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CubeSmart (NYSE:CUBE)
Q3 2019 Earnings Call
Oct 25, 2019, 11:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good morning, everyone, and welcome to the CubeSmart Third Quarter 2019 Earnings Conference Call. [Operator Instructions] I would now like to turn the conference over to Charles Place, Director of Investor Relations. Please go ahead, sir.

Charlie Place -- Director of Investor Relations

Thank you, Chad. Hello, everyone. Good morning from sunny Malvern, Pennsylvania. Welcome to CubeSmart's Third Quarter 2019 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 those forward-looking statements.

The risks and factors that could cause our actual results to differ materially from forward-looking statements are provided in documents that 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.

Christopher P. Marr -- President and Chief Executive Officer

Thanks Charlie, a solid quarter given the challenges we knew we were facing in the quarter from difficult expense comps and the impact of new supply on our top line growth. Our thesis on supply remains unchanged. We continue to expect new store openings in our top 12 markets to peak in 2019 and decline in 2020. Based on our internal analysis, we currently see a slowdown in deliveries in each of our top 12 markets with the most significant declines in Chicago, Miami Dallas,[Phonetic] and Houston, markets that experienced the impact of new supply early in this cycle. So while we expect a reduction in 2020 deliveries, given the fact that the average length of a customer's day is about 13 months, we expect the impact of supply and its related pricing pressure will continue to weigh on top-line growth into 2020 albeit at a gradually reduced rate of deceleration. We remain encouraged by the resilience of our portfolio in the face of new supply, sequential improvements in the same-store revenue growth in Dallas, Houston, and Miami, we believe are indicative of the performance of high quality real estate when operated by a focused team.

After several quarters of cautioning about the impending impact of new supply in Brooklyn, we finally began feeling its effect during the quarter. The good news is that after spending a day driving the market, touring the new comps, and speaking to operators, demand is solid, as evidenced by our portfolio having 120 basis points higher year-over-year occupancy, and the newly opened competitor stores appear to be leasing up nicely.

The reality is, we have outstanding real estate relative to the overall competitive set, and therefore we expect Brooklyn to absorb the supply much like our experience with the earlier wave of new construction in the Bronx. We continue to have success in growing our funds from operations per share. Recent transactions have reduced our weighted average cost of capital while continuing to strengthen our very conservative balance sheet. We remain disciplined in deploying capital, continuing to utilize joint ventures as an additional means of external growth, and our third party platform continues to be both the source of services revenue as well as a platform for acquisition.

Our consumer remains healthy. We currently operate 230 stores that are in various stages of lease-up and demand remains very solid. Significant near-term pressure on price is largely confined to supply impacted markets, and we believe in the long-term value creation, our high-quality platform and portfolio will produce.

Thank you for listening to my comments. And I'm now pleased to turn the call over to our Chief Financial Officer, Tim Martin, who will expand on various successes of the quarter. Tim?

Timothy M. Martin -- Chief Financial Officer

Thanks, Chris. And thanks to everyone joining us on the call for your continued interest and support. Another solid quarter to report. We reported third quarter 2019 results last evening, including a headline result of $0.44 per share of FFO as adjusted, which was at the high end of our guidance range, 1.5% growth in same-store revenue and 5.3% growth in same-store expenses yielded same-store NOI growth of 0.1% during the quarter.

As Chris mentioned, the impact of new supply on operating fundamentals continues into the back half of 2019, consistent with our expectations. We continue to see pressure on rental rates [Phonetic] while continuing to maintain solid occupancy levels. Same-store occupancy ended the quarter at 92.5%, and we averaged 93.1% during the quarter. Expense growth of 5.3% was driven by continued pressure on real estate taxes, timing of repair and maintenance cost compared to last year, as well as the impact of a fairly significant increase in the cost of our property and casualty insurance compared to last year.

Following our big transaction last quarter, external growth was more modest in the third quarter. On a wholly owned basis, we acquired two stores during the quarter for just under $18 million, one in Atlanta and one in Charleston, South Carolina, year-to-date we've invested $189 million in the wholly owned store acquisitions and have another $88 million under contract.

So we continue to find good opportunities to grow and expand in our target markets. Our HVP IV venture that is focused on lease-up acquisitions added two more stores during the quarter for $46 million, and we expect to add another two stores during the fourth quarter to that venture for around $34 million.

During the quarter, we opened one of our development projects in the Boston MSA. We also added a new development to our pipeline in King of Prussia, Pennsylvania as detailed on page 23 of our supplemental information package. We currently have five projects in our development queue with deliveries expected through 2021.

Our third-party management platform continued to adding stores in a meaningful way as we added 48 stores in the third quarter, bringing our third party platform to 652 stores under management. This growth allows us to further leverage our operating platform, expand the CubeSmart brand and likely will provide some attractive acquisition opportunities in the future.

On the balance sheet front, we've been active in raising both debt and equity capital. During the quarter, we issued 1.8 million shares under our at-the-market equity program raising $61.2 million at an average price of $34.93 per share. In subsequent quarter end, we accessed the public bond market for the second time this year. In early October, we issued $350 million in senior unsecured notes that bear interest at 3% and mature in 2030. Proceeds from the offering were used to repay amounts drawn on our revolving credit facility as well as to fund acquisition and development activity.

Combining all of this activity along with our new $750 million revolver, we discussed on last quarter's call, we're well positioned from a balance sheet perspective and have capacity to execute our external growth strategy and to fund that growth in a manner that's consistent with our investment grade credit ratings. Our revised earnings guidance and underlying assumptions are detailed in our release from last evening. Highlights include a narrowed full year range of FFO per share as adjusted of $1.67 to $1.69, which is a half penny [Phonetic] raise at the midpoint as well as narrowed ranges for our outlook for same-store revenue, expenses, and NOI. We introduced fourth quarter FFO per share as adjusted guidance of $0.41 to $0.42 . So thanks again for joining us on the call this morning. At this point. Chad, why don't we open up the floor for some questions.

Questions and Answers:

Operator

Certainly. We will now begin the question-and-answer session. [Operator Instructions]

And the first question comes from Smedes Rose with Citi. Please go ahead.

Smedes Rose -- Citigroup -- Analyst

Hi, good morning. I wanted to just ask a little about the change in the guidance, particularly at the top end, I noticed your prior guidance had indicated some deceleration through the back half of the year and it seems like, I think relative to a lot of forecast, it was a little steeper than expected in the third quarter. Was that mostly due to what you saw in Brooklyn? You're going to call that out or is there something else going on that changed I guess from your prior outlook.

Christopher P. Marr -- President and Chief Executive Officer

Yes, Smedes, this is Chris. Now, I mean the Brooklyn, the results in New York have actually been better than we would have anticipated throughout 2019 based on what we saw at the end of last year and our expected timing of deliveries. Again we're just providing a range of outlook we create that range in the fall of the year before and we're still operating within that range. It just became obvious that that everything breaking in our way in all the markets across the country to hit the high end was going to be mathematically challenging based on where we are through the 9 months, and so we adjusted that top end accordingly.

Timothy M. Martin -- Chief Financial Officer

Yes, I mean mathematically Smedes, our previous high end given our third quarter print [Phonetic] would have mathematically suggested a reacceleration in the fourth quarter, which we do not anticipate, which is why we took away the high end of that range.

Smedes Rose -- Citigroup -- Analyst

Okay. And then you had mentioned that in some of the markets that saw development early on in the cycle, you sound like maybe a little more optimistic on, but which ones sort of specific look into 2020, maybe perhaps would see some sort of reacceleration in?

Christopher P. Marr -- President and Chief Executive Officer

Yes, I think, again it's, those ones, I rattled off in the prepared remarks that saw the impact of supplier earlier in the process. So when you look at what right now is on our radar for deliveries in 2020, you see the sharpest declines in Dallas, in Chicago, and in Houston, and to some degree in Miami, although still more anticipated in '20 in Miami than in Chicago or Dallas or Houston, and I think, again Austin would also be in that category. So those are the markets where you're starting to see some green shoots, we saw some, some good outcome in Q 3, from that perspective. Our occupancies are there. We're just starting to see rental rate climb back from its lows and gives us some optimism as we go into 2020 that those markets will continue to show improvement.

Smedes Rose -- Citigroup -- Analyst

Okay, thank you.

Operator

The next question will be from Jeremy Metz with BMO Capital Markets. Please go ahead.

Jeremy Metz -- BMO Capital Market -- Analyst

Hi, good morning, guys. Just sticking with supply, Chris, you had mentioned you're continuing to hold your expectation that supply peaks during 2019 and starts to decline in 2020, I guess as we step back and think more broadly about just the lingering impact here, you mentioned it weighing on 2020. But what is the typical lag is you think about it between peak supply and peak supply impacts?

Christopher P. Marr -- President and Chief Executive Officer

Yes, I think, you are in that, academically, kind of that 9-month to 13-month range as as that sort of the churn in the customer base and that's again as it relates to a decline in price based on that supply. I think the rate at which that impacts you slows, so I think the impact as we get here later in this impact of supply cycle will be less pronounced than the rate of its impact as we experienced it earlier this year, through the third quarter if that's helpful to sort of answer it in two ways there.

Jeremy Metz -- BMO Capital Market -- Analyst

Yes, no that's fair. And just switching gears to the expenses, if I look at the advertising spend, it's up, I mean, clearly it was 4% but nothing crazy, at least relative to what we're seeing from some of your peers. Are you just not seeing as much incremental demand with additional spend such that you're not ramping that even harder or is it just better faith in the systems to be selective on bidding and no need to really crank up that spend, just from a diminishing returns on additional cost [Phonetic] , trying to think about how you're valuing the increase ad spend from here.

Christopher P. Marr -- President and Chief Executive Officer

So, the focus is on achieving our objectives while paying very close attention to the cost of that incremental customer relative to the lifetime value of that incremental customer. And in Q3, we certainly actively looked at spend, we're willing to spend, but we were able to achieve our objectives in the quarter, continuing to be, again with that eye on that incremental customer and their value relative to the spend As we look forward, the landscape hasn't changed. It is incredibly competitive, not only from the larger competitors and their spend, but also from the regional and non-traditional storage folks who are also ramping up page[Phonetic] . You have to focus in on the fact that page search in and of itself produces the least amount of customers for us, and so that's only one component of the overall. I think to be fair, as we look at the landscape and we look out into Q4 and into 2020, our expectation would be that we will continue to find ways to use other channels and to be able to generate that incremental customer at a reasonable cost that will cause us to spend at a rate in excess of inflation, how high does that go. Stay tuned, and we'll articulate that when we provide guidance for operating expenses for next year, but I continue to anticipate that our spend will continue to grow at a rate more rapidly than what it has in the past and certainly more rapidly than the rate of inflation.

Jeremy Metz -- BMO Capital Market -- Analyst

Got it. Thanks, Chris.

Christopher P. Marr -- President and Chief Executive Officer

Thanks.

Operator

The next question will be from Todd Thomas with KeyBanc Capital Markets. Please go ahead.

Todd Thomas -- KeyBanc Capital Markets -- Analyst

Hi, good morning. Just sticking with expenses, can you comment on the increase in property taxes, almost 8% a quarter. Is that level of growth in property taxes is expected to persist for a period of time or was this quarter a bit more elevated than you would expect going forward?

Timothy M. Martin -- Chief Financial Officer

Hi, Todd, it's Tim. There is a couple of things going on there. It is a little bit of a difficult comp, because we had some good news in last year's number. We had the benefit of a handful of assessments' challenges that came back in our favor last year, to create a little bit more difficult comp. That said though, boy, it's hard to get too excited about seeing meaningful decreases in that level of growth in property taxes. It feels like a broken record, we've been talking about this for what, three-four years now. But for us in the quarter, we saw significant pressure on growth in taxes in Chicago, Houston, San Antonio, Cleveland, Nashville to name a few that were the bigger impact MSAs. We're in the midst of preparing all of our outlook for 2020, and as Chris mentioned, obviously we're not sharing that on this call, but we continue to expect pressure in the real estate tax range. We've experience, as you know, over the past couple of years, anywhere from 4% to 8%. Of course, quarters can go up and down, but I would certainly anticipate that at least into 2020 and possibly a year beyond that, that the continued pressure on real estate taxes is not going away anytime soon.

Todd Thomas -- KeyBanc Capital Markets -- Analyst

Okay, and you mentioned San Antonio, and we saw 168% increase in operating expenses there. I realize it's just for four stores, but was that predominantly due to property taxes, and do you expect to see any other sort of big pops in other markets like that?

Timothy M. Martin -- Chief Financial Officer

Yes, that particular market was significantly impacted by a successful refund last year. So there was an increase in the general real estate tax bill in San Antonio in the 2019 period, but the 2018 period was helped meaningfully by a by a tax refund. So it's a really difficult comps. I wouldn't read too much into that one.

Todd Thomas -- KeyBanc Capital Markets -- Analyst

Okay, and then just shifting over. So the Labor Day sales that many operators held during August and September, did that have an impact on traffic and activity across your portfolio? And was that expected or was that new this year or at least more impactful than in prior years?

Christopher P. Marr -- President and Chief Executive Officer

Hi, it's Chris. It was not new this year. Certainly for a few of our larger competitors, it's a recurring theme. I think what was new this year is duration. You saw some variation of a sale regardless of what it was branded that lasted longer into September, certainly from one of our competitors it lasted significantly longer in September. So that's new. I think anytime you have something like that, it puts some pressure on the rentals. It certainly works from an occupancy perspective. It puts additional pressure on price because you're giving away an additional concession there. Now some of that is offset by changes in base rate that you make in advance of the sale, but I would say, I would not read into that that it was anything different than the norm, as I said, the only thing I would say is different is the duration was a little bit longer in terms of keeping in that place than what we would have seen in the last couple of years.

Todd Thomas -- KeyBanc Capital Markets -- Analyst

Okay, all right, thank you.

Operator

The next question will be from Jonathan Hughes with Raymond James. Please go ahead.

Jonathan Hughes -- Raymond James -- Analyst

Hi, good morning. Kind of a related question, were you guys running any revenue management experiments with rates or discounting during the quarter, and if so, and I realize, it might be tough, but do you have a sense of what revenue growth would have been had you not made a potential change?

Christopher P. Marr -- President and Chief Executive Officer

Yes. So, great question. We are running experiments and tests constantly, we are playing around with a bunch of different things all year. Some of which, you know again, quarter-to-quarter can have an impact. It can swing obviously both ways. I think some of the things we were doing leading into the third quarter, put some pressure on quarterly revenue growth, but not, I would not say it was overly meaningful but certainly put a little bit of pressure on, obviously with the belief that the long-term revenue growth from those customers is going to be better to our advantage.

Jonathan Hughes -- Raymond James -- Analyst

Right. So maybe trading discounting for a higher rate.

Christopher P. Marr -- President and Chief Executive Officer

Or various other tools, but yes, directionally, yes.

Jonathan Hughes -- Raymond James -- Analyst

Okay. And then I think you mentioned it earlier, but I just want to confirm, you're not seeing any change in existing tenant behavior despite any of the broader macroeconomic choppiness.

Christopher P. Marr -- President and Chief Executive Officer

No, I mean our self-storage customer, as I said, continues to remain very healthy. Demand is healthy. I mean again, my point, the stores that are new, and again it's -- we own or manage over 200 stores that are in some degree of lease-up. The physical occupancy is fine and most of the stores are leasing up quite nicely. It's just in those markets with heavy impact of supply, you're seeing an awful lot of pressure on price.

And again, to go back to the, and not to be the broken record, the stable stores only need to backfill the 5% or 6% of the customers who vacate every month. So you're not chasing that customer down to the bottom, but we have stores in market, where you've got competitors that are face rate [Phonetic] 25% to 50% below what I would say are market rents. We don't have to chase them to that point, but we continually see, I'll call it somewhere between 2.5% and 3.5% down and effective rents relative to where we were last year, and last year was down relative to the year before. So it's pressure in the markets with supply. I'm confident that this too shall pass.

Jonathan Hughes -- Raymond James -- Analyst

Okay, that's helpful. And then just one last one for me, you ended the last call by hedging and priming the balance sheet ahead of an interesting time period for the sector and even you executed on that with the debt and equity raises since then, are you finally starting to see more properties come to market as maybe some owners and other operators find out this business is tough and are performing below expectations and may look to monetize before things could get even tougher.

Timothy M. Martin -- Chief Financial Officer

Hi, it's Tim. I mean we always see opportunities, there is always a market for folks that are looking to dispose off their self-storage holdings. I don't know that I would go so far as to characterize it the way that you laid it out that folks are trying to call up a shift in the market. We continue to work hard to focus on deals that come to market. We continue to focus on existing relationships, largely through our third-party management platform, but not exclusively, and we've underwritten a tremendous amount of opportunity this year, much of which there's just a disconnect between buyer and seller expectations. But obviously, as we have increased our activity and our guidance on external growth modestly, we're finding opportunities. We continue to be optimistic that opportunities will come. I don't, I wouldn't characterize that there was some type of market shift, that somebody is trying to call the top, and they're trying to sell in advance of that. That said, a lot of folks, as we've talked about for several calls, a lot of folks who built their stores and built them based on a pro forma that they established many years ago that didn't anticipate another store being built or two more stores being built in that market, many of those stores are not performing to their underwritten pro formas and many of those builders or investors were short-term focused anyway. So there's certainly going to be some activity that we're going to see, that's a result of that type of activity. But again, back to our comments for the past couple of quarters, we don't think that folks are in distress. I think folks are going to be modestly disappointed compared to where they thought they were going to be, and I think that probably provides some opportunity for us, or for someone to make a good investment here and there in the coming 12 or 24 months.

Jonathan Hughes -- Raymond James -- Analyst

Okay. Thanks for the time.

Timothy M. Martin -- Chief Financial Officer

Thanks.

Operator

The next question will be from Shirley Wu of Bank of America. Please go ahead.

Shirley Wu -- Bank of America -- Analyst

Hi, guys, thanks for taking my question. So this is a follow-up on New York, and as you're seeing more of an impact of supply in the back half of ' 19, could you talk to the cadence of that supply over the next few quarters and what you anticipate getting delivered, and also on top of that from the street rates that you're seeing in the boroughs in 3Q.

Christopher P. Marr -- President and Chief Executive Officer

Sure. So I think as you look at new development impacting each of the boroughs, start with the Bronx. As we think about the Bronx, there is one, two, three deliveries left for '19, and then right now, what we're looking at for '20 is one store that's on the docket to open in '20. So I think again And you're starting to see the opportunities for supply there dropping off pretty significantly. In Brooklyn, again, I think you've got a similar construct. Most of the deliveries are scheduled, either already have happened, so Brooklyn, just like every other borough in New York, you can build the stores where the zoning is, and so we have four stores out of our same-store pool in Brooklyn, who are currently experiencing eight brand new comps impacting them. If you take away those four stores out of our overall Brooklyn same-store pool, the other stores in Brooklyn are actually performing pretty nicely and have same-store revenue growth that's quite healthy. So it's a concentrated impact which is just the reality of life in the boroughs.

And so I think the significant impact in terms of deliveries in Brooklyn, largely are coming now. We either saw them in the third quarter or will see them in the fourth. Queens, just not much happening. I mean there is a delivery here or there. Again, it's a different cat, those deliveries tend not to have as much of an impact as they do in Brooklyn and in Bronx. We have the one property in Manhattan, its unaffected. We're starting to see supply in Long Island, in North Jersey. In Westchester, again I think the Bronx opportunity set is dissipating quickly and so folks who want to continue to find opportunities in the New York MSA are moving out into the suburbs, our Staten Island store, which is just a spectacular site, continues to chug along, just very, very nicely. That helpful?

Shirley Wu -- Bank of America -- Analyst

Yes, that was helpful. And can you also talk to what you're seeing in terms of net effective rate trend in 3Q, starting from, let's say, the end of 2Q and moving into the back half, and then what you're seeing going into October as well.

Christopher P. Marr -- President and Chief Executive Officer

Yes, you know, no sharp changes. Again, we continue to be in, as I said to a previous question, we're in that somewhere between down one, down five in net effective rents, and I know that's a pretty big gap, but again it's a story of the supply and no supply, margins [Phonetic]. The markets, Las Vegas is a great example that aren't seeing the impact of new supply. We've got very, very solid asking rent or net effective rent growth, similar in many of the California markets, while it's slowing relative to what we had seen in the heyday, it's still a nice growth, those markets, and we know where they are, that are seeing supply. They're down to some degree worse than our portfolio. So is Houston, Florida all of Florida is seeing some pressure from supply, it's now not only Miami, it's the West Coast of Florida up into Orlando and then even Jacksonville to some degree. So the song remains the same and will be until we get into next year end, I think [Phonetic] see a diminishing impact from the supply.

Shirley Wu -- Bank of America -- Analyst

Right. So, the range is a little bit wider than expected. So if you were to do a back of an envelope and rate it by your exposure to those different markets, would your net effective rent rates be closer to the high end or low end of that range.

Christopher P. Marr -- President and Chief Executive Officer

Yes. Right in the middle, Shirley.

Shirley Wu -- Bank of America -- Analyst

Okay. Thank you.

Operator

Our next question comes from Ki Bin Kim with SunTrust. Please go ahead.

Ki Bin Kim -- SunTrust -- Analyst

Thanks, hi, out there. Can you go back to the supply topic, you said you're seeing supply peaking next year, but just so I can get a sense of what that really means. So if there were like 2000 properties being delivered and next year it'll be down to 1900, it doesn't mean much, but if it goes to 1000 obviously it's more meaningful. Just trying to get a better picture.

Christopher P. Marr -- President and Chief Executive Officer

Yes, and so these numbers are range, Ki Bin, because again some of these deliveries that we would anticipate coming in to 2019, will obviously not yet completed, and will open in January, February 2020 equal number by probability will not open in '20 and will move into '21. But in order of magnitude for us, and again this is just our top 12 markets, which is about 70% of our revenue, you're going from a range in 2019 of expected deliveries in those top 12 markets of somewhere between 300 and 360 going to a range of somewhere between a 110 and 150.

Ki Bin Kim -- SunTrust -- Analyst

That's a pretty big drop off. And when you look at maybe permitting data, is that a similar tone or is that a little bit different?

Christopher P. Marr -- President and Chief Executive Officer

Yes, I think, all of it sort of holds together. I mean, we've got our own proprietary work that we do internally. We utilize the various entities that are out there doing a similar amount of work we look at, and again, and this is in the top 12. I just think you're running out of opportunity that makes sense economically, I mean the rental rates that you would need to have a new development makes sense, certainly in the top tier markets, are well in excess of what today's rental rates are, and I think given the experience that people are having who did open in the last 18 to 24 months, you're just not seeing as much activity. It's moving then to the second tier markets. So I think there still is opportunity. It's going to largely be away from those markets where our portfolio is heavily concentrated.

Ki Bin Kim -- SunTrust -- Analyst

Okay. And earlier you said there were no changes to customer behavior when they get a rent increase. But how long for new customers, any kind of incremental changes in shopping patterns or how sensitive they are to prices? Maybe that's highlighted by the average time visitor spend on your website if that's changed at all, things like that.

Christopher P. Marr -- President and Chief Executive Officer

No, I just think there are more options, right. So no change. I just think, again, given the amount of new supply, the customer is finding, they're finding more options, and so therefore we need to be more efficient on getting those customers. We need to meet our objectives at the stable stores.

Ki Bin Kim -- SunTrust -- Analyst

Okay. Thank you.

Christopher P. Marr -- President and Chief Executive Officer

Thanks.

Operator

The next question is from Eric Frankel with Green Street Advisors. Please go ahead.

Eric Frankel -- Green Street Advisors -- Analyst

Thank you. I just want to touch upon the third-party management business. You said, [Phonetic] you had a fair amount of stores this quarter, but I think the net new additions is only about four. So maybe if you can just comment on the stores that came off your platform.

Timothy M. Martin -- Chief Financial Officer

Sure happy to. So you'll recall that last quarter we talked about our HVP III transaction, where we acquired 18 stores and sold 50 stores. As part of that transaction, the new operator and the new owner of those stores was looking for a transition period for us to continue to manage for a short period of time while they staffed up their operations, ultimately their intent is to self-manage those stores, and so during the quarter, more than -- the majority of the stores that came off the platform were stores that we transitioned off of our platform to the new owner. And then the balance of the stores that left the platform were various little chunks of stores, they were sold.

Christopher P. Marr -- President and Chief Executive Officer

Yes. The biggest chunk was a sale to another [Indecipherable].

Timothy M. Martin -- Chief Financial Officer

Correct.

Eric Frankel -- Green Street Advisors -- Analyst

Got you. Okay, one of the questions relates to New York again. So one of your, I guess you can call, one of your competitors purchased a pretty sizable portfolio in the market there that pretty, what seems like a pretty aggressive price. Maybe you could just touch upon whether the valuations in New York have changed at all as fundamentals maybe have softened a little bit.

Christopher P. Marr -- President and Chief Executive Officer

Sure. I mean I think I will start by. I'm not sure there're -- I'm not sure there're a self-storage competitor, but time will tell. The values in New York, yes, clearly continue to grind a little bit tighter. I mean, it's just a very, very attractive market long-term for storage, we're proud to have identified that eight years ago and be the market leader there. But when you're looking at valuations across the country, I think historically for the last 25 years, you always looked at California and everywhere else, I think that's shifting a bit to some of the East Coast markets being perceived on an equal footing.

Eric Frankel -- Green Street Advisors -- Analyst

Okay, thanks, I'll get back in the queue.

Christopher P. Marr -- President and Chief Executive Officer

Thanks.

Operator

The next question comes from Todd Stender of Wells Fargo. Please go ahead.

Todd Stender -- Wells Fargo -- Analyst

Hi, thanks. And just to stay with New York, looking at your Brooklyn development project, the opening date slipped into Q4, and there is a lot to get that investment total up to the final estimate. I wonder if you could just speak to the specific project just because of its size and maybe you still have a good, not to, to get that up to that $43 million. Thanks.

Timothy M. Martin -- Chief Financial Officer

Yes. So the difference between where we are and where we ultimately will be is that development deal was structured similar to many of our deals where our development partner has the right to put their position to us in the future. So we put in our total investment number there what we ultimately expect including their put, so that will come in one big chunk.

Christopher P. Marr -- President and Chief Executive Officer

And Todd, I was just there, again, as I said I spent the day in New York touring and that site is an extremely challenging site. We are under the elevated train line or next to it. And interestingly enough, I think we've talked about this site, we're about 14 inches from a competitor store that they've just finished and are leasing up right now and actually are leasing up really nicely, two basements. So it's a complicated construction. The delays are days and weeks not months. We try to predict as best we can when the stores will open, but that store should open here before the end of the year and we're super excited about it. It's a really underserved market, and we look forward to being a very good competitor to our peer.

Todd Stender -- Wells Fargo -- Analyst

And in something like that, is the lease-up period expectations still three leasing seasons or are you really like it and that's like two, how do you see about that?

Christopher P. Marr -- President and Chief Executive Officer

Yes, for a size of that store, I think the underwriting would be more like four. I will say based on where the market is today, we're pretty pleased with being able to get that store delivered, but yes, it's going to be more like four.

Todd Stender -- Wells Fargo -- Analyst

Got it, OK. And then just switching to disposition guidance, just at the high end of the range that came way down, was there a group of assets or a market that you might have been looking to exit or it's just the fact that you tapped the bond market are [Indecipherable] here in Q4, you're plenty liquid, so you don't need any proceeds right now, how do you think about that?

Timothy M. Martin -- Chief Financial Officer

I wish there were some great answer to that. We started the year with a $0 million to $50 million [Phonetic] range because we're exploring a couple of opportunities. And as we sit here today, we know what the answer is. So we sold the one store in Texas here subsequent to quarter end, and that's likely to be the disposition activity for the year.

Todd Stender -- Wells Fargo -- Analyst

Was that a very small asset for $4 million bucks, it sounds, on the tiny side.

Timothy M. Martin -- Chief Financial Officer

It was $4.1 million worth of asset.

Todd Stender -- Wells Fargo -- Analyst

Okay. Thank you.

Timothy M. Martin -- Chief Financial Officer

Your're welcome.

Operator

Ladies and gentlemen, this concludes our question-and-answer session. I'd like to return the conference back to Chris Marr for any closing remarks.

Christopher P. Marr -- President and Chief Executive Officer

All right, well, thank you everybody for listening in. Trust me, we're going to navigate through this impact of supply just fine. The customer remains very resilient. Our business continues to be extremely solid. It's a challenge here going forward, I think for a few quarters as we go quarter-to-quarter, but for those of you with a longer-term outlook on our industry and our company, I feel extremely confident, we're moving in a good direction and as the new supply impact begins to wane, we'll come out the other side, stronger for it. So thank you all for listening. Look forward to seeing many of you in sunny Los Angeles, California. And we'll look forward to speaking to everybody on our year-end call. Have a great weekend. Thanks.

Operator

[Operator Closing Remarks]

Duration: 40 minutes

Call participants:

Charlie Place -- Director of Investor Relations

Christopher P. Marr -- President and Chief Executive Officer

Timothy M. Martin -- Chief Financial Officer

Smedes Rose -- Citigroup -- Analyst

Jeremy Metz -- BMO Capital Market -- Analyst

Todd Thomas -- KeyBanc Capital Markets -- Analyst

Jonathan Hughes -- Raymond James -- Analyst

Shirley Wu -- Bank of America -- Analyst

Ki Bin Kim -- SunTrust -- Analyst

Eric Frankel -- Green Street Advisors -- Analyst

Todd Stender -- Wells Fargo -- Analyst

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