Juan Sanabria: And then just the government put out new over time pay rules. I know storage as a whole has been very efficient in the use of labor ban hours. Just curious if there’s anything we should be thinking about with regards to those new over time rules and the impact on storage OpEx costs going forward?
Christopher Marr: Nothing specific related to the new rules as it relates to our business. Now obviously, we are competing for talent in our stores with retailers and other businesses that have the same types of skill sets as we value in our store and district teammates, and that continues to be a pretty competitive environment. But from our perspective, nothing has really changed in terms of that environment.
Juan Sanabria: And just one last one for me. On the third-party management, very strong first quarter. So what’s the visibility for the balance of the year? And should we expect that kind of above trend growth to continue for the foreseeable future?
Timothy Martin: Yes. So we did have – thanks for letting me have the opportunity to say it a second time. But 68 stores in the first quarter was the most that we have onboarded in 14 years in a single quarter. So that was fantastic. We have a very healthy pipeline. This will surely be year number eight of us being able to add at least 130 new stores to the platform. I think on the other side, when you think about churn on the third-party management platform, which is a normal and healthy thing, because the transaction market is slow, we do have an expectation that fewer stores will leave the portfolio because the transaction market is muted. So we expect to have another very productive year on the third-party management front.
The reality is that when you have times like this where the operating environment isn’t normal and it becomes more challenging, existing owners are more likely to recognize the need and the value that a sophisticated operating platform like ours provides. And so the math around the value of our services becomes a lot easier for those folks when times get a little bit challenging. So bad news that fundamentals aren’t as robust as they were in 2021 and 2022. Good news is it allows those of us who have a lot of great tools and data and a really well staffed and powerful platform to really show that value at times like this, apart from times where everybody is doing well.
Juan Sanabria: Thank you.
Timothy Martin: Thank you.
Operator: Our next question comes from the line of Brendan Lynch from Barclays. Go ahead, please.
Brendan Lynch: Great. Thanks for taking the question. I wanted to circle back to the advertising spend being down. And you’re talking about the kind of improved conversion rates and return on invested capital improving. Can you just quantify maybe the order of magnitude that you have seen so far in those changes and what the potential opportunity is going forward?
Christopher Marr: Sure. So when I think about taking it backwards, when you think about the potential opportunity going forward, it continues to be a focus on how can we use the tools that are available to us, both through our CDP as well as through things like Google’s Performance Max, which is an AI-powered campaign, helped supplement our traditional paid search campaigns by exposing those qualified users to CubeSmart ads across multiple Google placements and there are countless things like that under the hood that we continue to work on and refine to make our marketing spend as efficient as possible. And I think that we are in the early stages of beginning to see the benefits of those investments that we’ve made historically and those that we’ll continue to make here over the next couple of years.
In terms of just numbers, when you think about web visits are up 6% or so over where they were last year. The conversion rate is about 530 basis points better than it was last year. We’re reducing our cost per clicks by – in the magnitude of around 9%. So those are some data points against that, but it is a rapidly changing environment. Obviously, we have the impact of the removal of cooking that has now been somewhat deferred into next year, but that will also change the landscape for those of us who rely heavily on digital marketing for customer capture. So exciting stuff going on here at Cube and I think in the digital world in general, and we’re highly focused on finding ways for it to reduce our costs and help improve customer capture and revenue maximization.
Brendan Lynch: Great. That’s helpful. And one more on expense items, property insurance. The increase is the most acute in markets with weather risk? Or is it pretty even across the board? And do you have just property insurance? Or do you also have business disruption insurance as well?
Timothy Martin: It’s difficult to answer the first question because we have a – our approach is across the entirety of our portfolio. So getting visibility into market by market, it’s a little bit challenging because it’s quoted for the entirety of the portfolio. Obviously, it’s going to be influenced by those areas that are more impacted by some of the recent activity and some of the other pressures just more broadly on commercial cost of insurance, Florida comes to mind. And then…
Brendan Lynch: Business disruption alternative.
Timothy Martin: Yes, we do have business interruption as part of our overall coverage.
Brendan Lynch: Okay, great. Thanks for the color.
Christopher Marr: Thank you.
Operator: Our next question comes from the line of Omotayo Okusanya from Deutsche Bank. Please go ahead.
Omotayo Okusanya: Hi, yes, good morning. Thanks for taking my question. There was a comment earlier on just about ECRI trends in terms of frequency and magnitude kind of being similar to kind of where you’ve been experiencing. Can you just provide a little bit more color around that in terms of ECRI is generally up, again, still in the teens or high-low double digits or give us a sense of what’s happening there and if anything is changing in terms of just frequency, how quickly you’re doing it, especially for kind of new tenant capture?
Christopher Marr: Sure. Over the last three quarters or so, there’s really been no change to the magnitude or the frequency of that program for Cube, and it continues to be running on average at about that mid-teens level in terms of the average increase that a customer may receive across the portfolio.
Omotayo Okusanya: Got you. That’s helpful. And then in terms of just the customer behavior, whether activity you’re seeing with credit card payments or payments by other means. Anything changing on that end, any kind of increases in bad debt? Any kind of increase in delinquencies or anything of that nature.
Christopher Marr: No, nothing in terms of change in trends in our customer and our existing customer health as it relates to those areas of credit for the self-storage business, looking at units going to auction, our customers greater than 30 days past due write-offs, et cetera, all trends continue to be in line with history.
Omotayo Okusanya: Great. Thank you.
Operator: Our next question comes from the line of Mike Mueller from JPMorgan. Go ahead please.
