Charlie Place - Director, IR Chris Marr - President & CEO Tim Martin - CFO.

R.J. Milligan - Robert W. Baird Todd Thomas - KeyBanc Capital Markets Gaurav Mehta - Cantor Fitzgerald Jeremy Metz - UBS George Hoglund - Jefferies Todd Stender - Wells Fargo Securities Paul Adornato - BMO Capital Markets Ryan Burke - Green Street Advisor Ki Bin Kim - SunTrust Robinson Humphrey.

Good morning, and welcome to the CubeSmart Second Quarter 2015 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Charlie Place. Please go ahead..

Thank you, Kate. Hello everyone and good morning. Welcome to CubeSmart’s second quarter 2015 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 Factor 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 second quarter financial supplement posted on the company’s website at www.cubesmart.com. I will now turn the call over to Chris,.

Thank you. Charlie. We're running out of superlatives that describe the performance of the self-storage industry. At Cube we're focused on maximizing the performance of our portfolio in these extraordinary times. During the quarter on a same-store basis, we achieved record high occupancies finishing June at 93.8%.

We achieved record high asking rents, accelerating throughout the quarter to average $16.22 per foot, 8.1% above 2Q '14 and discount usage contracted throughout the quarter to average a record low 3.7% of in-place rent. That positive momentum continued into July.

The same-store pool had more rentals in July of this year than we experienced in a record setting July of 2014 and ended the month at 94.2% occupancy, while continuing the trend of lower discounts and higher asking rents for new customers.

We remain disciplined in our external growth strategy acquiring and developing Class A properties and Class A demographic markets. During the quarter, we closed on one store in Dallas that we had committed to acquire at completion and we opened our joint venture store -- development store in Arlington, Virginia.

The lease-ups on our newly opened stores have exceeded our underwriting with the performance of our Arlington store being nothing short of a amazing at 36% physically occupied after being opened for 91 days.

During the quarter, we committed to a development project in Washington DC and a C/O acquisition in Miami, both of which we expect to come online in late 2016. This strong performance has resulted in significant increases in our forecast for same-store metrics.

When combined with extremely robust lease-up at our newly opened stores as well as our increase in our acquisition volume guidance, we've also sharply revised upward our full year funds from operations per share expectations.

I'll now turn it over to Tim who will speak in more detail about our financial performance during the quarter, our financing strategy and our upward guidance revisions..

Thanks Chris and thank you to everyone on the call for your continued interest and support. As Chris touched on, industry fundamentals continue to be a tailwind and our operating platform continues to deliver better than expected occupancy, NOI and FFO per share growth.

Our reported FFO per share as adjusted of $0.31 was $0.02 higher than our guidance range and represents 14.8% growth over last year.

The beat to our guidance came almost entirely from revenue outperformance on both the same-store and non-same-store properties and while gains and physical occupancy drive a portion of our 6.8% same-store revenue growth, we've effectively transitioned to increase net effective rents being the primary driver of that revenue growth.

Strong core portfolio performance year-to-date leads to a significantly improved outlook on our expectations for the balance of 2015. In last evening's earnings release, we updated and improved guidance ranges on both FFO per share and on our same-store operating metrics.

Our FFO per share guidance increased to a revised range of $1.18 to $1.22 per share, representing a 3% increase in guidance at the midpoint. We also introduced third quarter 2015 FFO per share guidance of $0.32 to $0.33.

Our FFO guidance ranges are on an as adjusted basis and exclude the impact of acquisition related cost, given the unpredictability and non-recurring nature of those costs. As mentioned, our core portfolio performance has been exceptional year-to-date and our summer rental season has outpaced our prior expectations.

As a result, we're increasing our same-store guidance, same-store revenues are now expected to grow at 6.25% to 7% and our NOI growth expectation has been increased to 150 basis points at the midpoint to a revised range of 7.75% to 8.75%.

As Chris mentioned, we also raised our targeted acquisition volume to a range of $150 million to $200 million, which excludes our JV development and our acquisition at C/O activity. Consistent with our historical practice, we include the impact of announced transactions in our FFO guidance, but exclude the impact of future speculative activity.

Chris touched on our external growth activities and more details are included in our supplemental information package.

On the balance sheet, we closed during the quarter on our expanded revolving credit facility that increased our line from $300 million to $500 million, extending the maturity out until 2020 and improved the facility fee and borrowing spread.

We also remained active using our aftermarket program raising $27 million under that plan during the second quarter. During the quarter, we repaid a $53.5 million CMBS loan, reducing our secured debt to gross assets ratio to a new low of only 4.2%.

We believe we're well positioned to support our external growth objectives and we'll continue to pursue opportunities to term out our short term borrowings. We remain committed to funding our growth in a manner that's consistent with our credit ratings.

Earlier time as our industry and our portfolio continue to perform at record high levels, we're focused on continuing to take advantage of strong fundamentals to maximize cash flows from our portfolio and combined with prudent capital allocation, driven meaningful value creation for our shareholders. That concludes our prepared remarks.

Thanks again for joining us this morning and Kate, at this time, why don't we open up the call for questions?.

We'll now begin the question-and-answer session. [Operator Instructions] The first question is from R.J. Milligan of Baird. Please go ahead..

Hey guys. Good morning..

Good morning..

Good morning..

Talked about 36% occupied after 91 days, can you talk about, traditionally we've heard the lease-up period for self-storage being three leasing seasons, we've heard that winter has shortened, can you talk about expectations for some of the C/O deals in terms of lease-up and how may be that three years has changed over time giving the strength and fundamentals..

Yeah, again I always like to point out that the dataset is quite small when addressing this. From Cube’s perspective however, the performance of newly opened stores has been nothing short of extraordinary. We acquired a store empty in McKinney Texas. Went from empty to 90% occupied in nine months.

So we hit 90 about 30 days ago we bought it about nine months ago. The store and it's a reasonably sized store. Not a small store. The store in Arlington, Virginia which has over 100,000 square feet rentable, as I describe the occupancy and the customer growth there has been nothing short of amazing.

We see a little bit closer to the more traditional lease-up at our store on LBJ in Dallas faster than traditional at Northern Boulevard in Long Island City Queen, but nothing quite as dramatic as what we have in McKinney and what we're seeing Arlington.

So I think things are -- new stores are clearly leasing up faster and I think what’s important is releasing them up faster at pro forma rents. So we're not giving it away in order to get the physical occupancy, which I think is the half of that that often doesn’t get discussed. So, we continue to evaluate our underwriting.

I think we're more bullish today certainly than where we six months ago, but I am not sure we're quite yet ready to say that every new store opening is going to lease to full in nine months or even two years..

Okay. Thanks, that’s helpful.

Question on the acquisitions side, are you looking at assets or markets today that you wouldn’t necessarily look at two year ago, given the strength that we're seeing in fundamentals across the country?.

No, so we continue to believe in the strategy of VA demographic markets and that’s where we're focusing our efforts. I know there has been some talk of moving into the more secondary and tertiary markets, but we have not at this point adjusted our strategy..

Okay. Great thanks guys..

Thanks..

The next question is from Todd Thomas of KeyBanc Capital Markets. Please go ahead..

Hi, thanks good morning.

First question you mentioned the 94.2% occupancy at the end of July, When does occupancy peak in your portfolio generally and then what do you think the trajectory will look like during the off peak season this year? How much occupancy are you forecasting that you'll lose ahead of next year's peak season I guess where will occupancy trough in the portfolio this year?.

So, to the answer to the first question of when does occupancy typically peak in our portfolio August 1, so our peak occupancy was 94.3. In terms of the second part of that question, obviously it’s complicated by how you want to think about discounting and how you want to think about holding and asking rents.

And so philosophically we're hoping to hold on to as much of that 94.3% as we can going through to our trough which is typically in February. Again our models are going play with a variety of different outcomes, but in general we're going to try to hold on to as much of that as we possibly can..

Okay, and then just stepping back and thinking about where we are in the cycle here and how strong fundamentals in the business have been, how much of that do you attribute to an increase in demand or would you say it’s mostly due to the lack of new supply?.

I think its three things, I think the lack of new supply is a major contributor. I think the fact that the larger operators are taking more than their natural share of the demand from the existing demand I think is the second contributor.

And then I think the third is that the demand itself has grown both as the population continues to grow, but also as customers discover the product and more and more doing so every day. When we talk to our customers in Arlington, there is a -- there are several existing self storage facilities that are within seven of our store that we just opened.

And so it's not like there wasn’t product in that market and our customers are saying look, we’re driving on the highway 250,000 cars a day are seeing our sign in our doors. Hadn't really pictured self storage to be as beautiful as that building you built. Never had really thought about it. They come in, they see it.

Its meet their needs and they decide to come a customer. So I think it's an expanding demand base for a variety of reasons as well as obviously taking the share and I think it's clearly helped by the lack of supply..

So in Arlington, or I think in McKinney Texas you mentioned, are these new customers that were not previously using storage I mean, what’s the dynamic at play there? What’s the demand driver really for leasing up facility in nine months to that rate? Your comments imply the renters were lined up at the grand opening essentially and I’m just kind of wondering if something has changed at all with regard to the demand drivers of the business that you can identify..

Yeah, again I think it is, I think its awareness continues to increase in fact in Virginia we did have folks lined up waiting for opening day and had 30 customers right out of the gate. So its folks who have a better awareness of the product. I think it continues to be generational.

Particularly in Northern Virginia you have a significant amount of multifamily people living in smaller spaces with a need for the product who have discovered that flexible lease term, flexible size meets their lifestyle and they can use us for a variety of reasons.

We continue to have business customers find us more and more who hadn’t thought again that flexible lease, flexible size option as compared to storing their product in their home garage or some other alternative..

Okay. Thank you..

The next question comes from Gaurav Mehta of Cantor Fitzgerald. Please go ahead..

Thanks. Good morning.

Couple of quick questions, number one on the expense side it, it seems like in the second half of 2015 based on your guidance it seems like there is some expense uptick and by that could you talk about what you are expecting?.

Hi Gaurav its Tim. We continue to anticipate pressure on the real estate tax expense side.

We also from a how the expenses are balanced throughout the year, marketing expenses is one of those areas that timing as to when we press on the gas pad and when we spend this year relative to last year, is an area that for us is going to be a little bit weighted more towards the second half that it had been towards the first half.

So those are the two primary drivers and then the third little bit less so comes the timing of when the repair and maintenance expense occurs and hits. So we expect -- our repair and maintenance expenses is expected to come in where we thought it was going to be for the year.

Just from a timing perspective a little bit later in the year than we had anticipated and a little bit later than where it has hit last year..

Okay.

And then on your same-store and non-same-store pool, it seems like 18% of your portfolio is still considered non-same-store and that 87% occupied when does that roll into your same-store portfolio?.

So we reset our same-store on the first of the year and stores in our same-store portfolio when they're stabilized during all periods presented. So stores will come out same-store and enter our same-store pool on January 1 of 2016 to the extent that they were stabilized during 2015..

Okay, great. Thanks for taking my questions..

Thanks..

The next question is from Jeremy Metz of UBS. Please go ahead..

Good morning..

Good morning..

So just one question on the rent side, it looks like the asking rents compared to the realized rents are running at I think if my numbers are right here, the highest spread since you started disclosing this, so I am just wondering how we should think about this? Should we expect realized rents maybe to accelerate further from this mid 4% to 5% range or is the gap reflecting maybe just some discounting that's still going on to be able to catch-up there..

No it will -- your first primes is correct. It will continue to accelerate. We have been extremely aggressive.

We talked earlier in the year about looking back '14 what would we have done different in the rearview mirror and one of the things we talked about is that we would have gotten more aggressive both in reducing the amount of discounts offered as well as pushing the pedal harder on our rates for new customers.

So we ran most of May north of 11% in terms of the growth in asking rents to new customers and so that the impact of that as you know takes a little while longer to churn through the entire portfolio.

So we're really bullish on the rate side of our business going forward and think it will be reflective of continued very, very strong growth as we go forward..

And you mentioned discounting and you said it was about 3.7% in place. Can you just mention where that was last quarter and then I guess where that was last year in 2Q..

Yes, the average over the course of the quarter was 3.7%. That was an 80 basis point decline from the average in the second quarter of the prior year.

If you think about how that moves through the summer, we got to the end of July at just a hair north of 3% of discounts as a percentage of in-place rents, which all of these are records for our portfolio.

So we can clearly as I said rented more queues in July on a same-store basis than we did last year and last year was spectacular and we did sell it very, very low levels of free rent..

Okay.

Thanks and then in response to a question earlier about the robust results which in the storage industry, you talked about the expanding demand the bigger operator taking share or obviously we saw the limited supply picture, but I guess if I look back, I feel like we knew a lot of that three to six months ago, yourself and peers keep putting up results that on a quarterly basis seem to exceeding your own expectation.

So I am just wondering what in particular seem to be driving these results at each three months to that much better than you think if it's just more phased in the revenue management systems you have and what they're telling you is more of a coordinated effort generally by the market to really put rate in whole discounting..

Yes, I think its a few things, you touched on two of them.

Clearly the rate -- the transition from occupancy to rate was one that the industry I don't think had a great historical playbook for and so when you're looking at asking rent growth for us averaging north of 8%, when you look at it by market, we've markets where asking rent growth is north of 20%.

Markets with a significant number of stores and so I think the level of asking rent, the ability to continue to rent at very low levels of discount I think was at least the upside positive for Cube and some portion of that I assume is for the industry.

Again I also think given these high levels of occupancy, the ability to be more and more aggressive on the in-place customer who is in the queue below market rents, knowing that you've got another customer right behind there or rent decide that the straw that causes them to move out.

I think you also have -- I think you also have just continuing new demand that is a challenge given the diverse sources of demand for the product for us to predict. So I think you just have all of those factors coming together..

Okay.

And I can ask just one more here on the acquisition side, you guys have success finding deals, I guess obviously it depends on if you define success, seems like your peers maybe have had a little more success, kind of two part question, is this some reflection of maybe being a little bit more conservative right now in the face of a strong bid of deals out there and increasing completion.

And then the second part, can you just give us a little more detail on what your pipeline looks like today and if you have you anything else on the contract at the moment?.

Thanks. Yeah, I think it's difficult to answer that question without expressing a view on how others are looking at transaction. Again when we see opportunity that fits within our strategy, we go after it quite aggressively and I believe we're successful more often than not.

I think when you talk about just the overall volumes they tend to be driven by larger portfolio transactions and the recent opportunities just didn’t fit within the strategy that we have here at Cube. From a pipeline perspective, we continue to find opportunities out there.

Our guidance increased, I think reflects the fact that we continue to feel pretty bullish on what we can acquire this year..

Okay. Thanks guys and obviously you can feel free to comment on other pricing if you want..

Thanks..

The next question is from Ki Bin Kim, SunTrust Robinson Humphrey. Please go ahead..

Thanks, good morning guys..

Good morning..

Good morning. So you made a comment on the opening remarks that in July rates were higher. So I was just curious, did you mean higher than the 8% the schedule rents you posted for the quarter or you think just higher like its higher year-over-year in general..

Year-over-year in general.

Okay.

Can you just share what that number was?.

No..

Okay.

So if we had to kind of take a step back and look at what’s schedule rents are doing versus realized rents, in the super long term if you have 8% every year just different theory, does the realized rents ever catch up to 8% year-over-year or because of the lagging nature of customer trends and I know you're signing rent increase letters, but is there always inherently a gap between what's you realized versus what's your kind of push up in rates? What should it converge together?.

Hey it's Tim. It's more of the latter. If you were -- if you were to run a model where you were to aggressively push rates consistently at that level, you’re in-place rents would never catch up just due to the churn.

You would always have an in-place rent that was a little bit lower than your asking rent if you were to consistently raise your asking rents at that level..

Okay. And on Page 19 in your same-store schedule you actually break out non-same-store and then a column Other Expenses and Revenue, this quarter it seems like different expenses side, $4.3 million or $4.4 million was taken out and then last year was $2.3 million.

Just curious if that doesn’t belong to the same-store pool, it doesn’t belong in the non-same-store pool, you call it others eliminations just curious what that -- why that is and what those numbers are?.

Sure.

That for us is -- a lot of that is our property level G&A for lack of a better word so that is going to be expenses of our district managers, our operating platform and so as we expand our number of stores, as we expand our footprint to third party management, those costs continue to increase and primarily for us a lot of that is driven by expanded presence in our third party management platform..

So if I understand that correctly, that's not -- is that in your reported income statement G&A line item or is that part of operating expenses just not in the same-store pool for one period or another?.

The latter..

Okay. That's it for me, thank you guys..

Thanks Ki Bin..

The next question comes from George Hoglund of Jefferies. Please go ahead..

Good morning guys.

Just a question on the six properties that were added to the third party management program, were there newly constructed facilities?.

Yes, so hey it's Chris. So there was a -- I am trying to look for the exact split here, but yes it was a blend of newly constructed facilities as well as there was some that were existing stores. So if you can give me one second. The split was 50-50. So three of them were new construction and three of them were existing stores..

Okay. And are some of them to an existing sort of client of yours and in the third part management business like it was the same owner of the properties..

I don't know that the specific six whether they were one of in general we continue to have existing owners who are developing stores as well as we have some existing owners particularly on the institutional side who acquire existing stores and have them managed by CubeSmart..

Okay.

And the six properties -- are some of these again your existing markets that would compete with your other assets?.

Of these existing six properties, none of them are in markets that compete with existing Cube stores..

Okay. Got you thanks. And just one other question, just some fundamental are so strong right now and a lot of it has to do with the lack of new supply.

What besides a dramatic increase and supply could really slow the growth, are you seeing any major pushback in any certain markets in terms of rate? What could derail the party?.

Well supply obviously you hit on -- you hit on what is one reason I think your second most obvious reason comes back to some a shock economically that causes the consumer to freeze and we lose the movement that we have that I think a big part of our business. So absent some sort of shock to the system I think the supply is your answer..

All right. Thanks guys..

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

Thanks guys.

Just to go back to Arlington, can you give any specifics maybe discounts that are in place maybe your rate compared to market, just want to get a sense of how you could potentially replicate the success to others in those deals?.

Todd from a discount perspective, for a newly opened store, you're going to have quite a nice amount of first month free offers given that there are so many cubes available.

From a rate perspective we're in the low $30 a foot asking there, which is in line with our pro forma and so we are being pretty aggressive on the rate side there given the quality of the product relative to the older stores that are in that market.

I am just sitting here looking at actual versus our expectations and even on the discount line, our discount dollars are right in line with pro forma. So I think that's just quite frankly a pretty special situation there and we would love to have -- we would love to have more ability to deliver more product in that sub market..

Thanks and just as you see that success, are you changing underwriting assumptions yet for C/O deals. I know you said you're about 94% occupancy. You're certainly seeing that level from the other REITs.

How do you think about your going in yields on C/O deals going forward?.

I think as I answered the prior question, we're obviously getting more data in a diverse set of markets which is making us more comfortable as we start -- as we look at underwriting in terms of the pace of lease-up and the price that you can get per square foot net while you're leasing up.

We haven't made any dramatic changes at this point to our underwriting in terms of getting more aggressive on deals, but certainly as the data points continue to come in a very positive manner, we continue to look at that every day..

Thanks Chris and Tim, you don’t have much debt coming to between now and 2018, do you think about using more short term debt there is boom in your maturity schedule, which recently reach don’t use short terms usually from long term investments, but just going to get a sense of how you’re thinking about your funding right now?.

Yeah, thanks Todd. We have been very underexposed to short under the curve here over the last few years and feel like that is appropriate and likely to continue to be appropriate given where we are historically in the cost of longer term debt.

On the flip side, we did close on our expanded credit facility, which does give us the ability to have a little bit more borrowed on the line of credit then, than we would have prior having $200 million more of capacity.

So the expanded line really gives us the ability to use the facility, build up a balance that starts to approach where we would be looking at an index eligible type of bond deal at kind of a minimum $250 million deal.

So with the old $300 million line, it was really difficult to use much of that short term debt because you wanted to have a full $300 million to work with. So I’m giving a little bit of a mixed answer. We have an ability to have a little bit more exposure to short term debt through utilizing the line.

At the same time, we remain in very historically low interest rate environments and 10 and 12 and 15 year money is still very attractively priced..

Thanks Tim and just finally I don’t if I missed this, do you guys give any details or can you give details if you didn't on the acquisitions made in the quarter specifically the Florida and Arizona assets?.

We did not give specific details, stabilized cap rates on deals that we acquired not at C/O during the quarter or blended right around 6%. Good quality assets in sub markets, where we had a whole and so we were excited about them and we sourced them on a relationship basis..

And how about the subs that you have acquired in Q3, can you discuss any of that stuff?.

Yes two great stores in the Maryland suburbs of Washington DC and a store in the Park City's area of Dallas, Texas. And so both are high population very, very strong population growth that we had in our sub market platforms there in Dallas itself and in the suburbs on the Maryland side.

So again continues to be theme of sourcing and those were direct deals that we found through relationships and very, very excited about adding those stores to the CubeSmart platform..

These are stabilized properties?.

These are not fully stabilized properties. Those three they are -- but they are not -- they are not newly opened..

Okay, great. Thank you..

The next question comes from Paul Adornato of BMO Capital Markets. Please go ahead..

Thanks. Good morning.

Chris given the lease ups, where new stores is happening much quicker than expected, I was wondering when it would make economic sense to think about bringing that activity back on balance sheet?.

Paul, that's a great question. When you think about what we're doing from a joint venture development perspective, the fact that we are the overwhelming majority of the capital those stores are in fact on our balance sheet.

We're just working with a partner from an overhead perspective instead of having to have all of that on our books and again we've talked about how difficult it is to source deals in the long period of time from start to finish. So we still like the joint venture model and intend to continue with that going forward.

I think that being said, if we -- if we were to find some opportunities that were within reasonable geographic area of Philadelphia, I think we would start to seriously consider doing such a project on our own..

And Chris, you said that new customers coming in are kind of surprised that how nice the stores are? I was wondering if the permitting authorities are similarly warming up to the product site and if you’ve seen any such easing of restrictions..

Unfortunately not, you can look at design requirements for example in South Florida. You can look at some of the challenges that are going on with a development in Rockville, Maryland.

It still is again when you think about the challenges to development and some of the reasons why new supply has been so muted and continues to be muted that are not in my backyard continues to be fairly pervasive..

Thank you..

[Operator Instructions] Our next question is from Ryan Burke of Green Street Advisor. Please go ahead..

Thank you.

Just wanted to go back to the transaction market real quick, this is a very highly fragmented business in terms of property ownership, but transaction volumes continue to be low at least relative to what they could be? he size of price point I am curious what you think it takes for more private operators to make that decision to sell their properties whether that's something that happens over the near term or plays out over time..

Hey Ryan its Chris.

Again I think the decision making by that owner pricing obviously comes into play, but for the single asset owner it's their business and their business is doing very, very well and their cash flowing and they understand it and they look at the return that they're getting and then they think about what that is compared to their other options.

And many of those other options, investing in a well balanced portfolio of debt and equity is beyond their control and it's not something that they can touch and feel and understand. So I think there is just a lot of other psychology that goes into play for the single asset owner. For the small portfolios, I think it's a similar decision making point.

It's their business. They have employees. So they're thinking about it in terms of what's my alternative? Where could I place my capital? So it's in a state planning question that drives it. It's an age question that drives it. Sometimes it's a divorce or a family issue that drives it.

It's still a unique transaction market storage is in that perspective that the reason for a seller to make a decision is oftentimes motivated more by personal matter than just purely the financial side of it.

On the institutional side, I think you've seen fund life tends to drive decisions as funds are coming to the end especially of a defined life you're seeing, you're seeing properties come to market. I think you've seen some of that. This year you saw certainly more of that last year..

As you have conversations with say the smaller private owners, is there any sense that that type of mindset could change when fundamentals eventually go from something -- go from spectacular to something less than spectacular?.

Yes I think -- I think our thesis is that will happen. Again I think it's going to also come into play though as to what other where they see other alternatives, but certainly I think a less than spectacular fundamentals will cause some folks to say okay maybe now is the time. But we've talked about this.

I've talked about it at self storage association conferences that that math of looking at where you think your net operating income growth is going to be relative to where you think interest rates are going to move and how you think that affects cap rates, you could argue that -- you could argue that that just kind of analysis just isn’t resonating and it's not driving people to the market today..

Sure. Okay and then if you could provide your updated view on what you think the trajectory of cap rates has been so far this year and along with that do you think the smart deal has had an impact in any shape or form..

So on a single asset basis or one or two property portfolio, I still think you've seen a real meaningful change at all in cap rates or cap rate expectations.

Haven't seen anything of size that has come to market since the smart deal was announced, but certainly I would expect that the brokers and any seller will be trying to come to their own conclusion as to exactly what Cap rate that's traded at, so that they can use that for their own benefit..

Okay. Thank you..

Thanks..

The next question is a follow-up from Ki Bin Kim. Please go ahead..

Thank you.

So going back to your third party network program I guess, this is a little bit different than the EFRs where they make or they ask JV partners or the third party owners to change the brand to EFR and you guys have gone a different route, but given that I think scale and just being bigger has become more important as such that do you -- what do you think about that? And maybe -- are you guys contemplating maybe actually asking some of your newer partners to change the brand to CubeSmart..

Yes thanks Kim. What we have found is that our partners want to change the brand to CubeSmart. We don't have to ask them to do so. So I think at this point we have plus or minus five of the total third party platform that are not branded CubeSmart. So obviously call it almost all of our partners have elected to do so.

To your point, they recognize that there is power to the brand..

And is that physically branded or are you talking about just under on the web it's branded that way..

Physically branded..

Okay. And how many -- just to go back in history a little bit, but how much of -- does pipeline have you actually bought or how much has the fueled acquisitions in the past does, assume like it's kind of still didn't grown, since five years ago since you started this business segment.

And I can't remember how much you've actually bought or what the opportunity really looks like going forward?.

I think roughly speaking if you go back to the beginning of the program in 2010 through today, we've acquired about 50 properties from the third party platform. So it continues to be a nice source of acquisition opportunity for us..

Okay. Thank you..

Thanks..

This concludes our question-and-answer session. I would like to turn the conference back over to Chris Marr for closing remarks..

Okay. Thank you everybody for your participation. Thought this was great call. Really thoughtful questions. So we appreciate, we enjoy sharing the story. We look forward very much so talking to you all again after the end of the third quarter and continue to thank you for your interest and support at CubeSmart.

Enjoy the balance of the summer and we look forward to talking to you again in the fall..

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect..