Clint Halverson - VP, IR Spencer Kirk - CEO Karl Haas - COO and EVP Scott Stubbs - CFO and EVP

Michael Knott - Green Street Advisors Shahzeb Zakaria - Macquarie David Toti - Cantor Nick Joseph - Citi Todd Stender - Wells Fargo Todd Thomas - KeyBanc Capital Markets Michael Salinksky - RBC Capital Markets Ross Nussbaum – UBS RJ Milligan - Raymond James & Associates Paula Poskon - Robert W. Baird Jordan Sadler - KeyBanc Capital Markets Ki Bin Kim - SunTrust Robinson Humphrey

Thank you, Glenn. Welcome to Extra Space Storage's third quarter 2013 conference call.

In addition to our press release, we've furnished unaudited, supplemental financial information on our website. Please remember that management's prepared remarks and answers to your questions may contain forward-looking statements as defined in the Private Securities Litigation Reform Act.

Actual results could differ materially from those stated or implied by our forward-looking statements due to risks and uncertainties associated with the company’s business. These forward-looking statements are qualified by the cautionary statements contained in the company’s latest filings with the SEC, which we encourage our listeners to review.

Forward-looking statements represent management’s estimates as of today, Tuesday, October 29, 2013. The company assumes no obligation to revise or update any forward-looking statements because of changing market conditions or other circumstances after the date of this conference call.

With that, I’d now like to turn the call over to Spencer Kirk, Chief Executive Officer.

Good afternoon. The self storage industry finds itself in a great operating environment.

New supply remains low and customer demand remains stable, occupancies are at historically high levels and discounting is at record lows. While these are certainly buoyant times for storage operators we are not complacent and we continue to leverage our sophisticated platform and unique structure to produce double digit FFO growth.

Excluding one time acquisition related charges our year-over-year FFO growth was up 21% for the quarter. Since our IPO in 2004 we have grown our footprint by over 700%, we hit a significant milestone as we finished the quarter with over 1,000 Extra Space branded properties.

We continue to be disciplined and creative in our approach to acquiring properties both in the open market and in the off market. Year-to-date we have purchased 30 assets for over 290 million and we have an additional 40 assets under contract for over 240 million.

In addition year-to-date we have also added 72 branded assets to our management program for a total of 253 managed assets. Our growth is due in large part to a long history of building and cultivating mutually beneficial relationships.

We will continue to evaluate and pursue opportunities to increase shareholder value. I will now turn the time over to Karl.

Thanks Spence. Third quarter occupancy remained at record high levels.

We ended the quarter at 90.6% up 1.7% over last year, street rates were up around 3% during the quarter, discounts to new customers were down by 12%. As a result we had same store revenue growth of 7.8% for the quarter.

We saw expenses trending towards more normalized levels; increases were due to growth in payroll, insurance, repairs and maintenance expenses. Net operating income for the quarter was 9.7% and we are on track to have one of our best years ever.

With that I will turn it over to Scott.

Thanks, Karl. Last night we reported FFO of $0.46 per share, which includes a non-recurring expense of $0.08 from the extinguishment of debt on All Aboard transaction.

Also included in FFO was a one time benefit of $0.02 from recent debt modifications. Adjusting for these one-time events FFO was $0.52 per share.

FFO as adjusted was $0.57 per share when you adjust for the one time benefit from the debt modification we ended at $0.55 per share. We had another good quarter for acquisitions.

During the quarter we purchased 22 assets for $215 million located in Arizona and California. 20 of the properties acquired were from the All Aboard transaction in California.

Subsequent to the end of the quarter, we closed on two additional properties for $18 million located in Georgia and North Carolina. As of today, we have an additional 40 assets under contract for just over $241 million.

It is anticipated that these acquisitions will close by year end. Based on our acquisition activity and our operational performance we have increased our full year 2013 FFO guidance to be from $1.95 to $1.97 per share.

This estimate includes non-cash interest expense, acquisition related cost and onetime charges. When adjusted for this items FFO is estimated to be from 2.09 to 2.11 for the full year.

I'll now turn the time back to Spencer for some closing remarks.

Thanks Scott. I want to recognize the efforts of all of our hard working employees that collectively generated this quarter's outstanding results.

We are committed to keeping our focus on the operational excellence in the growth of Extra Space. I'd now like to turn the time over to Clint to start Q&A.

Thanks Spence. In order to ensure we have adequate time to address everyone’s question.

I'd simply ask that everyone keep your initial questions limited to two, if time allows, we'll address follow on questions once everyone has had an opportunity to ask their initial questions. With that we'd like to turn it over Glen to start our Q&A session.

Hey guys. Sure seems like everything is going well for you guys.

Can you talk about new supply as maybe a potential chink in the armor looking forward in terms of the industry outlook?

Good afternoon Michael, it's Spencer. It's really interesting I went to the SSA trade show in Las Vegas and development of course was a very hot topic.

But if I could say alright, this was the actual conversation, how many of you folks have actually gone down to Home Depot and bought a shovel. Well the audience have people saying they’re getting the development game narrowed pretty dramatically.

And then when you asked the follow up question, alright those of you that did buy a shovel how many of you have actually stuck it in mother Earth and turned over some dirt, and it further narrowed. So I think there is an awful lot of interest Michael.

I would say there is not so much action. Here and there we are seeing development starts, but as we’ve said on many, many calls right now to our best guesstimate the new supply that is scheduled or has been contemplated or is actually under construction today does not even approximate the amount of supply necessary to keep up with the population increase.

Okay. Thanks Spencer.

That’s helpful. I would be curious also to get your take on just the transaction market.

It seems like cap rates continue to go down and values continue to go up. So just curious any thoughts you have on that and sort of your ability to operate within that construct and be creative and disciplined as you've said.

And it looks like you tapped maybe the Harrison Street JV to buy that back. Can you just talk a little bit about those things?

Yes. We are creative, we are leveraging relationships both in the open market.

We want to be competitive as well as in the off market transactions and once again this quarter we did an off market transaction that was favorable. For us there is a compression of cap rates, our goal as a company is to remain disciplined.

If you said where is the core transactional range for what we're doing at Extra Space I’d call it between the 6 and the 7. There might be a property or two where you end up in the high 5s conversely you might end up in the mid 7s, but the core transactional volume we're doing is in the 6 to 7 range and we want to make sure that the transactions we do are accretive.

And so far we have been very disciplined in making sure that that is the end result.

Thanks guys.

Thanks Michael.

Thank you for taking my question. It seems like you guys raised your 4Q guidance by - for FFO per share by about $0.015, was that impacted at all by the increased acquisitions?

And if so, are you able to quantify that?

The acquisition volume increased so it went up, quantifying it, it went up by $100 million at, it’s probably $0.01 to $0.02 in there and then your property performance also went up. So I am trying to understand how you came up with your $0.015.

I would tell you the accretive acquisitions are going to be one to two pennies in the current year.

Got it. And just one follow-up, so at a media there in New York you guys disclosed that August was the best August that you have ever had in the company’s history.

Did that momentum carry into September as well? How does September compare with the past Septembers and if you could also give us an update on October that would be great?

Yeah. This is Scott.

August was actually our best in terms of rentals that we've ever seen as far as the eight year running history that we have. September was on the lower end of that.

So part of it was where the weekends fell and then October is right back into the norm. So our rentals and vacates continue at the norm more or towards the upper-end in terms of rentals and vacates.

Got it. That is helpful, guys.

Thank you so much.

Thanks, Shahzeb.

Hey, guys.

Hey David.

Karl, a question for you, absolute rent growth appeared to accelerate in the quarter obviously on improved occupancy levels and market demand. What’s your, I guess first of all, what were the dynamics in the quarter that sort of comprised that growth and what’s your expectation going forward relative to where you’re seeing the most pricing strength either in place rentals or with the street rates?

In my view we are basically seeing just a continuation of what we’ve had in the last two years. And rentals are strong, we really we’re seeing occupancy hold always stronger than we expected, but our revenue management system really drives everything.

And we set some general guidance for it, but it’s going to adjust rates, adjust discounts and how aggressive we are on the web, how much money we are spending on the web. All of it comes together to generate what we think is going to generate the best results and we see that working.

And I know everybody likes to talk about [rates here][ph], but let’s talk about the rentals and vacates. The problem is if rentals go up and vacates go up, you really haven’t, it really hasn’t done you that much good.

We focus on the occupancy delta and as we ended the quarter at 1.7 and over the last year and I can tell you beginning of the year we did not expect to be at that level. So the market is strong where we are seeing some real strength, our rates probably aren’t as strong as far as the delta to prior year as we would like, but some of that has to do with, we are getting really aggressive in reducing discounting.

And so discounting and do we really care if we are going to get seven whatever percent, 7.4%, 7.6% and 7.8% revenue growth, do we care if it’s coming from lower discounts or higher rates? Not really, as long as we are getting to our maximum number.

Okay. That’s helpful.

And then Scott, I just have a question for you. There are a couple of one-time items in the quarter unusual for you guys especially related to capital structure.

What are some of the near-term goals in your mind for the company in the next couple of quarters relative to keeping the balance sheet in check with your external growth activities? And secondarily, are there some goals about further reducing leverage or recasting or re-terming some of that existing debt on top of what you have already done?

Yeah, David, first of all I’d tell you, I think our leverage is appropriate. I think that we are at a level that is sustainable going forward.

I think our goal during this last couple of years has been to set ourselves up for future growth. We want to make sure that our capital stack is diversified.

We would like to have, in the past we’ve been a 100% secured, we would like to maybe add a little bit of diversity in there and have a little bit more unsecured. So our main goal here is to reduce the interest expense as much as possible your average interest rate and also set us up for the ability to grow.

We want to make sure there are leverages that are in position where we have the ability to grow and where we have the ability to roll our debt. I mean the last thing we want to do is be back in 2008 or 2009 where many companies had loans that were cross collateralized or they had all their debt coming due at once, so we’ve tried to layer our debt and make sure we are ready to grow in the future.

Okay. Thanks for the detail today.

Thanks, David.

Great, thanks. It's actually Nick Joseph here with Michael.

Going back to the transaction market, what was the blended cap rate on the acquisitions in the quarter and for the additional properties under contract?

This is Scott. On average we would tell you it's between 6% and 7% and then the same is true for the transactions that we're anticipating closing.

Just maybe one point of clarification to Shahzeb’s question earlier on how much accretion or additional FFO is being generated by the additional acquisitions. That is without acquisition cost.

Our acquisition cost we anticipate to be 1% of whatever we buy. And so we continue to buy things in an accretive price, but pricings become more aggressive.

Great, thanks. And then I appreciate your comments on potential new supply and if that supply does come where would you expect it to deliver first?

This is Spencer, Nick. I think realistically you are going to see new supply coming where land costs are not as challenging, I think in the Class A markets.

Of course everybody wants to get in there, but the barriers to entry are very high and most of the development that has ever been done in this business has been done by the smaller operators, the mom and pops, not the REITs. So you're going to get a lot of supply I think initially coming in secondary and tertiary markets.

I think it's going to be much more muted in the core markets.

Great, thanks.

You're welcome.

Hi. Thanks guys.

I know you won't engage in ground up development on your own, but what's kind of your comfort level teaming up with the developer whether it would be a joint venture or through financing new construction?

Todd, good afternoon, this is Spencer. We are looking at JV development opportunities potentially.

Once again, it’s got to be a really good fit. It’s got to be in markets that are nice operational overlay to where we're currently doing business.

And number three it needs to meet our criteria of what we called the 3 Cs of a partnership. We need partners that have character that we can trust that have integrity.

We need partners that have capacity. We get literally dozens and dozens of inquiries of people who want to do a development and have Extra Space fund all of it, take all of the financial risk and they participate at the end with some advantageous split to them having taken no risk, we're not interested in that, we need people really stand shoulder-to-shoulder.

And number three we need competency. We are not interested in a homebuilder saying I am thinking about doing some storage, we need someone that’s got a proven track record.

So you take character, capacity and competency that narrows down the field. You take the operational footprint, it further narrows it.

And in a few selected cases you may in the future see some JV development, but it’s going to be limited.

Thank you for the color, Spencer. But and just a yield requirement or a premium over acquisition cap rates.

Is there a set basis point number that you need to achieve?

There is and I can tell you it’s going to depend on the market, but I think somewhere between 250 and 350 basis points is probably a reasonable range for us to say this makes sense. Once again, it’s market dependent and there could be a little variation of that.

Sure. Thank you very much.

Jordan Sadler here with me as well. First question, I just wanted to circle back to the discounting, and I was just wondering if you can talk about maybe where we are in the spectrum of sort of reducing discounts and concessions and also maybe even refining your marketing and advertising spend.

I guess, if we just think sort of broadly about your tenant acquisition cost overall, maybe you can help us understand or quantify sort of how much room there still as to reduce tenant acquisition cost at this point?

This is Karl. I don’t really focus on tenant acquisition cost per say, I guess in the what we do on the internet is driven by [thriving] demand determining where we want the demand and going after it and making sure that we’re effectively spending the money that we've decided that we wanted to go to it.

As far as the discounting, it’s really relatively simple and that we've always operated with thresholds at which discounts go away and we actually in certain times a year in busy season we raise these thresholds. So we even give less away and within the rise and occupancy gets at all of our sites, we’re just giving away a lot less.

It’s a hard thing to break. I will tell you our biggest problem has been just that our managers or sir used to having discounts and everywhere and everybody in the industry has vendors up saying one month free.

And the nice part is right now we’ll always have something probably in almost every site offering one month free, but it’s getting less and less and then we are refining how we identify the units that are available for discount. We used just had it every unit type would sit by itself, but now we actually [bucketize] into and we started that in the middle of this year and what we found is that even it’s had a more positive impact on our discounting.

So we still think we have some runway on reduced discounting and if and I am not saying we will, but if our occupancy went higher we’d probably even see less discounts.

So what percent of the customers, I guess the 43,000 rentals that you had in the same store during the quarter, how many of those renters received the discount and what was the value of those discounts in the quarter?

I don’t have that right in front of me, it’s less, I know it’s less than in the prior quarter. We’ve been trending down every quarter and discounts, I focus more on discounts as a percentage of our rental income and that was running anywhere up to about 6% to 6.5%, now it’s down to the low 5s and almost in the 4s.

Okay, that’s helpful. And if I could one last one, I just noticed in the same store expense detail the tenant insurance expenses were up about 90%, this is only $500,000 or so, but can you just talk about what that increase was?

Yeah, it’s really couple of things Todd. Last year the expenses were slightly below an average run rate.

So last year’s number was a little bit low. And then in the current quarter, we had buyers at two of our.

So it increased the amount of payouts to those properties. So a low quarter last year and higher quarter for the two specific buyers.

Okay, thank you.

Good afternoon, guys. Just going back to pricing, you talked about what you’re paying for assets, but can you talk about the market in general, what you see in the last call at 90 days and how that compares in terms of these transactions in the market overall?

It is tough for us to give you real cap rates and what other people are paying. We know that we are not getting many of the marketed deals.

When people quote cap rates often they are backwards looking, sometimes they are forward looking, do they include a management fee, do they not, property tax has been adjusted. So in our mind, whenever we quote a cap rate we want to focus on year one.

We would tell you that any deal that has been marketed we have not been overly successful. We’ve been able to get one or two deals, but we definitely are getting majority.

So we would tell you that we are off by as much as 10% on pricing.

I appreciate your color there. And second for Karl.

I appreciate the color on the discounting and street rate growth, but as you look at the market today, I mean is the market keeping pace with you, when you look at some of the smaller operators in terms of reducing discounts pushing street rates or are you guys basically pulling the market at this point?

No, I think others are doing the same thing. I don’t know about the real smaller local operators, the advantage that we have as we have so much information and I think will be control what goes on at the properties a little bit tighter than a lot of local operators, but I think our public peers are pretty much doing the same that we're doing.

Okay, that's helpful. And then finally just a touch back on the development, just as a bridge gap for that, would you guys look at being mezzanine partner on something like that and buying it out once it's completed, being kind of a financing source.

So would have to be just kind of (inaudible) joint venture.

CFO deals Michael are something would consider. You’ve taken the construction risk out of the equation, now you are up to lease-up risk, and Extra Space has a good track record of leasing up assets, it's something we know, it's something we're comfortable with.

And yeah, a CFO deal would consider it.

When you say mezzanine, I guess it depends a bit on what do you mean that, would we be a lender on development? Yeah, we would consider that.

I think that if it didn't significantly, if it wasn't a real risky deal, yes we would consider it, but we would do CFO deals for sure.

Okay. Appreciate the color guys.

Thank you

Two questions guys. First is on acquisition funding for the Q4 pending acquisition, what's the game plan there?

So we have announced about $535 million in acquisitions. We did a $250 million exchangeable earlier this year as part of the yellow board $200 million transaction.

We did about a $100 in OP. So we have more than enough capacity on our lines of credit to get those acquisitions done.

Okay. Second question is on pricing power and we have seen over the last couple of months a significantly more challenging consumer environment, I probably used the word lousy with retailers from the low end of the spectrum to the high end of the spectrum putting up flatter sales within the mall REITs put up flat sales.

So it would seem to me that the consumer is telling us something here that there are a little spend for a lack of a better word. So I guess in that kind of a context, I am curious how you guys think about pricing power in the storage industry going forward when it’s clear that retailers are struggling on that perspective?

It’s Karl. I think the difference is a very large portion of our customer base needs it.

It’s not -- they’re not out there just shopping, going to the mall and having to stop in, feeling flush with cash and buying stuff at just kind of leisure. So much of what we get or people that have an event in their life and they need some storage and a lot of who’ve never used it, we still are -- statistics still tell us that 50% of the people that come in rent from us never used it before.

They come in, they don’t know what it costs and so it’s really a matter of what everybody is charging. And our occupancy is high, our discounts are down and so all of us are going to, are pushing rates more.

And I think until the new supply comes in and we have to worry about where the demand is going to come from, the pi stands the same and if anything the larger operators are taking a bigger piece of the pi. And so I think it bodes well until that dynamic of new supply coming on happens, we're going to be in a pretty good position to be able to give more for what we have.

Okay. And last question, you guys have obviously been aggressive on the acquisition front over half a billion this year.

Can you talk about your disposition strategy, given where cap rates have fallen to why not take the opportunity to start pruning out some of the lower performers in the portfolio here?

Yeah. Ross, it’s Spencer.

That's nothing we look at. A lot of the properties that we have fall under a couple of considerations, when you talk about dispositions.

Number one, can you even dispose of them because of the financing that’s on them, I think CMBS. Second question, all right if you dispose this asset in a certain market, you just change the denominator over which you are fixed expenses get spread.

We are not in a huge hurry to dispose of a lot of assets. We’re building a company, we’re building a platform, we’re building a brand.

And you might see a few and I am talking single digits cycle out of our system, but this is not something we are aggressively pursuing.

Thank you.

Thanks Ross.

Hey good afternoon. Guys we've seen a lot of activity over the past couple of quarters.

In terms of acquisitions we've seen several large portfolios get snatched up. And based on what you are seeing come into market and I guess sellers’ pricing expectations, do you think that pace of acquisitions have we seen over the past two quarters are sustainable?

Do you think we’ll see an acceleration or deceleration what are your thoughts there?

No one knows RJ, what the future is going to hold. I was out touring and looking at some properties and having a couple of discussions with brokers and next with our own internal analysis.

Obviously the higher, the more willing the sellers are going to become. And I personally offer my opinion, I think through 2014 you will see a pace that is at least comparable to what you have seen in 2013, but I will also put a caveat that the larger asset pools for larger portfolios are becoming more and more scares, there just aren’t that many $200 million, $300 million, $400 million, $500 million portfolios hanging out there.

And I think if there would be any trendings would be towards the same acquisition volume if not more, but perhaps smaller portfolios not larger ones coming to the marketplace. And only time will prove whether this opinion is correct or incorrect.

Okay. And Spencer can you talk about any negotiations or what do you think the opportunity set is to continue to buy out joint venture partners?

What we want to do is when our partners approach us, be in a position to transact. We want to work to produce the very best result we are not going to go to them and try to break apart a perfectly functional partnership.

We are incline to meeting the need of our JV partners and having them come to us at the appropriate time, which is part of the reason why it’s difficult for Extra Space to prognosticate what the acquisition activity level will be in a given year because we are not actively prospecting our JV partners. We are waiting for them signal that it’s time for them to redeploy capital and at that point we want to be the first and only call because we have treated them well and that formula seems to be working to our advantage.

All right, thanks, guys.

Thanks.

Thanks.

Thank you and good afternoon everyone. Karl, a couple of questions for you.

Can you update us on what the tenant insurance penetration rate is in the overall portfolio?

Yeah. It is around 69%.

Thanks. And how is the average length of stay trending between your individual customer base and the commercial business customer base?

No real change. We really have not seen that move highly off and that is whole now.

Everything we have been doing really going back to 2008.

Karl, this is your last earnings call?

It depends what the first quarter of 2014.

Fair enough. And Spencer, just a bigger picture question for you.

Do you think the -- I mean obviously the self storage stocks have had a tremendous run here. Do you think the current valuations are adequately pricing in the growth potential?

I will say I am very comfortable where Extra Space is priced, that demotic I just pull up that there is limited supply, but there has been a tendency of the internet. We have not very sophisticated revenue management program that Karl talked about this is optimized pricing.

And all of the results that the public companies have posted in the storage sector have been in spite of a crappy economy. If the economy continues to heal, we just see further upside.

So for me I'm optimistic about the future and I think that the larger publicly traded companies are going to continue to produce decent results.

Thanks, Spencer.

Thanks Paula.

Hi it's Jordan Sadler with Todd. Curious about sort of the range of street rate increases you have seen across your markets.

I think the blended number you said was 3% year-over-year. But what sort of like the high and a low point, I mean and I came more about the high point actually?

Probably, I don't think we have any markets where street rates are much above that 5% above the prior year. And the low point is probably around 2% to 2.5%, it's strange but the DC markets, ball from a DC market is one that probably stands out as one that hits me is being where we've had our harder time pushing rates.

Obviously not surprisingly Boston and going up into the Silicon Valley, those are doing better.

Okay. It's interesting.

So as you would describe it I mean I guess economic conditions, but it's also it seems like prevailing economic conditions just sort of having added it driving the markets that have better street rate upside, is that fair?

Yes, not surprising.

Okay. And then could you give us a little bit more color on the assets that are under contract, I mean markets, I didn’t catch, maybe occupancies?

With that many assets it’s really pretty diverse as far as the markets, I mean they go from Hawaii to Florida. And as far as occupancy we have 19 where we're buying at a joint venture partner that’s very similar to ours.

And then we have a few other managed ones that are very similar. But I believe it’s 20 states.

And so it’s a pretty diverse spread there.

Okay. That’s helpful.

And then just lastly on the most recent third-party deals, the terms of those deals similar to previous deals consistent any change?

No change, we have not had offer different management fee structures or anything else we have held through to the program. The integrity of the program is very important to us and our success is because of our previous track record and we're very excited about the upside in this program as we go forward.

Do you see risk to that business at all and is it getting more competitive from a pricing standpoint?

Yes. The competition is keenly aware and there are pricing pressures and other factors, but as we look at what we are able to offer a mom and pop or an operator of few assets.

I think we have a compelling proposition that says we are competitive. We produce an outstanding result and we know how to work exceptionally well with partners.

Unlike any other publicly traded pair, this company has about 50% of the assets under the Extra Space brand that are either only partially owned or non-owned. And we for 15 years have structured our systems and our business and our management team around an ability to work and play well in a partnership.

And I think our track record speaks for itself. So I think we are in a good position to not only continue the growth that we have experienced so far, but perhaps even see an acceleration in the growth rate.

That's helpful. Thank you.

Thanks, Jordan.

Hi guys. Curious on your comments, I think Karl made them earlier that the year-over-year occupancy gap has been sustained at a higher level than you would have thought at the beginning of the year.

I’m just curious as you think about how you go about maximizing revenues whether the high occupancy rates that you’ve achieved and the Public Storage has achieved, does that make you re-think where your occupancy could end up peeking, is there more room for this year-over-year gap to continue same where it is even as we head into next year?

This is Karl.

Yes.

We are, I think we’re constantly are re-thinking it and we don’t know what the right answer is, perfect answer, I don’t know. And I guess if anybody should know we would have as many as good as chance as anybody to know what the right answer is.

It’s hard for us to believe that 94% and 95% is what we would be shooting for. It seems to be working for Public Storage, but they operate a little bit differently.

And we see it’s a combination of less discounts and certainly at 95% you’d even be giving away less discounts, so that’s a plus. But the ability to push rates as hard as maybe we would like to push we are getting away getting that high for us.

So we are higher than we thought. We originally were thinking we’d probably peak out at 88, 87, 88, now we are peaking out at 91 and averaging more like 90 instead of 89 or 87.

So it could go higher. As I said, our system drives it and about the only thing we do is we give some general guidelines to revenue management and we don’t want to see occupancy drop dramatically, but if they determine that where we are right now is the right level to maximize revenue or if our systems do then you will see that delta go down some.

But I can’t rule out that it wouldn’t, we couldn’t be here a year from now and be a point to point and a half to two points higher.

Okay. Thanks for that.

And then it sounds like, Spencer, if the economy were to get on a better footing you would continue to foresee an even stronger demand picture for storage with limited supply so it almost seems like sky is the limit potentially in terms of pricing power and rent growth, is that a fair interpretation?

I am not going to say that sky is the limit Michael, but I will say that I for one would not suggest that the best stages are behind Extra Space, the best stages are ahead of Extra Space.

Okay, thanks a lot.

Just a couple of quick follow-ups. You have several JVs that are not in the promote yet, and so the first question, are those based on just at the level of NOI or is that IRR based which might be negative appraisals and given where CapEx have gone, are we getting closer such a time for some of the larger JVs that you manage to promote?

Those all have preferred IRRs, so in other words they need to hit a preferred return and what happen with many of those joint ventures is we bought them as part of the story just say acquisition. And then between that time and today, you went through a pretty major recession.

So those haven’t been up to the original projections, but they are doing very well nonetheless.

Could you comment on how close we could be or?

It varies by JV and the IRR is very dependent on whether or not the JV, whether or not the fund allows debt or no debt, so it’s going to vary by JV, and so I wouldn’t feel comfortable commenting today.

Okay, that’s fine. Your CFO, Scott Stubbs, had already.

Your same store expenses still fairly low from year-over-year growth rate standpoint, but (inaudible) a little bit. And it seems like from other regions associated that are close to a lot of these have previously report a higher expenses and such a royalty taxes going forward.

Is it a or at this more, slightly more elevated level from the estimated low level long term run rate?

So the same-store expenses, we would tell you are high for the quarter partly because you had a negative same-store comparison last year. So this year actually looks probably worst than it would, if it was against a normal year.

We would tell you that getting back more to normal run rates and they should continue to grow more at the rate of inflation.

Okay. And just last quick question, what is your average new tenant length of stay and how got you changed that on the past couple of year?

And I know typically companies will talk about the average tenant duration, but what are the average new tenants today, how long do you think?

Ki Bin, I don't have the exact number in front of me, but it's around 12.6 months and it's picked up just slightly year over year.

Okay. Thank you, guys.

Thank you everybody for your interest in Extra Space today. We'll see you next quarter.