Q4 2020 CubeSmart Earnings Call
Should you need assistance. Please signal conference specialist by passing that Starkey followed by zero. After today's presentation, there will be an opportunity to ask questions asking a question you May Press Star then one on you touched on pumps. So withdraw your question. Please press Star then ship, but it's not such a bad on US being recorded I would now like to turn the conference over to Josh should Sir.
Senior director of Finance. Please go ahead.
Thank you Greg Good morning, everyone. Welcome to keeps on Whats fourth quarter 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 to be followed by a Q&A session. In addition to our earnings release, which was issued yesterday evening supplemental operating and <unk>.
The data is available under the Investor Relations section on the company's website at Www Dot keeps smart dotcom.
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 can cause 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 with boss morning, coupled with 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.
The company's remarks include reference to non-GAAP measures a reconciliation between GAAP and non-GAAP measures can be found in the fourth quarter financial supplement posted on the company's website at www Dot keeps smart dotcom on.
I'll turn the call over to Chris.
Thanks, Jack and good morning.
I'll begin by recognizing and thanking our over 3000 cube smart 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 waves.
Our team has innovated on 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 on our investment and 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 a first half of the year that began with headwinds from new supply and then a very difficult operating environment in the second quarter.
The fourth quarter continued the momentum from our very strong third quarter performance and our state of the art systems balance 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.
Had similar solid growth in both our urban and suburban stores.
The New York MSA inclusive of the outer boroughs the rest of the Acela corridor in our Arizona, and 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 five states furthering our strategy of maintaining a high quality diversified portfolio.
We continue to be a third party manager of choice, adding over 150 stores to the platform for the fourth consecutive year.
We are entering the stage of the development cycle, where many of our owners, whose stores opened and particularly in 2017 and 18 are ready to monetize their asset and we expected 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 fourth quarter continued thus far into 'twenty one.
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 fourth 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 fourth quarter was a very productive quarter for us in many ways, our consumer demand for self storage continued to be unseasonably strong into the fourth quarter.
And our platform and portfolio portfolio continued to perform exceptionally well.
Same store performance included headline results of 3.4% revenue growth and negative <unk>, 8% expense growth, yielding NOI growth of five 1% from the quarter.
Average occupancy in the fourth quarter was 93, 8% up 220 basis points year over year.
And quarter ending occupancy was also up 220 basis points over last year at 93, 4%.
Same store expense growth for the fourth quarter came in a little better than our expectations down 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 third party management business during the quarter.
On binding all of that internal growth along with external growth, we reported <unk> per share as adjusted of <unk> 47 for the quarter, representing an 11, 9% growth over last year.
We remain active and disciplined in our pursuit of external growth opportunities.
In the fourth quarter was a very busy quarter for our team on that front.
During the fourth quarter, we invested $661 2 million as we acquired 18 stores across five 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 one store in New York for a total sales price of $12 8 million.
On the third party management front, we finished off another productive year, adding 38 stores in the fourth quarter, bringing our 2020 total to 168, new stores added to our program. We ended the year with 723 managed stores, allowing us to enhance our market position and expand the keeps smart brand.
On the balance sheet, we continue to focus on funding our growth on a conservative manner consistent with our triple B <unk> two investment grade credit ratings.
You would expect with the levels of external growth I just walked through we were quite busy during the quarter on the capital raising trends.
On October 6th we closed on a $450 million unsecured bond issue with a long 10 year term maturing in 2031 with a yield to maturity of two 1%.
This offering demonstrates our ongoing commitment to this market and represents our seventh 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 use proceeds to support the redemption of our debut $250 million bond deal from back in 2012 that had a coup.
On a 4.8%.
That redemption was completed on October 30th and included an $18 million 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 million of secured debt of which $33 2 million of that was repaid at closing our post closing around it.
We were also active during the fourth quarter raising equity capital as part of that storage Deluxe transaction, we issued operating partnership units valued at $175 1 million for an average price of $33 21 per unit.
Additionally, we were busy utilizing our aftermarket equity program as we sold $3 6 million common shares at an average price of $33 69 per share raising net proceeds of $120 7 million.
So that's a lot of moving pieces, obviously all of this details 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.
And 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 ethical 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 in 2019, and 2020 as well as the impact of 2021 deliveries that will compete with our stores.
Embedded in our same store expectations for 2021.
He 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% from 2019.
We then started to see the impact decline is impacted stores fell down to 45% in 2020 and now again in 2020, we see that number come back further down to 40%.
We're continuing to see signs of a lessening impact from new supply as we move forward.
Our newly developed stores and acquired stores and 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 stabilization.
But of course on the short term those investments create a drag to our <unk> per share.
Our <unk> guidance for 2021 is impacted negatively by five to six per share as a result of that dilution. You'll note that the dilution in 2021, though is down about <unk> <unk> per share compared to 2020 as the stores are continuing to lease up unless it's been added to our development pipeline.
Our <unk> 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, where 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 on react quickly and efficiently in the 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 let's open up the call for some questions.
We will now begin the question answer session.
<unk> you May Press Star then one on your Touchtone phone.
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At this time, we will pause momentarily to assemble our roster.
Our first question comes from Allure of Cutback with Bank of America. Please go ahead.
Good morning, congratulations on a great and active corner. So I just wanted to kind of talk a little bit more about your opportunities day 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 it is currently in the pipeline.
I guess, how are you guys thinking about the.
Guidance there.
Yeah, that's a great question and thank you for thank you for the compliment on a strong quarter and that is a much much appreciate it.
It's a difficult it's a difficult year to predict.
Ultimately, where we think we're going to be a participant in some of the activity. We certainly see that there's a lot of stuff that we believe will come to market.
But it's competitive cap rates are cap rates are 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.
By looking at our third party managed platform.
Thinking about our existing relationships.
We feel pretty comfortable that we'll be able to transact in that level on find attractive opportunities beyond that certainly will be.
We will be opportunistic if and when we find opportunities that are that are attractive to us that 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 development and no development starts have been trending down but do you think that there is any opportunity to start something new this year.
Hey, there its Chris.
So we put a few more specifically Vienna, Virginia.
Pipeline now so we are looking again in the markets that are that that we focus in on that that Boston to.
Washington D C corridor for opportunities in and we will be.
Selectively adding them I.
I think for those markets in general.
Where our portfolio sits we're looking for unique opportunities to be able to enhance.
On the stores that we own and operate today.
That are in underserved pockets are pockets, where we think we can take advantage of.
Demand then.
On a low square foot per capita.
Those are becoming increasingly more challenging too.
To find at this stage of the cycle. So it isn't off the table, but I would say we are we on all likelihood will.
We'll see a little bit less activity in that area then than we would have seen at the beginning of the cycle.
Okay got it thank you.
Thanks.
Our next question will come from one celebrate 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 can.
Could provide.
Spot occupancy is relative to.
Last year and any color on how rates have trended.
Yes, three to force in earlier to the first would be helpful.
Yeah.
Sure happy to so I'll start with thinking about the.
How we see how we see things playing out and.
In 2021, certainly as we entered the year.
We are doing so on occupancy levels that are seasonally high.
And so we would expect that we would expect that first half performance.
Certainly relative to first half performance in 2020.
It's going to be is going to continue to be pretty robust as we as we saw in the fourth quarter.
Second quarter, obviously being the quarter that is going to have the easiest comp for us in a more broadly in the sector given given that was the height of the impact from the pandemic.
And then when you get into the back half of the year, what we expect is.
Chart, two a return to normal.
Returned to normal levels of demand of 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 fourth quarter of 2021.
From an occupancy standpoint, we're going to have a pretty difficult comp is as the quarter that we're reporting on today again had had a very very strong occupancy levels and we just saw demand that was on.
They came to us at a different part of the year. Then then it more typically does.
So that's that's broadly how we how we think about.
As we sit here today, how do we think about how 2021 plays out.
Chris I don't know if you had anything to add on any color on.
On on rates or demand or supplement anything that I just walked through.
Yeah. Thanks, Tim So so one as we sit here today.
Today, the same store pool.
270 basis points higher than than than today last year.
In physical occupancy we continue to see.
Great opportunity on the on the rate side.
Wide widespread and broad and deep across the country.
We're starting to push on average across the country up.
And of the 20% year over year type growth range for net effective rents for new customers. So we're 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.
A relatively quote 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.
On.
Unusual.
And then underpinning our thesis today for the back end of the year.
July through December is that gradual slow return too.
Sort of on 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 some maybe some attrition in the third party management business any.
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 color.
Sure. So 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 on the additions to the platform.
On the question is just going to be as I alluded to and we saw a little bit of this in the fourth quarter I think we had.
Eight or nine assets that were that were bought by while nine that were bought by cube out of that program Aten and the deluxe deal on one additional we had another group where owners took the assets to market.
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 the.
The tailwind for all of us.
Coming out of 'twenty is the fact that that physical lease up on on the 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 thats 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 are an impetus to bringing stores to the market. We're not as Tim said we're.
We're pretty diligent in our underwriting and then what fits into our portfolio. So we will not always be the buyer for those stores.
But if we are or we arent they still come out of the third party numbers. So I think we will be again to summarize long winded answer net positive in 'twenty. One continues to be really good pipeline, but I think we'll just continue to see some of the developed assets being brought to market.
Thanks, a lot Chris.
Our next question will come from Todd Thomas with Keybanc capital markets. Please go ahead.
Hi, good morning.
Chris the 20% higher net effective rents that you are 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 in and similar to what you would normally do seasonally as as demand.
Potentially picks up a little bit or do you think that there are some some pressure points with renters or other reasons that.
Might hold cube.
<unk> the industry back from from raising rents further.
Hey, good morning.
Hi.
The the anticipation as we as we sit here on the 26th of February at the Occupancies that were at were trying to.
We're keenly focused on that balance between occupancy and rate.
We do believe that there is an opportunity for a more traditional.
Additional 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.
We have.
Yeah.
The unique opportunity here, where you've got a.
You've got folks who are.
Selling their home because the market is very positive for that.
There are challenges in the homebuilding industry with materials and labor. So again that that typical use in the summer where you have.
Someone sell their home the new home is not ready yet and they need to use our products. 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 over the late spring and summer and likely at a higher rate.
Okay, and then I guess circling back to the guidance and following up on on <unk> question.
Does the guidance contemplate.
Lower year over year occupancy in the third and fourth quarters for 'twenty, one and what are you anticipating.
In terms of net effective rates in the back half of the year.
Yes, great question and the question that we that we don't guide to specifically so directionally.
As we mentioned in the color within the range of our 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 more normal seasonality.
Certainly by the time, you get to the fourth quarter, we would think that occupancy levels in 2021 at this point or probably more likely to be a little bit lower in the fourth towards 'twenty. One then they went on 'twenty.
But 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 in New York can you comment on that.
Yeah very similar.
Very similar to the rest of it.
On.
The stores that.
In the markets that are kind of closer to Manhattan, and our Manhattan store on.
Are performing.
Very consistent with the stores in the boroughs that are a little bit further away from 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 outer lying suburbs.
So we're benefiting there as well from from movement. So I think I think again, New York, Washington, D C Boston and Philadelphia.
We'll all continue to perform tire 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 270 basis points year over year today.
Is there is there any difference or is there a meaningful difference at all between physical and economic occupancy today relative to where it normally is and I understand there is still some regulation in place and maybe in New York and some other locations around auctioning off units I was just curious if you could talk about that in sort of the non pay.
<unk> occupancy that yet you have in the portfolio today.
Yeah, I will say much like a there is no real meaningful difference.
Right in line with where it has been historically.
One of the.
Ken one of the things that is shining about the industry as it as it has often done in varying cycles.
Our customer base is.
Is extremely solid right now we have historically low receivables.
We have historically low write offs.
So we aren't seeing 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.
That we are.
Again.
<unk>.
Our need based product for folks who are in transition and <unk>.
They value what they have placed on our care and they have been paying us on time, the downside to that unfortunately for us is.
We have 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.
Right, Okay, alright, great. Thank you.
Thanks Scott.
Next question will come from Keith then Kim with tourists. 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 that demand been different in New York city than other cities.
No. We try you know we we continue to look at that is it is it a little bit different at our one store it on 55th Street in Manhattan.
Lightly 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.
Yeah.
You are more likely than not storing the contents of your entire apartment. So.
When we when we dig into that question and look for trends.
We really don't see anything different in in the New York stores that are park slope those closer to Manhattan.
Long Island City Queens for example than we do in.
And some of the stores out in storia or Coney Island, and 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.
And as the country continues to return back to normalcy.
Curious on your thoughts on New York city's returned 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.
Yeah, we're bullish on the return I think it's going to create some good demand for US you know you have.
You have folks who want to.
Either return or or move into the workplace for the first time.
Think about all of the 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.
And 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 phenomenon is not changing and so perhaps you go back into the office four days, a week or one day, a week, but I don't think everybody assumes youre going back in five days a week from nine to five so the.
On 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.
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 app stores.
In the urban core, but we also have a fairly.
Concentrated position on the first and second rings around in the in the near end suburbs on I think that balance is going to serve us quite well.
Okay. Thank you.
Yeah.
Thanks.
Our next question will come from Smedes Rose with Citi. Please go ahead.
Hi, Thank you.
Keeping with the New York for a moment just where they.
I ask you a little bit on the supply side have you started to see anything you actually start to drop out of the pipeline given some of the changes on the tax laws that happened last year.
Hey, Smedes. This is Chris Yeah, we've seen.
We've seen a combination of nothing new.
On a few drops so for example, this year there was zero.
New supply in the Bronx.
We expect next year, one new store at most.
Overall.
We think we will see a few more stores come in that again either were supposed to open in November and December of 'twenty that move into 'twenty one.
Or a few stores that were on the docket pre.
Is.
In Queens, and Brooklyn, but as we get through.
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 day nothing.
Okay. Thanks, and then I just wanted to ask you you talked about your acquisition outlook, a little bit but.
It does seem like there's sort of a.
A more pronounced the number of properties coming to market.
I'm excited.
Central changes from the tax law that maybe folks, but I'm just wondering are you seeing.
A breakdown between properties that are still on lease up versus stabilized spread it's becoming maybe wider.
It would have been or anything along those lines that might present opt.
Opportunities.
For you.
Are you willing to kind of push through I guess remaining will be sub con.
I don't think there's really a lot of a lot of change 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 or any different view on.
On how we would think about underwriting the risk that comes with with lease up.
Do think that part of what we're going to we're going to experience here over the next 12 months is because of the because of the strong fundamentals that we've seen over these past six months in particular.
We ended 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 half have certainly accelerated the pace at which theyre gaining physical occupancy and so if you think about the peak of the supply here. This last develop.
Cycle being about three 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 a from an occupancy standpoint.
If if the owner it's not a long term owner when combining where they are from a physical occupancy standpoint.
Wherever they are from the standpoint of rates have seen a nice 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 those are going to be things that are near stabilized they might not be fully stabilized, but they are 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 and how they think about bidding.
On the other side of that transaction.
Okay, great. Thank you I appreciate it.
Thank you.
Our next question will come from Todd Stender with Wells Fargo. Please go ahead.
Thanks, and thanks for your comments on New York City just.
Just to stay on that theme New York City rents are the highest in your portfolio by far can you share. What's your revenue management systems are saying about the boroughs have you experienced any friction and raising rents.
Getting them towards $30 rents and any color there I guess on the rate side.
Hey, Todd no no friction at all.
Again given.
Our overall cost structure and in the in the boroughs, obviously the rates change or 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 we are not in every property anywhere near where pre supply rates.
<unk> 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.
Of rate increases on an annual basis and so on <unk>.
No concerns from from our perspective, we have quite a few markets that had that had a 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 it's rents where before we open the Neptune and cropsey too so comfortable.
Comfortable with where we are still believe we have room to continue to grow.
Alright, that's helpful and then same store expense growth guidance.
It 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 you have a <unk>.
Are things that.
That are largely driven by tough comps from 2020, you had some periods in the 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 fourth quarter of 2020 is great news for this quarter creates a tough comp.
As you as you roll that forward then into 2021.
Because it's hard to it's hard to have a real estate tax refunds be a recurring event at times.
So certainly there are 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 us to drive to drive the top line.
Marketing expense will continue to we'll continue to look at that on a on a daily basis to find good opportunities and we expect we'll continue to find some 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 first part of the year and it didn't last year and so.
A lot of a lot of small things that drive our expectations to be within the range that we that we 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 from me on the 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. So it's more lease up and maybe the kind of cap rates on that are around those buckets.
We tried to have a pretty oh, we have a pretty open view on on what we look at as it relates to stabilized versus non stabilized where we don't have a particular 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 on 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.
Four four expanded performance under our platform all of that goes into the underwriting and and also it comes down to where we're comfortable transacting based on based on a risk adjusted return. So we're still looking for opportunities across the gamut, we would still consider a ground up development, where certainly slowing that down but we're not we're not close to looking at that.
All the way to something that's that's fully stabilized.
And again, we will price those opportunities differently across that spectrum.
But in the guidance that we've provided the at least the range of of where we think we can comfortably transact.
There's nothing embedded in that.
We're focused on 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 you know the old guy from up.
You used to look at an asset that was stable.
And.
As part of of your upside it was putting it on your platform and all of the sophistication that comes along with that.
Yes.
The marketing of those of those assets for sale has shifted a bit to say well.
You know the operators not very sophisticated or there's all this opportunity on.
On savings or are you can you can do marketing more efficiently.
But with the 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 think about the underwriting that's that's 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.
Got it that makes sense thanks for the color.
Our next question will come from Mike Mueller with Jpmorgan. Please go ahead.
Yes, hi.
You may have missed this but I think you said moving rates were up 20% year over year today and I'm just curious what was that comp in the fourth quarter.
A 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 whats your underwriting now for a timeframe to stabilize the project and if it's changed at all from pre pandemic.
It hasn't hasn't really changed I think I think if you had a smaller opportunity smaller in square footage.
That was closer to 50000 feet I think you could still look at getting to a stabilized level of physical occupancy and three three rental seasons, and then fully stabilize and four.
I think if you look at our larger store, if you get something thats.
150000, Peter larger I think you can add at least a year to that if not too.
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 on the same way a year ago or two years ago.
Got it okay.
That was it thank you.
Great. Thank you.
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 to 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 cube smart. Thank you for the recognition of the high quality results, we posted in the quarter, we look forward to way.
Two a very constructive 'twenty one.
Hope you all remain safe.
Jim.
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 first quarter. So it'll be here before you know it hang in there and talk to you soon bye bye.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.