CubeSmart
NYSE:CUBE

Watchlist Manager
CubeSmart Logo
CubeSmart
NYSE:CUBE
Watchlist
Price: 48.91 USD 0.62% Market Closed
Market Cap: 11B USD
Have any thoughts about
CubeSmart?
Write Note

Earnings Call Analysis

Q2-2024 Analysis
CubeSmart

CubeSmart Navigates Market Fluctuations

CubeSmart's second quarter results met expectations, with same-store revenue up 0.3%, despite a 4.2% rise in operating expenses, reducing NOI by 1.2%. Same-store occupancy was 91.5%, down 110 basis points. The company also enhanced their portfolio with two New York projects costing $61.8 million and added 39 stores to management. CubeSmart's financial stability is strong with a 4.3x debt-to-EBITDA ratio. Updated guidance projects revenue growth between -0.75% and 0.25%, and NOI growth between -3% and -1%. The company remains cautious yet optimistic about upcoming market conditions and external growth opportunities.

Quarterly Performance

CubeSmart's second quarter performance aligned with the company's expectations. The same-store portfolio saw a 1.8% increase in rentals, while vacates remained flat. Asking rates in the same-store pool began down 13% year-over-year but improved to a 9.8% decline by the end of June. Occupancy rose to 91.9%, a gain of 150 basis points .

Market Trends

Urban markets, including New York, the DMV area (District of Columbia, Maryland, Virginia), and Chicago, performed well. However, softness was noted in the West Coast of Florida, Atlanta, and Tucson, Arizona. In New York City, the boroughs outperformed the overall MSA, with Long Island, Westchester, and North Jersey still feeling residual supply impacts .

Financial Metrics

Same-store revenues grew 0.3% year-over-year. However, same-store operating expenses increased by 4.2%, resulting in a negative 1.2% growth in same-store net operating income (NOI). Funds from operations (FFO) per share, adjusted, was $0.64, meeting the guidance midpoint .

Growth and Development

CubeSmart opened two development projects in New York, costing $61.8 million. The company added 39 stores to its third-party management platform, totaling 879 stores at the quarter's end. The balance sheet remains robust with a debt-to-EBITDA ratio of 4.3x and minimal exposure to floating rates .

Guidance for the Year

The company revised its guidance marginally. Same-store revenue growth is now expected between -0.75% and +0.25%. Same-store NOI growth was adjusted to fall between -3% and -1%. Expense growth expectations improved slightly due to better real estate tax outlooks .

Customer Trends

Despite a 100 basis point increase in the rate gap for new move-ins in July compared to the previous year, the existing customer base remains healthy. Lengths of stay and overall customer health are higher than pre-pandemic levels. Auction activity, receivables, and write-offs are slightly elevated but align with pre-COVID norms .

Challenges and Opportunities

CubeSmart continues to face challenges in increasing street rates due to market forces, competition, supply, and consumer behavior. The new customer rates need to rise to achieve better overall results. The company remains focused on external growth opportunities and disciplined investment strategies .

Earnings Call Transcript

Earnings Call Transcript
2024-Q2

from 0
Operator

Thank you for standing by. My name is Christina, and I will be your conference operator today. At this time, I would like to welcome everyone to the CubeSmart Second Quarter 2024 Earnings Call. [Operator Instructions]

At this time, I'd like to turn the call over to Josh Schutzer, VP of Finance.

J
Joshua Schutzer
executive

Thank you, Christina. Good morning, everyone.

Welcome to CubeSmart's Second Quarter 2024 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 of 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 this -- can be found in the second quarter financial supplement posted on the company's website at www.cubesmart.com.

I will now turn the call over to Chris.

C
Christopher Marr
executive

Thanks, Josh. Good morning. Thank you all for joining the second quarter earnings call.

Overall, operating trends for CubeSmart during the quarter were largely in line with our expectations. Our same-store portfolio experienced a 1.8% increase in rentals compared to the second quarter of 2023. Vacates in the same-store portfolio were flat to the second quarter of last year. Asking rates in that same-store pool began the quarter down roughly 13% to the prior year and ended June negative 9.8% compared to the end of June last year. Same-store occupancy ended June, 91.9%, gaining 150 basis points during the quarter.

We historically reach our seasonal peak in early August. Over the last few years, those peaks have been shifting earlier in July, and this year, it now appears that peak occurred in late June. This aligns with the macro trends in the economy, housing and the consumer.

Performance trends by market were consistent with the first quarter. The urban markets of New York, the DMV, District of Columbia, Maryland, Virginia, Northern Virginia, and Chicago, were all stronger performers across key metrics while we continue to see softness along the West Coast of Florida, in Atlanta and Tucson, Arizona. Within New York City, the boroughs continue to outperform the overall MSA as we are still feeling a bit of the residual impact of supply on our Long Island Westchester and North Jersey stores. Our third-party management program continues to grow and our balance sheet remains in excellent condition.

I'd like to now turn the call over to our Chief Financial Officer, Tim Martin. Tim?

T
Timothy Martin
executive

Thanks, Chris. Good morning, everyone. Thanks for taking a few minutes out of your day to join us.

No big surprises in the second quarter as our results were right in the middle of our expectations. Same-store revenues grew 0.3% compared to last year, with average occupancy for our same-store portfolio down about 110 basis points to 91.5%. Same-store operating expenses grew 4.2% over last year, driven by continued pressure on property insurance as well as a bit of a timing issue related to repair and maintenance costs relative to the timing of those costs last year. So 0.3% revenue growth combined with 4.2% expense growth yielded negative 1.2% same-store NOI growth, and we reported FFO per share as adjusted of $0.64 for the quarter, which was the midpoint of our guidance range.

From an external growth perspective, we opened two development projects in New York for a total cost of $61.8 million. We continued our disciplined approach to finding external growth opportunities on balance sheet. On the third-party management front, we had another productive quarter, adding 39 stores to our platform, bringing us to 879 stores under management at quarter end.

Our balance sheet position remains strong, 4.3x debt-to-EBITDA and effectively no floating rate exposure. We're really well positioned to support external growth opportunities with our available line of credit, access to liquidity and our leverage capacity.

Looking forward to the second half of the year. Details of our 2024 earnings guidance and related assumptions were included in our release last night. We narrowed the guidance ranges for same-store revenue, expenses and NOI. The high end of our initial revenue guide implied an improvement in the housing market, which hasn't materialized. Taking that along with our performance through the rental season, resulted in us narrowing our revenue guide to our current outlook of negative 0.75% to positive 0.25% growth for the year. We improved our expectation for same-store expense growth based on year-to-date results as well as some slightly improved expectations for real estate taxes this year.

When you bring those components down to same-store NOI, the result is a narrowing of that range from negative 4% to 0% growth down to the middle of that range with our revised guidance at negative 3% to negative 1% growth. And then a very similar narrowing of our range on FFO per share as a result.

That concludes our prepared remarks. Thanks again for joining us on the call this morning. At this time, Cristina, let's open the call for questions.

Operator

[Operator Instructions] Your first question comes from the line of Josh Dennerlein from Bank of America.

Josh, just to make sure your line's not muted on your end? Again, your line is open.

Okay. We're going to move on to the next question. [Operator Instructions]

And your next question comes from the line of Spenser Allaway from Green Street Advisors.

S
Spenser Allaway
analyst

Thanks for the color in regards to move-in rates during the quarter. Can you provide an update on where move-in rents have trended thus far into 3Q? And if you have any additional color you could share on how ECRIs have been trending and customer sensitivity, that would be great?

C
Christopher Marr
executive

Sure. Thanks, Spenser. So the rate gap in July, to last year's July, moved out about 100 basis points from where we ended June. So high negative 10% range.

In terms of the existing customer base, the existing customer continues to be pretty healthy. We see lengths of stay customers who have been with us for longer than 2 years, continue to be higher than pre-pandemic levels. The auction activity that we see, receivables and write-offs, while all slightly increasing from what we saw at this point last year, all remain at or in line with pre-COVID levels. So at this point in the year, continue to feel positive about the health of our existing customer base.

Operator

Your next question comes from the line of Steve Sakwa from Evercore ISI.

S
Sanket Agarwal
analyst

Sanket on for Steve. We had a question around expense growth. You guys lowered the guidance for expense growth. Can you elaborate more on different components where you are seeing less pressure on the expense side?

T
Timothy Martin
executive

Yes. Thanks for the question. So on our revised and improved expense guidance, part of it is our year-to-date performance is reflected in there. And then the forward-looking item that has changed a bit is what I mentioned in the prepared remarks, which is on the real estate tax line item. We have a bit of additional information in three of our large states that gives us a revised outlook for real estate tax growth to not be quite as high as we would have included in our original guidance range.

Operator

Your next question comes from the line of Eric Wolfe from Citigroup.

N
Nicholas Joseph
analyst

It's Nick Joseph here with Eric. Just following up on the ECRI question. Is there -- has there been any change in customers' willingness to accept the higher ECRIs? We're hearing about softening on the consumer? So just curious if you're feeling that at all on ECRIs?

C
Christopher Marr
executive

Yes, Eric, thanks for the question. So we watched that very carefully in terms of the metrics that I responded to, to Spenser's question, but as well as looking at behavioral patterns of the existing customer post receiving that rent increase. And we have not seen any discernible change in behavior as those existing customers have received a rate increase. But to your point on where we are with the consumer, certainly, it's something that we pay very, very close attention to. But at this point, no discernible change.

N
Nicholas Joseph
analyst

That's helpful. And then maybe just on New York City, obviously, continues to outperform. So just hoping you could talk about the trends you're seeing there and whether you think this out-performance is sustainable?

C
Christopher Marr
executive

So again, we would expect to see some deceleration in the New York market as we move through the balance of this year, just given where fundamentals are, as we've discussed across the country. Very resilient customer. Customer who tends to stay longer. Obviously, rents a smaller amount of space and tends to use that Cube on a more regular basis. Also a nice combination of small business in the blocks around our store who are long-term customers.

We certainly see softness in New York as it relates to the locker size, the smallest size Cubes. That is where, obviously, the consumer can remove their possessions and literally carry them down the street if they wish to switch up, and we've seen incredibly aggressive pricing from some of our competitors, particularly in Manhattan on those really small-sized Cubes. But outside of that, business continues to be very positive.

In terms of by borough, in the Bronx, where we have not seen any additional supply since -- boy, probably going on now 1.5 years, you see good, solid kind of mid-6 same-store revenue growth in the second quarter of Brooklyn, which in fact, does have some residual impact of supply but has seen some pretty good trends around consumer behavior and demand actually posted the highest same-store revenue growth of the boroughs in the quarter.

And then in Queens, again, a little bit of a different market. You have a little more single-family homes there, a little bit more space, continues to be a good performer kind of right behind the Bronx. Staten Island, we only have small presence there, has seen some supply. And then Manhattan is competitive, certainly has seen supply. We have our one store there on 55th Street doing well, but certainly, I think Manhattan is a little bit of a different animal at this moment given the supply.

You move out into the New Jersey, Westchester, Long Island, feeling good that New Jersey is stabilizing after the supply impact, still have a little ways to go in Long Island and Westchester is doing fine. So that's kind of the New York MSA and the boroughs in a nutshell.

Operator

And your next question comes from the line of Michael Goldsmith from UBS.

M
Michael Goldsmith
analyst

As the new customer is seemingly more price-sensitive, are you seeing any major changes to conversion rates or blocking at the final page of online checkout? And with that, how has top of funnel demand trended?

C
Christopher Marr
executive

Yes. Thanks, Michael. No change in conversion rate as the customer goes through the funnel, whether that be online or in a call to our sales centers. So have seen that be fairly constant over the last 3 or 4 quarters.

From a top-of-funnel demand perspective, again, I think it's indicative of how we thought about guidance back in February and kind of where we are today. We're not seeing the demand levels, the improvement in the single-family home for sale market that would have driven us towards the more bullish end of our expectations as we described them back in February.

Conversely, we're not seeing the combination of factors that would have taken us towards the more bearish end. So it just sort of navigates as you would expect, given the macro background just a little bit less movement, which is creating a little bit less top-of-funnel demand, particularly in the markets I called out is soft. The combination of new supply along with a little bit less demand and movement inquiries in that Tampa to Naples corridor has made that West Coast of Florida particularly challenging here over the last couple of months.

M
Michael Goldsmith
analyst

Got it. And as a follow-up, Tim, it seems like other income grew pretty materially during the quarter. Can you walk through what's in that line? And -- and what influenced the strong growth this quarter?

T
Timothy Martin
executive

Thanks, Michael. So a couple of drivers of the growth in other property-related income. We've been able to generate some additional fee income across a variety of categories as we continuously refine our fee structure and our approach. Those fees include administrative, late and payment convenience fees.

We also capture our solar credits on that line item. And so some of that growth reflects the benefits of our expanded solar program. So it's a combination of those things that are leading to some nice growth in that line item.

M
Michael Goldsmith
analyst

Did that have an influence on the New York market because that kind of accelerated pretty materially in the quarter?

T
Timothy Martin
executive

Yes. I mean, I guess, on a relative basis, it had a little bit more proportionate impact there, but it's similar trends across the portfolio. The changes that we have made are universal across all markets.

Operator

Your next question comes from the line of Hong Zhang from JPMorgan.

H
Hong Zhang
analyst

So you -- you've kept advertising expense relatively stable for the past year or so. I was just kind of wondering what your thoughts are on that category? And why not spend more to potentially get more inbound, more customers?

C
Christopher Marr
executive

Yes. Thanks for the question. So I think it depends upon the lens that you view that spend through. If you think about our spend and how we do it seasonally, but also as a percentage of revenues, we are fairly aggressive as it relates to our overall marketing spend.

In terms of just the seasonal move, obviously, if you look at last year from Q1 to Q2, pretty significant uptick in spend, similarly pretty significant uptick in spend this year. I've said all along, I would expect that when we get to the end of the year, the marketing spend will be up a little bit higher than just pure inflationary levels. Continue to believe that, that will be the case. But ultimately, it's an ROI-based decision. We need to see an opportunity to generate those incremental rentals at a cost below the lifetime value of that customer for us to increase spend. And in pockets, we've seen that. And at times, we've seen that when it is, we'll be aggressive. And when that opportunity is not there, we've tended to pull back a little bit.

H
Hong Zhang
analyst

Got it. And for my follow-up. Yes, there's been a lot higher expectations of the Fed cutting rates going into the end of the year. Do you think that's enough for street rates to potentially break even next year? Or do you think something more needs to happen to for that?

C
Christopher Marr
executive

Yes, that's a great question. Thanks for asking. So you could be in the optimistic camp to say if we really experience -- I guess now they're counting on 3 and maybe 1, that's 50 basis points between now and the end of the year. There is an optimistic case to say ultimately, does that translate into what drives mortgage rates? And if we see a decline in mortgage rates as a result, there is a pent-up demand I firmly believe for single-family home transactions. And this could be the catalyst for folks to feel a lot better about buying and selling a home. And if that is, in fact, true, we may get some assistance late this year in terms of some transactions that may be in the normal history would have taken place in May and June, but take place late in the year. Certainly could be a very good setup for 2025.

So not counting on that, obviously, in our expectations that Tim outlined. But certainly, today has been an interesting day already.

Operator

Your next question comes from the line of Eric Luebchow from Wells Fargo.

E
Eric Luebchow
analyst

Maybe you could provide a little more color on what the transaction environment looks like? I know you've talked in the past few calls about a pretty wide bid-ask spread maybe narrowing a little bit, but it seems like most in the industry have said that activity is still relatively quiet.

So what does your pipeline look like today? Where are you seeing cap rates for stabilized assets that fit your underwriting criteria? And in the absence of material M&A in the pipeline, how do you think about other forms of capital return between dividends and buybacks?

T
Timothy Martin
executive

Eric, thanks for the question. I wish I had something new and exciting to share with you, but we find ourselves in a very similar situation as we've been discussing here for, what it seems like many several straight quarters at this point, is that we had seen and have seen a narrowing of the bid-ask spread. We have -- we've been pursuing some transactions where we're much closer to transacting than we had been. But obviously, in our results, you saw that nothing got across the finish line.

Seasonally, acquisitions in our sector tend to be weighted to the back half of the year as sellers tend to like to put their books together and sell off of higher occupancy levels and peak rates for the year. So back half of the year is still a bit of an unknown. We are actively looking at a lot of different opportunities, and there remains a bit ask spread, albeit narrowed from where it had been several quarters ago. So as I talked last time we were together here on this call, it feels like we're getting closer, but we're not quite there yet. So really nothing new.

As it relates to alternative forms of capital, I mean, our dividend policy has been pretty consistent. We looked -- we think our payout ratio is pretty appropriate. And we would think about dividend growth over time being plus or minus about the same growth we would see in cash flow. Our most attractive opportunities are in redevelopment opportunities. I wish we had more of them, but we do pursue those. We have a handful of things that we're still working on that are coming out of our Storage West acquisition a couple of years ago. There are some nice opportunities that we continue to pursue. They're not necessarily needle moving, but it's an area of focus for us.

So we continue to underwrite -- look for great opportunities that are consistent with our investment strategy at returns that make sense for us. And we've been patient -- or remain patient and are optimistic that that some things are going to break loose here and hopefully sooner than later.

Operator

Your next question comes from the line of Juan Sanabria from BMO Capital Markets.

R
Robin Haneland
analyst

This is Robin sitting here with Juan. On the FFO guidance, what drives the implied back half acceleration?

T
Timothy Martin
executive

The back half -- meaning, first half FFO per share versus second half FFO per share?

R
Robin Haneland
analyst

Yes.

T
Timothy Martin
executive

Yes. I mean it's typically our seasonality of our business and the strength of the rental season results in second half of the year is almost every year higher FFO per share in the back half than in the front half. So that's a pretty seasonal norm for us, and this year is no exception to that norm.

R
Robin Haneland
analyst

Okay. And on same-store revenues, what's the revised assumption now on street rates? And when do you expect to hit parity year-over-year?

T
Timothy Martin
executive

I'm sorry. So street rate question, the gap on street rates year-over-year and when we expect to hit parity?

R
Robin Haneland
analyst

Yes. Basically, close the gap.

C
Christopher Marr
executive

Yes, I'll jump in. Yes, thanks. So again, I think when you look at the volatility that we're seeing in -- certainly in the market this morning, it just goes to the difficulty in pinpointing that question with any specificity. I think that in our guidance, as implied, we continue to track towards kind of where we thought we would be at the beginning of the year. The high end implied that we would see that parity sometime late summer. That's obviously off the table. And I think at this point, given where everything is, it's just going to be incredibly difficult to predict with any precision.

Our expectation at this point is that we do not see that parity in 2024. When we will see it in 2025, it's incredibly difficult to predict. As I said, if today's movements are indicative of any sort of relief on the mortgage side, that could set up a nice backdrop for 2025, but too soon to tell.

Operator

[Operator Instructions] Your next question comes from the line of Todd Thomas from KeyBanc.

T
Todd Thomas
analyst

Just a couple of quick questions for me. First, I think, Chris, you said that the peak rental season peaked in -- towards the end of June, a little bit earlier than in prior years. Any sense on sort of what really drove that specifically? And then sorry if I missed it, but did you speak about occupancy in July and how that compares year-over-year?

C
Christopher Marr
executive

Thanks, Todd. So I think one of the reasons certainly has to tie back to the housing market and a dearth of transactions there. I think, again, you typically see that home move drag into July. Historically, towards the end of July. And I think what we've seen over the last couple of years as the housing market has been slower than historical norms, it's just keep pushing that seasonality a little bit earlier into the process.

Occupancy as of July 31 was 91.4%.

T
Todd Thomas
analyst

Okay. And what's that look like year-over-year?

C
Christopher Marr
executive

GAAP to July 31 of last year, it was down 1.3%.

T
Todd Thomas
analyst

Okay. That's helpful. And then I just wanted to go back to the other property income. Tim, you talked about some of the components there, some of the fees, the solar credits. I think your tenant protection fees run through that too.

Is that all in the same store, your comments about some of that? Or was that just regarding the consolidated other property income line?

T
Timothy Martin
executive

My comments were focused on the same-store component. The tenant insurance that you refer to is not in our same-store fees. The variety of fees that I mentioned, the solar credits are in same store, and they were what I was alluding to, tenants insurance not so much.

T
Todd Thomas
analyst

Okay. Got it. And then I'm just curious about the growth in that line for the same store. In the first quarter, there was not really a big contribution to same-store revenue growth this quarter. It did have a big impact, and it increased $2 million sequentially. So had a decent impact on the growth rate year-over-year, but also just the run rate in general.

Did something happen specific to the quarter? And is it expected to be maintained at this level moving forward? Or should we reflect that in the run rate going forward and think about an adjustment heading into the third quarter?

T
Timothy Martin
executive

Yes. I think many of the changes that we made were not onetime changes that are going to be second quarter blip up and then return back to prior levels. Our expectation is that that line item should -- there's going to be seasonality trends to it. But that line item, year-over-year, we should see some continued outsized growth in that line item over the next couple of quarters.

Operator

Your next question comes from the line of Brendan Lynch from Barclays.

B
Brendan Lynch
analyst

You mentioned in the prepared remarks about the peak season, the demand peaking in June versus the traditional August. If you were to expect this to occur next year, how would it inform your street rate and ECRI approach?

C
Christopher Marr
executive

Yes. Thanks for the question. I think that the concept then is when do you have that sort of customer peak that then translates primarily into occupancy and rent rate for new customers. And then when does that begin its seasonal decline. As we think about the drivers of that for next year, absolutely, it will have to inform where we believe that will occur. That then translates into how do we see the seasonal trends in the back half of the year in terms of both that occupancy and that rate.

So it's a factor in terms of how we would think about budgeting for our stores in 2025. But I think, again, it's -- we're going to be fortunate to have more information here August, September, October before we have to kind of dig into those budgets.

B
Brendan Lynch
analyst

Okay. That's helpful. And then on the fees that you're pushing on clients, how much more aggressive do you think you can be before facing customer resistance? I would imagine this is something that is A/B tested to kind of fill out where customers are.

And maybe just a related question. At what point do customers become aware that they are going to be facing these fees relative to when they're signing up for a unit?

T
Timothy Martin
executive

Yes, I think the fees are disclosed and increasingly disclosed as it relates to fees that are again, a variety of things ranging from the administrative fee, the customer pays in their first -- when they initially rent. And that really ties in with -- when you think about an administrative fee, it is really part and parcel to the initial rental. So it gets mixed in with rental rate and how you think about that, how you think about any type of promotion or discount, administrative fee, all that stuff goes together. For us, it happens to be reported on a different line item. But it's all part of that initial cost, which is disclosed and very available for a customer to understand. The other fees that are late fees or payment convenience fees are all disclosed at the time and are highly visible to the customer.

From how much can the customer take? I mean that's consistent with anything else as it relates to how much can we push on rate for new customers. What are the opportunities to increase rates to existing customers? Fees just fall into that same category. You're constantly looking for continued refinement and optimization across all of those different revenue streams. And we found some opportunities to be a little bit more efficient, a little bit more profitable on some of those line items, which is what you're seeing flow through under the results.

Operator

Your next question comes from the line of Josh Dennerlein from Bank of America.

J
Joshua Dennerlein
analyst

I guess I'm just trying to think through like the evolution of the in-place rent per occupied square foot from here. I guess move in rates, it seems like they're under pressure, but the existing customer seems fine. So just kind of -- any kind of like gives or takes we should think about on how this metric goes up and down from here?

C
Christopher Marr
executive

Yes, Josh, ultimately, for the industry, we need to see the rate for the new customer moving in go up. And again, absent seeing that, you're going to see overall results that continue to be in line with what we've experienced thus far this year.

So again, what's going to drive that is a combination of things. Certainly, market forces and competition are one. Supply is another and consumer health and behavior a third and demand drivers are fourth. So some combination of those four factors will ultimately lead to, again, this closing of the gap between current rates for new customers moving in and where they had been last year.

And again, we've had the question as to when that will happen, don't quite have that crystal ball refined, but it will. And at that point, then you will go back to having that nice blend of new customers coming in at a higher rate year-over-year and the growth that you get from that. That also then tends to have a bit of a positive effect on the asking increases for the existing customer base. And then you kind of get back into that 20-year trend of self-storage revenue growth.

But ultimately, we need to see the combination of those four things work in some way together to get that new customer rate up.

Operator

[Operator Instructions] With no further questions, I'll turn the call back over to Chris Marr.

C
Christopher Marr
executive

Thank you. Thanks, everyone, for participating in this second quarter call. We look forward to seeing many of you in the early fall, and we'll speak to everyone again when we report for the third quarter. Thank you, and enjoy the rest of the summer.

Operator

Thank you. This does conclude today's conference call. You may now disconnect. Have a great day.