Effective Jan. 1, there’s a new top boss at CubeSmart LP.
Chris Marr is taking over from Dean Jernigan as CEO of the publicly traded self-storage REIT. Jernigan had been CEO of CubeSmart since 2006; he announced his retirement in June 2012. In the interim, Marr has been front and center as the public face of CubeSmart.
Before stepping into Jernigan’s role, Marr had been CubeSmart’s president and chief investment officer since 2008, as well as chief operating officer since 2012. He will retain the president title. Previously, Marr was the company’s chief financial officer.
“Chris Marr has been a CEO in the making for at least 15 years. He’s performed every role in an exceptional, outstanding manner that I’ve asked him to perform,” Jernigan said during the company’s most recent conference call with Wall Street analysts.
In terms of length of stay, our customers are staying longer because they really have found us to be helpful beyond just the core need for storage.
— Chris Marr, incoming CEO of CubeSmart
Jernigan said that in his various roles, Marr has been instrumental in CubeSmart’s continued growth. Over the past five years, CubeSmart has boosted revenue by more than 42 percent, with $283 million posted in 2012. The company posted $236 million in revenue during the first nine months of 2013.
Marr will receive a base salary of $500,000 as CEO. In addition to performance bonuses of up to $750,000 for 2014, Marr will get a promotion bonus of $500,000 in the form of vested shares of stock.
The succession has been in the works since February, when CubeSmart’s board approved Marr’s rise up the ranks.
“Talk about a smooth transition,” said Paul Adornato, REIT analyst at BMO Capital Markets in New York. “The guy who was number two is now number one.”
Adornato doesn’t expect the leadership switch to prompt any huge changes in direction for the company, but there might be subtle differences in the way that Jernigan and Marr view the business.
“Jernigan has always been keenly focused on maximizing revenue, but agnostic as to whether rate or occupancy were the levers to get there,” Adornato said. “Chris Marr, I think, has been a little bit more vocal about utilizing occupancy to drive that revenue maximization.”
Marr shed some light on the subject during the company’s most recent conference call.
“As you go into the busy rental season of next year,” Marr said, “the focus is on holding on to as much of that occupancy as we can.”
CubeSmart posted an average occupancy rate of 90.5 percent during the third quarter. Marr said time would tell whether growth in rental rates and reductions in free rent would follow the occupancy gains.
“The proof of that, obviously, is going to be in that time period next year between April 1 and August 1, when we see the bulk of our rental activity,” Marr said.
Marr said that rental rates have remained fairly consistent since August, a positive sign that operators are able to maintain occupancy without resorting to discounts.
Another tactic Marr favors when it comes to sustaining occupancy is offering more amenities and services. One example is the CubeSmart Superstore. These select locations offer storage and retrieval of individual items, full-service packing, paper shredding and computer workstations. Furthermore, the company recently launched a storage-by-the-bin service in Manhattan called CubeSmart Direct.
“In terms of length of stay, our customers are staying longer because they really have found us to be helpful beyond just the core need for storage,” Marr said in an interview with REIT.com.
Jernigan Makes an Exit
Jernigan, 67, has said he would remain a long-term CubeSmart shareholder after stepping down as CEO. He also will continue as a consultant for the REIT for at least two years. In November, the CubeSmart board authorized an agreement for Jernigan to offer advisory and consulting services from time to time. Jernigan will command a $1,000 hourly fee for his services, not to exceed 20 hours per quarter, according to filings with the U.S. Securities and Exchange Commission.
Jernigan is a veteran of the self-storage industry, building his first storage facility in Memphis, TN, back in 1985 and launching Storage USA Inc. with his wife, Kristi. Storage USA became the first publicly traded self-storage REIT in 1994. At one point, Marr was chief financial officer at Storage USA.
GE Capital bought Storage USA in 2002; three years later, publicly traded REIT Extra Space Storage Inc. scooped up the self-storage operator. In 2006, Jernigan was hired as CEO of U-Stor-It, a newly formed REIT at the time.
Under his tenure, Jernigan oversaw the restructuring of CubeSmart’s management after the departure of several U-Stor-It executives. Also during his tenure, the REIT’s headquarters moved to Wayne, PA, from Cleveland. In 2011, U-Stor-It changed its named to CubeSmart.
Following his retirement as CEO, one thing Jernigan plans to do is start tweeting. The Twitter account @deanjernigan was launched in December. No posts have appeared yet, but Jernigan’s bio indicates he’ll start firing off tweets in January.