a poster child there.
When you think about the hurricane and the timing, you know, and the overall occupancies pre-hurricane in our Florida MSAs, you know, we didn't have a lot of vacancy to begin with, and the timing is such that we are certainly beginning to see customers who are coming in who had wind damage. The possessions are still dry and in good shape, but the physical structure of their home or residence is not. That will definitely be a seasonal benefit to the latter part of October and into November here, and that's in our expectations.
From the rest of the country and the housing market, you know, the markets that saw significantly above average growth in same-store revenues, in occupancy and in net effective rates like a Phoenix or a Tucson are those that are coming down then in the deceleration part of the curve much faster, you know, than your slow and steady markets like a Chicago or a New York. So that's kind of the trends that we're seeing at the moment.
Thank you, Chris.
Thank you for your question. Our next question comes from the line of Smedes Rose with Citi. Smedes, your line is now open.
Hi. Thanks. I wanted to ask you maybe just on the advertising and marketing side of the business. As you know, trends kind of decelerate into next year and get back to more normalcy, would you expect that piece to start ramping up again back to more kind of like, kind of pre-COVID levels?
Yeah, that one is a challenging question because we're making decisions, you know, on a week-to-week basis here, based on a return on each invested dollar, and particularly on each incremental dollar when it relates to paid search. I think we look at it, you know, that the levers are sort of intertwined. You have how we think about net effective rate to the new customer, so that street rate and that, you know, that discount or offer if one is made, what channel the customer is coming through. We look at that as a lifetime value opportunity, and then what's going on in there, particularly in the paid search market.
I think as you're seeing softening, as I'm sure you've seen in the headline results with Google and Facebook and others from an advertising perspective more globally, you know, it's created some opportunities to be a little more efficient and to see some lower costs in the bid market. You know, that's offset by what, you know, our peers both larger and smaller choose to do market by market with their spend. As we look out into, you know, the fourth quarter and next year, again, I think that will be a little bit more of a volatile number than some of our other expenses, which are more easily predictable and consistent quarter to quarter.
We would certainly expect to see some growth next year in marketing spend, but not, you know, necessarily, outsized. That's our thesis at the moment. Again, the whole 2023 planning process is in process.
Okay. I wanted to ask you, at least on the data that we get, it looks like the supply, the pipeline looks like it's actually sort of ticking up a little bit, which I thought was kind of surprising. I was just wondering if you're seeing that in your markets. Maybe you could just kind of talk about, you know, competitive supply additions that you're looking at coming out over next year.
Yeah. We're not seeing that in our top 12 MSAs. I think we're seeing delays. Without a doubt, you're seeing deliveries that we would have expected, you know, at the beginning of the year, the timing continues to get pushed out. I think that's a positive, because I think it is allowing for a, you know, a better pace, which is creating, you know, an opportunity for the stores that do come on to get leased up a bit before the next one comes on instead of deliveries happening one right after another. I think that's been a positive, this year. I think that trend will continue next year. You know, but as we look out, it's slightly down right now in terms of our expectation going from 2022 to 2023 in our top markets in terms of deliveries.
You know, we'll have a better sense of what these delays and how many fourth quarters get pushed out into next year, although I would say about the same we would expect get pushed from late 2023 into 2024. I think, you know, I think it's still a constructive supply to in the major markets. I think the data that some of the, you know, the high quality folks producing that track supply nationally, you know, I think that may paint a different picture given that, you know, what we're seeing on the ground from our third party owners is that those markets that may not have seen new supply in the last cycle, the more secondary markets are starting to get more and more attention.
Okay. Thank you. Appreciate it.
Thanks.
Thank you. Thank you for your question. Our next question comes from the line of Samir Khanal with Evercore ISI. Samir, your line is now open.
Thanks so much. Hey, Chris, good morning. On the expense side, I mean, you've certainly done a good job controlling expenses this year. I guess how sustainable are these sort of low expense growth numbers into next year, right? I'm you know, I'm looking at sort of efficiencies that you've done on the personnel side. I mean, how much more is there that you can do on that? Just trying to get a better hold of the sort of expense trends over the next sort of let's call it, I don't know, 6-12 months.
Hey, Samir, it's Tim. Good question. I think trends in expenses, our expectation from a high level is that most of those trends are likely to continue into next year, short of providing guidance here. I think our expectation is that you'll continue, not only for us but for others, continue to see pressure on the property tax line. Chris just explained, you know, marketing is gonna be opportunistic as we look at that. From a personnel standpoint, you know, we are still balancing the fact that there's pressure on wages. It continues to be a challenge to you know, to staff in certain markets, although not nearly the challenge that it was a year, 18 months ago.
Some of those pressures on healthcare costs. A lot of those pressures, we continue to find ways to be efficient with technology, to be efficient with how we staff the stores, to offset that somewhat, and I think we'll be able to continue to do that. Overall, you know, the lower hanging fruit on that tree is starting to get pretty well picked. Expect to see continued pressure on utility costs as we think about our planning for next year. I would say from a high level standpoint, more of the same would be what we would expect over the next 6-12 months.
That's great color, Tim. Thanks so much. Then I guess just to shift over to New York, you know, when we look at sort of revenue growth and NOI growth, it's certainly trending better than we all thought, I think, sort of going into the beginning of this year. I guess, Chris, can you elaborate a bit more on sort of what you're seeing from a demand side and even, you know, maybe extend and talk a little bit about supply trends you're seeing in that market and how you think that landscape sort of plays out over the next twelve months? Thanks so much.
Yeah. On the, you know, on the demand side, as you can see with the, you know, the physical occupancy print, it I think we're down 10-20 basis points in the MSA. It has been at least through a point during the third quarter, our only major market where occupancy was running a bit higher than last year. The stores that we have opened in New Jersey and Long Island, Westchester and the boroughs, both Cube and third-party managed, have leased up really nicely, ahead of plan, from an occupancy perspective. The consumer demand in the MSA as a whole and in, you know, in the, in the more urban areas specifically continues to be good.
We didn't see in the MSA the same level of rent growth in 2020 and 2021 as you would have seen in, say, a Tucson or a Phoenix. So you're just not seeing the same deceleration, you know, in that metric at the same rate as you are in some of the South and Southwest markets. From a supply perspective, we continue to be cautious and we will caution everyone, particularly on Brooklyn and Queens, that there is an impact and there will be an impact. I will say I am getting more and more confident that we will be able to navigate through this just fine.
I think when you look at the specifics, you know, store by store, market by market, we have one new competitor who's gonna open in a crowded Long Island City market, you know, directly across the street from us, one of our stores, impact two of our other stores. That one store may be problematic. It's been underway for years and years. It looks like it's finally going to get built and open. So that'll put some pressure on that particular little pocket. We have a store that, you know, is supposed to open late 2023 in Gowanus, Brooklyn, that, you know, will have an impact on our owned and managed stores in that market.
Where it's exactly situated, it's likely to draw customers, you know, from a segment of that market that, you know, frankly, for New York, have to travel a bit of a way to get to us. I think that impact will definitely be there, but the geography may be a bit helpful to us. There's another store in Brooklyn that will impact us at one of our stores that's pretty adjacent. That will have an impact. You're talking about, you know, six, seven stores in the entirety of our borough exposure that should have a comp that will present a little bit of a challenge for us late in 2023.
You know, that's against a portfolio in those three boroughs of 50-ish stores when you think about or more when you think about owned and managed. You know, it's gonna be there, but I think we're gonna be okay again as we navigate through this.
Thanks so much.
Thank you for your question. Our next question comes from the line of Todd Thomas with KeyBanc Capital Markets. Todd, your line is now open.
All right. Thanks. I wanted to ask about investments a little bit. You know, you've been a little bit more conservative or disciplined, I guess, on the investment front. Can you just talk a little bit about the pipeline of deals that you're looking at today, what deal flow looks like in general? You know, in terms of underwriting investments, whether or not you're changing your IRR hurdles and how you're thinking about underwriting deals today, you know, whether there's changes in sort of your market rent growth forecasts or otherwise.
Hey, Todd, it's Tim. Thanks for the question. As you would expect, and as I mentioned in the prepared remarks here, the activity has certainly slowed. It went through, you know, I would say the middle part of the summer where there was quite a bit of price discovery, but, and the buyer pool started to shrink a little bit, but you still had a handful of folks seemingly on every deal that were, you know, that were still pursuing pretty aggressively. As you got later into the summer and into the early fall, started to hear some rumblings about some deals that were starting to fall apart.
Folks walking away or retrading or walking away from deposits and again, not unique to our sector. I think that makes a lot of sense when there's the volatility that we've seen, you know, broadly in the capital markets. I think then where you are is absolutely in a period of price discovery where sellers had grown accustomed to what the market looked like six months ago, and buyers are trying to adjust to where they think the market is, you know, gonna be in six months from now. I think you've seen a little bit of a slowing down of opportunities that have come across our desk to underwrite.
I think what we have seen is a continuation throughout 2022 that the opportunities that we have looked at are just not of the same quality that we saw in 2021. That's been consistent throughout the year. There are a handful of deals that are super attractive to us based on market and physical quality. Overall, the opportunity set has been of lower quality this year, which has been a big driver in our appetite and the volume that you've seen from us. I think that touched on most of your question, but was there anything else that you wanted to talk about?
Yeah. Well, have you changed your return requirements? I mean, are you seeing? Can you talk a little bit about, you know, price trends, cap rates? You know, I guess, you know, going in cap rates are, you know, not always relevant obviously, but you know, maybe IRR hurdles and what you're seeing in the market and how you've adjusted your underwriting.
Yeah, sure. The underwriting itself has actually, over the past year or two, gotten to be a lot more fun. It used to be fairly simple to underwrite a storage facility. Then, you know, several years back when you start to get into, you know, the heat of the development cycle that we're now on the tail end of, that created some complexity in the variables that go into underwriting an opportunity. Throw on top of that, you know, the volatility that we've seen in asking rate growth, largely coming through the COVID demand, trying to calibrate your underwriting to think about where rate growth will continue to go or how it will moderate. The process of underwriting an opportunity hasn't changed.
The variability and the volatility of the input certainly has, which makes it more interesting to go through. Certainly from a return standpoint, we are, you know, we've adjusted the returns that we're requiring across the spectrum of early stage leased up all the way through stable based on our cost of capital, both equity and debt. We look for opportunities that are perfect infill, high quality, complementary to our existing high quality portfolio, and we have the luxury and the flexibility of having very low levels of leverage and a lot of availability of capital that we don't necessarily have to look at the stock price every day for a one or two or three asset portfolio. We're very disciplined, we'll be patient, and we think that there are likely to be some great opportunities for us, you know, in the coming months and quarters.
Okay. Can you share how asking rents trended during the quarter and through October on a year-over-year basis? You know, can you talk about what kind of market rent growth you might, you know, think is reasonable to expect in 2023? Any sense?
Hey, Todd, it's Chris. I, you know, as I mentioned earlier, the NER for new customers in the quarter was down high single digits, and that's where we are across markets, you know, as of this week. It fortunately and I think positively hasn't declined further as we've gotten here into October. As we've gone through the year and the comps from last year, which had no seasonality, just get tougher and tougher, you know, that's gone from down, you know, 2-3% to, you know, 4-5%. Now we're, you know, kind of averaging in that high single digits. As we look out and try to underwrite, as Tim said, for the future, it's really market specific.
You know, I think it's fair to say over the near term as we try to get back into a more normalized trend of seasonality and customer behavior, and you look at the comps to last year and into the first quarter of this year, you know, it'll be challenging comps as you think about trying to project out. But that's really, you know, again, since we're doing everything at an asset level here, it depends upon where we're seeing the opportunity, what stage of lease up that asset is in, and you know, what we see unique about that particular market or sub-market.
Okay. All right. Thank you.
You're welcome.
Thank you for your question. Our next question comes from the line of Lizzy Doykan with Bank of America. Lizzy , your line is now open.
Hi. Good morning. Thanks for taking my question. I wanted to ask about just the, you know, the term extension on the revolving credit facility. I believe you said, you know, the discussions went well with the bank. I'm just wondering, you know, what you're noticing out there in terms of going out and obtaining financing given how tough, you know, market conditions are. Do you foresee, you know? I guess, how are your discussions with banks going now or what do you kind of see within your relationships with them?
Hey, Lizzy . Thanks for the question. Yeah, it was in a normal course for us, given the 2024 maturity for the revolver. I would say different, more normal, less volatile times, we probably would have waited to recast our facility for probably until the middle part of 2023. You know, looking out and always having a view on de-risking, you know, de-risking that side of the business when we feel like it's appropriate to do so. We had.
You know, we started the process, you know, several quarters ahead of when we normally would, just in case the market continues to, you know, move in a direction where, you know, where lenders are a little bit stricter or have a little bit less flexibility, or it's just frankly not as much of a borrower's market as it has been. We have very strong, very long-standing relationships with a really high-quality bank group and work hard to have great partnerships with those institutions. I think as a result of that, we had a fairly smooth process at a time where I do believe that obtaining financing is getting and is going to get more challenging here in the coming months and coming quarters.
We're happy to have closed it here earlier this week and again, just de-risk and not have to really worry about our maturity schedule here until very late in 2025. Facing down some uncertain times, we feel like that's a pretty good position for us to be in.
That's great color. Thank you. Then I just wanted to ask about the sales from the Fund V JV. How are you thinking about your focus with regards to capital allocation, particularly with use of your joint venture partnerships? I guess, you know, what makes the most sense? Does it kind of depend on the opportunity? Specifically, I know with this deal, the assets were, you said, they were not in line with what's been on your balance sheet. I just wanna kind of get a better understanding of how you gauge opportunities with your partnerships.
Yeah, I would say it starts for us with we have had we believe a very well-articulated and consistent strategy as to what we want to have on our balance sheet. Our desire is to have the highest quality portfolio in the highest quality markets. When we find opportunities to do that, especially on stabilized assets, our preference is to buy those on our own, 100% owned, simple capital structure, easy for shareholders and investors to understand.
Once you get past that, then we have found many opportunities for many different reasons to look at, you know, at co-investment vehicles, ranging from, you know, more recently having ventures that are focused on stores that are in early stage lease up, because we've had a lot of opportunities to bring third-party managed stores from our platform, you know, onto our balance sheet in some way. But frankly, in early stage lease up, in a venture structure, we can bring on five in a venture for every one that we could bring on balance sheet and to manage the dilution.
Ideally, set that up in a way that when those stores stabilize, our partners' hold period will have, you know, lines up pretty well with when they stabilize, and then, you know, ideally, we would then have the opportunity to buy in their position and achieve our, you know, our original and overall objective. In the case of the one that we just exited, as you touched on, it was unique in that it didn't really fit that category, but we found an opportunity to bring it onto our platform, add a lot of value, and it worked out fabulously, partially due to great timing. We've had co-investment structures for a variety of different reasons and would expect to use them, you know, going forward for similar reasons.
Great. Thank you.
Sure.
Thank you for your question. Our next question comes from the line of David Balaguer with Green Street. David, your line is now open.
Good morning. Wanted to touch on the New York market again, as you mentioned something about, occupancy being a bit stickier relative to other markets, but rent growth, at least on a relative basis, lagging a little bit compared to some other markets, and wanted to touch on that phenomenon. Is that just a length of stay difference in New York compared to other markets? What does that difference look like?
Yeah. I think broadly it's just a consumer in many of our stores in all of the boroughs who is in the neighborhood and uses the product on a, I'll call it a more regular basis. It does just tend to be attractive to folks living in very small residences who will use CubeSmart and visit us, you know, frequently, as opposed to just, you know, an overwhelming customer base at a particular store that is just the typical mover. I think as a result, you just get a stickier customer.
You know, again, I think just the phenomenon we saw, not just in New York, but across all of our urban stores in most markets, is that you just didn't see quite the rent growth in 2021 as you would have seen again in
You know, the more suburban or, you know, as I pointed out, some of the Southwest markets that saw big shifts in population.
Great. With that occupancy being a bit stickier, would you expect moving forward, to the extent we see a lot of the hot markets slow down, would you think that the positive rent growth trends in New York might be a bit stickier than some of those other markets?
Yeah. Yes. I think as you see, you know, again, the decline, the deceleration in some markets on a relative basis wouldn't expect in the urban markets to see it at the same rate.
Got it. Thank you. Just shifting back to move-in rates, can you remind us what that typical sort of peak to trough decline in move-in rates in a normal year looks like from, say, the peak summer months to the slower winter months?
Yeah. It's a pretty wide range when you just think about, you know, A, time, and B, markets. You know, call it in that 10%-20% range.
Great. Thank you very much.
Thank you for your question. Our next question comes from the line of Ki Bin Kim with Truist. Your line is now open.
Thanks. Good morning. Just one more question on the New York City supply topic. You know, when you look at some of the data providers out there, you know, they're showing about 19% figure on supply growth. Obviously, that includes stuff that will never get built, plenty of that. You know, and then I try to marry that versus some of your commentary you're providing that supply risk, you know, doesn't look that bad. You know, can you help us bridge that gap? I know it's not your job to know what other data providers are saying, but it just seems to be a pretty wide spread between what you're saying and what some of these data providers are showing.
Yeah. Thanks, Ki Bin Kim. One, I think, and again, this is again not. I believe when you're looking at that data, it is the MSA, not the boroughs particularly. So you're picking up all of Jersey, Long Island, Westchester, as well as Manhattan, Brooklyn, Queens, and Staten Island. So again, when you look at that supply and its competitive impact, particularly on Cube, many of those stores that are gonna open are just in markets, submarkets where we don't have a presence. So when I'm looking at it, I am specifically looking at what we know is entitled and either under construction or some sign of movement that tells us it's actually gonna get done in the next 18 months or so in markets where it will create some competition to Cube.
When I think about that, I answered the question relative to Brooklyn, Queens, and the Bronx. You know, there is, as I said, one store in Long Island City, one in Gowanus, one in East New York, and one kind of on the very edge of Atlantic Avenue that, assuming they get completed here at the latter part of 2023, will be competitors in one way, shape, or form to Cube. Again, given the dynamics of New York City, they will also be competitors to, I think, each of the other public REITs who also own a store or manage a store in that same general area. You know, as we get into, you get into New Jersey, Long Island, Westchester, it's a lot.
Obviously, it's a much larger area, and stores tend to be, you know, not clustered as they are in the boroughs.
Great. Thanks. The second question, going back to the topic about expenses and how we should think about that for next year, you know, Texas and Florida are some of your biggest markets and, you know, we've seen property taxes go up a lot, maybe more for homes than maybe a self-storage product. I was curious, in your thinking for next year, what are you expecting for property taxes in markets like that?
We're expecting them to go up for sure. I think, you know, some of those areas we're still waiting to finalize to see what the impact is here for 2022, as we're finally getting bills in for some of those. You know, hard to look at exactly where those are gonna be. Those are certainly markets that are under pressure, that have been and are likely to continue to be. You know, we'll try to provide some color on that next quarter when we provide 2023 guidance.
Thanks.
Ki Bin Kim, I think if you look at real estate tax expense. Yeah, if you look at real estate tax expense growth over the last four or five years, you know, the range of growth hasn't, you know, has been fairly consistent. I don't think as you look forward right now, at least our expectation is that's gonna change all that much.
Thanks. If I could squeeze a third one here. What other promote opportunities are there in your JVs?
Yeah. Many of our JVs, if not most, have some type of promote either in our favor or our partner's favor. Oftentimes on our development ventures, our partner actually has a promoted interest. It's a fairly common component to many of our ventures, and we can be on either side of it. This one obviously, that we touched on, you know, that we monetized here this quarter was one that we were on the side of. You know, we were in a position to be the, you know, the big value add by bringing it on and doing all the hard work to get the stores prettied up and professionalized and leased up.
That was a great opportunity that we were on that side of the equation. It can go in either direction depending on the opportunity.
Okay. Thank you.
Sure. Thanks.
Thank you for your question. Our final question comes from the line of Michael W. Mueller with JPMorgan Chase. Michael, your line is now open.
Oh, there we go. Yeah, I just have one question. Has there been any change to the percentage of customers that have been in place over a year and over two years? Anything material?
Great question, and the factual answer is for the greater than one year, the change has been minimal. Those customers both greater than six months and greater than one year, it's been pretty consistent. For those that are greater than two years, it has gone up about 5%.
That's over what time period?
That is comparing.
Is that year over year?
Yeah, year-over-year.
Got it. Okay. That was it. Appreciate it. Thank you.
Okay. I appreciate it. Thank you.
Thanks.
Thank you for your question. Those are all the questions we have registered in the queue. This concludes the question and answer session. I will now pass back to Chris Marr for closing remarks.
All right. Thanks everybody for a very good call. Really appreciate the interest and the questions. Enjoyed sharing our thoughts with you. As I said, the team is in good shape. We have the appetite to find external growth. We have the balance sheet capacity to execute on that appetite, but we will remain disciplined. We will remain focused on finding opportunities that you know are accretive to our portfolio, to our customer base, to our earnings. We will be patient. You know, as we try to look out into 2023, certainly the change in the debt capital markets and potentially some changes in economic conditions could create some attractive opportunities for us. If that's the case, we are ready to take advantage of them.
Meanwhile, from an internal growth perspective, you know, I think we're confident that storage and cube will continue to perform well. We're confident that our portfolio is well-positioned, on a relative basis, to achieve that performance, and the team certainly is focused. Thank you all for your attention and participating in the call. Look forward to speaking to many of you in person, out in the West Coast here at Nareit, and looking forward to speaking to you again when we report end of year and produce our expectations for 2023. Thanks again. Take care.