Charlie Place - Director, Investor Relations Chris Marr - President and Chief Executive Officer Tim Martin - Chief Financial Officer.

Gaurav Mehta - Cantor Fitzgerald Bruce Nathan - KeyBanc Capital Markets Ki Bin Kim - SunTrust Gwen Clark - Evercore Smedes Rose - Citigroup Juan Sanabria - Bank of America Jonathan Hughes - Raymond James George Hoglund - Jefferies David Corak - FBR Capital Ryan Burke - Green Street Advisors.

Good morning and welcome to Cube Smart's First Quarter 2017 Earning's Conference Call. [Operator Instructions] At this time, I'd like to turn the conference call over to Mr. Charlie Place, Director of Investor Relations. Sir, please go ahead..

Thank you, Jamie. Hello everyone. Good morning from Sunny Melborne, Penselvenya. Welcome to Cube Smart's First Quarter 2017 Earning's 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 relation 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 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 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 fourth 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. A very solid quarter for Cube Smart and Tim will dig into the details of our financial performance in post quarter and balance sheet activity. We're pleased with the portfolio performance during the quarter gaining 50 basis points in physical occupancy and experiencing solid demand across markets.

And we continue to see solid lease up in the non-stabilized asset pool. We experienced some nice acceleration in revenue growth from the Fourth Quarter in Chicago and Phoenix and continue to experience strong year-over-year growth in our California, Nevada and Utah portfolios.

Another major MSAs, New York, Dallas and Washington DC Metro; our performance was strong and we continue to navigate to the impact of new supply. We're extremely pleased with the growth in our third party management program.

We added 44 new storage to the platform, 24 existing operating assets and 20 new developments bringing our total under-management to 356. We believe this program continues to expand our brand, leverage our robust operating platform and create a pipeline of excellent future acquisition candidates.

We remain disciplined in the on balance sheet growth front. We continue to explore all opportunities but will be cognizant and disciplined in transacting. So with that I'd like to turn it over to Tim for some more detailed comments.

Tim?.

Thanks Chris. Excuse me and thanks everyone joining us on the call for your continued interest and support. We reported First Quarter 2017 results last evening including a headline result $0.36 per share, that's adjusted which was at the high end of our provided guidance range and represents a 12.5% growth over last year.

Overall, for the quarter we can describe virtually every matric the same way, namely in line with our expectations. Demand remains steady and broad based and rent growth continues to moderate as we expected given the aggregate rank growth we've achieved over the last three years combined with the impact of new supply on a portion of our stores.

Same story in Ohio, 6% was driven by a 5.4% increase in revenue and a 4.1% increase in operating expenses, all three metrics in line with our expectations. Revenue growth was primarily driven by a 4.9% increase in effective rents and 50 basis point increase in occupancy as we ended the quarter at 92.7%.

Our same store expense growth was mostly attributable to the 8.7% growth in real estate taxes; excluding real estate taxes, our expense growth for all other wide items was 1.6%.

We remain active and disciplined pursuit of external growth opportunities during the First Quarter we did not close on any property acquisitions and ended the quarter with two stores under contract for 22 million.

We opened one development property in North Palm Beach, Florida during the quarter and as Chris mentioned we added 44 stores to our third party management program bringing our managed store count up to 356 at quarter end. Quite quarter also on the balance sheet as again this quarter did not sell any shares under or at the market equity program.

Subsequent quarter end in early April, we completed the issuance of a $100 million of senior unsecured notes. The transaction enabled us to bring both our 2023 and 2025 notes up to the 300 million in total keeping each of those transactions as index eligible with the new higher minimum size requirement.

The 50 million we added to the 2023 notes priced at a 3.495% yield to maturity and the 50million added to our 25 notes priced at 3.811% yield to maturity. Proceeds, we're use to repay our $100 million unsecured term loan that was scheduled to mature in 2018. And with that we now have no debt maturing until 2019.

Our 2017 guidance and underlying assumptions remain unchanged from what we provided last quarter. We feel that we're well positioned operationally and financially as we head into the seasonally the busiest part of the calendar for our business. With that, thanks again for joining us on the call this morning.

At this point, Jamie why don't we open up the call for questions..

Ladies and gentlemen, at this time we'll begin the question and answer session. [Operator Instructions] Our first question today comes from Gaurav Mehta from Cantor Fitzgerald. Please go ahead with your question..

Yes. Good morning. So couple of questions on same store revenue growth, so you talked about rent growth continuing to moderate and on a sequential basis you had a 40 basis point deceleration in 1Q. I was wondering if you could comment up on your expectation for rest of the year.

Would you expect that deceleration to be in line with 1Q or be more or less as the year progresses?.

Yes. Hey, Guarav. It's Chris. Good morning. I think implied in our guidance range for same store revenue would be a continued deceleration in the same store revenue growth throughout the balance of the year.

The magnitude quarter-by-quarter obviously is going to be highly influenced by what happens as we move into the busy season here which really starts for all intent and purposes tomorrow and will run through the end of July. So I think macro guidance assumes continued deceleration in same store revenue growth.

The pace and the quarter-to-quarter impact; macro we would expect it to vary by quarter depending upon what happens here in the next 90 days..

Okay. And I guess the follow up.

You had a good increase in third party platform in 1Q, can you comment on what you're hearing in the market and how much expansion can we expect?.

Sure. Chris will take that one as well. The marketplace continues to be evolving towards both existing open and operating assets coming into the program.

And we're seeing a bit of an uptake in the interest from those existing property owners as their performance has slowed due to either new supply or the fact that they've maxed out on the occupancy side.

So I think going forward, our expectation is roughly an even split between existing stores and new developments and I would expect of that; we would to see new properties coming into the program whether they be open in operating or development assets at a fairly good clip here through the rest of the year and even into the first half of ‘18 with a nice backlog.

Obviously hard to predict on the development assets, how many will ultimately be built. But not quite ready to commit yet that '17 will neither exceed '16 but certainly the visibility looks like we're on that pace..

Okay. Thanks for taking my questions..

Our next question comes for Todd Thomas from KeyBanc Capital Markets. Please go ahead with your question..

Hi. Good morning. This is Bruce Nathan for Todd today. Just a couple of questions, first on last quarter's call you guys were pretty excited about January. You mentioned it was one of the best Januarys the Cube that had for rentals in a long time.

Just wanted to see if you guys could talk a little bit about how the rest of the quarter played out and if that changed much and why exactly? That'd be great, thanks..

Sure. So Chris will take a crack at that one. Yes, January was quite robust and then as we went through the quarter I would say again, positive fundamentals, strong – positive demand trans relative to 2016 First Quarter.

February and March not as robust as January but still very pleased with how trans went and ended the quarter on both a rental basis and on a net basis outperforming what was a very-very strong 2016 and 2016 obviously had an extra day in February as well.

So I would say from a demand perspective for the first four months of the year we're satisfied with what we're seeing in terms of customer interest in our markets for the product..

Got it. Thank you. And then just pivoting to asking rents a bit; you're scheduled annual rent per square foot was up just 80 basis points. That compares to 2.5% last quarter, 3.5% for the year in 2016; curious how we should think about this moving forward. Is this kind of a stabilized level or could be potentially see this go negative.

Just wanted to get your thoughts on that..

Yes. I would not expect to see the portfolio wide go negative. As a point of reference, again spot number but thus far in April we're up about 1.8% over where we were at the same point last year. We would anticipate being able to continue to grow asking rents now starting with the beginning of the busy season tomorrow through the end of July.

Our models and forecast would be assuming that we would continue to get some upward activity in street rates, but we would also assume that the levels of discounting we saw in Q1 and then the fact that discounts were down a just a bit in Q1 on a percentage of projected rent basis relative to Q1 of '16.

Now that's likely to tighten as we go through the year.

But our expectation is during the busy season we should be able to push rates more than how we were able to push rates during January, February and March where we saw opportunity to gain some occupancy with customers who statistically are more valuable to us because those who rent during that time of the year tend to be at longer length of stay..

Got it. That makes sense. Thank you guys, appreciate it..

Thanks..

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

Thank you.

Could you just maybe provide us little bit into how you're thinking about more see of all deals or more development starts going forward? What's your appetite today?.

Yes Ki Bin, thanks. Chris will take that one. I think from the fact that our cost of capital certainly on the equity side has increased over the last several months and in looking at what's available in the marketplace on the sea of our side; I would expect that we would be fairly disciplined in taking on any additional opportunities.

We would have to see both the compelling opportunity from a market and quality or asset perspective as well as some more compelling pricing.

On the development side, we would continue to look for opportunities in on our top markets Boston, New York, Washington DC for deliveries and at this point 18 or 19; but again, we're being very cautious in how we're thinking about underwriting and looking for certainly an adequate returns for the risk.

So I would say interested in development options if we can find them. But we'll be very disciplined in the volume and I think on the CEO's side I think today we would have to see some more attractive pricing to be very active in that space..

So I realized the priority is always – the most important part is finding a good deal. As I clearly get that but is your maybe more cautiousness towards that driven by what you think about market management at that time in the future or as just pricing and less trackers..

Well I think it's across of a variety of thing. Pricing on a relative basis to our cost of capital is less attractive today then it was a year ago. Certainly when we look out or making a commitment for a delivery in the future and we're dealing with an uncertain future cost of capital at the same time.

And so all of those have always come into play as we've made decisions about where to make commitments and I think we're pleased with the commitments that we made in the past that are starting to pay off for us today.

I think going forward all of those factors will come into play as we think about where to use the balance sheet capacity that we have..

Okay. Thanks.

And one last quick one; the schedule rents that you report, I realized as a month end snapshot, so average of three data points but how does the average daily number look like that? Any material difference in the 0.8%?.

Hey Ki, it's Tim. It's – we don't disclose it and – but I can tell you for this quarter that a track pretty similarly if you would have looked at it every day to the 0.8% average of the three day, the points divided by three. It wasn't a big difference between the two..

Okay. Thank you guys..

Thanks..

Our next question comes from Gwen Clark from Evercore ISI. Please go ahead with your question..

Hi, can you just talk about the market performance so then the New York City Metro area as size of market?.

Sure. If you just take the borrows, the hourly borrows and the performance relative to our expectations was pretty uniform throughout the four borrows. So how we expected them to perform going into the quarter is how they perform during the quarter.

If you think about their performance relative to the first quarter of 2016, our worst performing market no surprise are borrow is where we have the biggest impact of new supply is in the brinks and revenue growth was basically flat there asking rents or negative and then the highest performance all over one store would be Statin Island where we saw very strong revenue growth, teen type revenue growth and good increase in asking rents and queens was middle of the road closer to our same store average and then Brooklyn which was positive but not as robust this queen.

So I think profound the matter you would expect. No supply in Statin Island. Top performer, limited supply in Queen. Next more supply in Queen in Brooklyn and then market with the most supply impacting us in the near term our branch good on a year-over-year revenue growth basis..

And you think the performance I guess over the next six months will be kind of similar by some market..

Yes. I would suspect if you're talking about ranking the four borrows; yes if you're talking about relative performance I would think another quarter or two and we could have gotten to the kind of the worst of branch but the development impact in Brooklyn is coming.

So that will – I would expect that one will be more challenging as we get to the bottom part of '17 and '18 and for the most part in Queens I think we will have a much more muted impact of supply..

Alright, great. Thank you..

Thanks Gwen..

Our next question comes from Smedes Rose from Citi Group. Please go ahead with your question..

Hi. Thanks, just a follow up on New York for a second. Do you have a sense of the pace of supply as it rolls out over the course of the year. And you mentioned that performances in line with your expectations today. I was just wondering what caused the 5$ growth in expenses in the quarter and also are you seeing impacts from the large facility. P.S.

I opened in Jerzy City.

So I'll take some of those and then Tim you can chime in on the expenses and anything else is as you see fit. There is far backward; now the Jerzy Citi development, non-quantifiable impact. We certainly don't have product that's going to be a direct competitor of that store and we're not feeling it as we're further out in the trade range.

Yes, in fact it's possible to draw customers from significantly further away then we generally get 85% of our customers. We're not seeing any measurable impact of that.

Today, as you look at new supply in the borrows, no change from my commentary and in Q1 we're going to continue to see product coming on and limited basis and the brings but I think the supply for example in Brooklyn we saw five stores that opened in'16 and '17. We would anticipate 13 stores coming on in '17 and '18 in that borrow.

SO think Brooklyn will see more supply About half of that supply coming on in Brooklyn will compete with an existing Cube Smart about a 25 % of that new supply will be a Cube controlled asset that will compete with another Cube in that market itself. Queens as I said and not as much, nearly as much of an impact, that all much more needed supply.

The barns I think we're coming to back half of i. Brooklyn will see some activity in '17 and '18. And on the per square foot though, if I just want to go back again and make the point.

If you're thinking square foot per capita with that supply, our analysis would suggest that Brooklyn ends with two square feet per capita, Queens at two one Stanton Island in 17 and the – said 3.4 and we will be north of the 22% owner of the total supply in each of those borrows.

While if you can include Manhattan 22% if you just take the core borrows we'll be in over about 27% of the total supply by the end of '18..

And then on the expense growth, it's really three factors.

A little bit of pressure on real estate taxes but not nearly to the extent that we saw over the balance of the same store portfolio but you did have a little pressure from the snow removal cost was up quite a bit over First Quarter of last year and then R&M which is most often just timing of one thing get done.

So those are the three areas that contributed to the 5% growth..

Alright. Thank you very much..

Our next question comes from Juan Sanabria from Bank of America. Please go ahead with you question..

Hi, good morning. Just hoping you could comment a little bit on the concession environment; what you guys expect going from here.

It sounds like there's more pressure on the smaller more moment top operators you're looking for so that the third party more professionalized management given that do you think that the pressure is from concessions should accelerate or if you could just comment on how you think that plays out..

Sure. Just as again, a data point as we think about discounting discounts in the First Quarter were 3.8% of revenues that was a 10 basis point decline from where we were in the first quarter of last year. So again on an effective rent basis and playing that off against occupancy. So always looking at three leavers one has to pull in the First Quarter.

I would say our systems went at it with a continued very modest squeeze on the amount of free rent that we're offering.

We were very modest in pushing on asking rates to new customers and we were able to gain 50 basis points in physical occupancy again looking at those customers as slightly more valuable than those that tend to be shelling off during the prime moving season. So we think that strategy will help us as we go into the next 90 days.

I think going forward we would expect that we would have more aggressive push on street rates to new customers combined with those discounts probably going to flat the last year and it wouldn't be surprising if we actually even got a little bit more aggressive than that.

And I would think that our occupancy over the course of the year will revert back to closer to flat. So that's the anticipation but caution that as we start tomorrow, all three of those leavers get pulled in different every day and we'll update you in three months as to how the busy season started to play out.

But that would be our expectation as we sit here today..

Then just on the occupancy; what would drive to decline against on a year-over-year basis? Is it just tougher consulate? And are you seeing any pressures on the tenants in terms of higher bad debts or just any reasons for cause for concern or just the health of the tenant..

So in terms of just the year-over-year growth in physical occupancy, as we went through last year we peaked out quite high and I think right now our expectation in that that gap this year to last year; again, throwing all the leavers our expectation is that we should be able to get a little bit more price as we go through the busy summer season in exchange for the fact that we would expect the occupancy growth to slow down here as we moved into May, June and July.

Again, as we caution all the time, all three levers move every day and ultimately we'll see what makes the most sense to maximize the opportunity being presented to us as we go through the busy season.

In terms of our customers, usually the first quarter on April as a benchmark from a receivable's perspective and from a write off perspectives and from a push back to way it increases in our markets.

We're not seeing any visible signs of change relative to what we would have seen in the back half of 2016 but obviously that's something that we're paying close attention to and we will again see what the opportunity the consumer and the market presents to us in the busy season.

We feel like we've got the people and systems to maximize whatever that opportunity is..

Thank you, Chris..

Our next question comes from Jonathan Hughes from Raymond James Financial. Please go ahead with your question..

Hey. Good morning, thanks for taking my question. Just to go back to the last one. One of your peers yesterday discussed distress consumer and concerning demand environment decided some metrics they track.

Do you closely read into those as well? I think they're good ways into seeing what your consumer is thinking and are you as concerned about the ability to get tenants into your Cubes?.

So the metrics; given the fact that our customer is every person and has a need that to be quite diverse but ultimately it's a residential person in transit moving in some way. So we do look at length of stay. We look at receivables. We look at write offs.

We look at pressure or any sort of push back on weight increase and I would say again for our customers and our markets, we're not seeing any meaningful change in behavior and he first part of 2017 relative to the back half or even a year ago of 2016 but obviously that's across a hour markets and our almost 900 stores that we own and manage.

So we listen to those who own or manage significantly more stores than us in more markets than we're in and certainly have that on our radar. But right now, I would not have thought to raise that particular issue on this call..

Okay.

And then turning back to New York any update there on the proposal to ban development in the IBZ?.

We're tracking that and it continues to make progress both the state association and the self-storage association are doing great work and we thank them for shouldering the burden of articulating positions there and so at this point to the best of my knowledge nothing has been formally put in place.

But the issue is continuing to have to have some traction and so we will update and I'm sure the SSA and the New York State Association will update as more facts become available..

Okay, fair enough.

Could you give us some details on acquisitions in terms of cap rates obviously not completed in the quarter, but maybe what perspective deals are asking or requiring to get done?.

Yes, I think for the activity that that we've seen in the Class A markets, Boston, New York, part of DC and then out in the coastal California markets we don't see any shift in salary expectations. Could there be a 25 basis point upward move in the other markets that price feels about right.

But again, we didn't transact and there was a limited number of transactions that we've been able to get information on to back check our underwriting but that's what the market feels like right now.

It feels like there is still a bit of disconnect between certainly the REITs and our cost to capital and our expectations and where sellers are in terms of their expectations..

Okay, thanks and then just one more. Could you maybe touch on the re acceleration in revenue growth in Chicago, one of your peers highlighted the similar trend.

What we are seeing there and this may be an indication that the supply impact in that market and the strength to continue throughout the year?.

Yes, I mean Chicago is a fickle market so hesitant to take a 3 month snapshot and call it a forward looking trend but it certainly feels as if.

Some of the angst, I don't think they've solved any of their fiscal problems in an Illinois or in Chicago, but it feels like some of the angst has maybe abated and certainly it feels like the impact of the supply that had come into the Chicago market is starting to mute.

So optimistic about the market probably a little bit of both of those and we would be -- we would expect positive things from greater Chicago land as we go forward, but again caution it is a fickle market..

Okay. Thanks for taking my question..

Our next question comes from George Hoglund from Jefferies. Please go ahead with your question..

Good morning guys..

Good morning..

Look at the strong growth in third party management business.

I get that owners are seeing more competition and basically want help there, but would this also drive maybe some of those owners to decide to sell?.

Yes. I think it's always one of two things. We certainly, if we find the assets and the markets to fit into our strategy always talk to potential customers about a sale. I think the reason for someone to choose one option versus the other is as varied as the reason why. Folks need and choose to use self-storage. Some of it is a state planning.

Some of it is we desire to keep the cash flow but we don't that we don't have anyone in the family who's interested in and taking over the responsibility of management. There is just a variety of reasons why owner which used to go one direction or another you know again ultimately from our perspective if the store is branded [indiscernible].

If we're running the store world obviously in a great position ultimately if I don't make the decision to sell to be the first call women not always be the right bidder or the highest bidder but certainly were the first call..

Okay and then what scenario or what would cause you guys too not want to do or not want manager store in a third party basis..

The first and primary is philosophical differences with an owner. We have a philosophy as to how we manage a store and we're very clear in articulating our philosophy during the process of getting to know one another and it's apparent that we have different philosophies. It's in both parties, its best for both parties.

If perhaps they try if perhaps somebody else takes over the management or they explore different options is just creates too much headache on both sides. Second would be if, if we have no relationship and with that owner and it's in a market where there is no existing owner managed to the cost analysis there is different and.

And presents some challenges for us. And then lastly would just be quality of the product in the market itself. So those three things generally would be -- there would be a disconnect on one of those three things that would cause us not to pursue..

Okay and what about if it's a market that's facing significant pressures from new supply would that impact your decision?.

No, again. We would feel like that goes back to the philosophy you know we would have a conversation with the owner and it would be us sharing our expectations of performance of that store in the face of that new supply and our strategy to get ultimately the store leased up at the highest.

Profitability possible and now we're not afraid of competing against anybody but we would want to make sure the owner was aligned with our expectations..

Okay. Thanks for the color..

Our next question comes from David Corak from FBR Capital Markets. Please go ahead with your question. .

Good morning..

Good morning..

In terms or passing on renewals to longer term customers, you guys have mentioned previously that you hadn't seen much of a change in consumer behavior specifically there and kind of the high single-digit pricing increases is pretty commonly accepted.

When you guys are running your tests on this or even just in the normal course of business, is there any disparity there in either the retention rate or the price increase that you can get first stores that are competing directly with new supply verse is a store that's not and then maybe what's the magnitude of those differences if there is one?.

Limited differences and modest. Again a typical self-storage customer is not going to invest the time and the money for the rental of the truck for labor in their own time and energy to relocate surely overpriced.

The unique exception and the small number of customers would be those whose anticipatory length of stay is significantly along and there that's the number of customers for whom that's their anticipation is quite low self-modest difference it not significant and you know not much of an impact..

Okay, that's great. This was brought up on the call by one of your competitor yesterday, but I was hoping to get your take on it. Basically the idea that by the time we get to the back half of 2018 we're going to have 2000 the 2500 stores are so in lease up all at once.

So my question is really does this really matter or is it only the first leasing season that is really impactful to your store letter in operations nearby..

Well, when we think about when we think about take you know a store opens a brand new and getting it from.

And Peter stabilized you know largely is going to be over 3 to 4 year for 3 to 4 busy season time period so the way we think about it is what the supply look like that came on in 15, 16, and 17 then how will that the 15 burn off in the 18 come on and then roll it forward.

So I think we're going to get to the end of 18 and as we go into 19 and we look at supply for 16 relative to 18, and 19 I think it's more likely to be flat or down than anything else.

So I think as you get out of 18 and to 19 regardless of the absolute quantity, I think the impact, because of the lack of growth in total new supply year-over-year will be much more needed..

Okay, that's helpful. Thanks a lot..

Our next question comes from Nick Yulico from UBS. Please go ahead with your question..

Hi good morning this is Tredrea Johan [ph] for Nick and thanks for taking the question.

So I wanted to build on the same store revenue topic that was addressed a little bit earlier, so on separating the prior year same store pool and the new same store pool, there was about a 40 basis points gap in the first quarter between the 2 and defusing the prior year same store pool the revenue deceleration with about 80 bps from fourth quarter the first quarter.

And if I recall correctly, you mentioned earlier in the year that the pool change would be slightly additive call it maybe 10 basis points on same store rev.

So should we think of the performance gap narrowing between the two pools for the balance of the year?.

Yes.

I think what we talked about on the prior call was that we expected the incrementally added stores to this year's pool to add 10 to 20 basis points and it would be more weighted, the benefit from those would be more weighted to the beginning part of the year and much less of a contribution to the overall 2017 same store pool in the back half of the year.

And so again in line with a lot of other things we've talked about the results in the first quarter are very much in line with what we expected including the contribution of the story..

Okay. Thank you very much..

Thanks..

Our next question comes from Ryan Burke from Green Street Advisors. Please go ahead with your question..

Thanks. Just one follow-up on the industrial action plan in New York City, if it does go the very real restrictions being put in place on the development of self-stored in the boroughs.

How soon could that happen do you feel for timing?.

Hi Ryan, it's Chris. I believe that hasn't the details of that certainly haven't been fully articulated or the expectation is that those projects that have perfected their entitlements would be permitted to move forward that projects that haven't even begun that process would be restricted.

I don't have factual accuracy on the no man's land in between..

Okay. Thank you..

And we do have a follow-up question from Ki Bin Kim from SunTrust. Please go ahead with your question..

Thank you. Going back to your third party management platform, you are analyzing about $12 million bucks per year and I have related there is an expense synergy to that number.

Anyway how do you quantify that expense part of it, spreading out your advertising over a bigger platform and et cetera?.

So I mean generically, we think about it Ki Bin has a business that has a margin of called it the midpoint of 50% type margin in the business and its incremental store that you add could be way higher or lower than that depending on if you have the capacity within that market, within that district manager and so on and so forth.

So, overall I would think about it from a modeling perspective at about a 50% type margin business..

Yes. So the reason I ask about that is I know you have competition that's true what you are offering to this platform but if I think about it why not charge promote.

Right I mean there's not many good deals in realty, but this seems like it's one of the best deal for private operators to just pay that 6% revenue management fee and latch on to the better platform.

Have you thought about maybe adding promote to this business?.

Go ahead, Tim..

Thanks, Chris. I would just say from our standpoint, we would love to negotiate the best deal that we could. I mean I think there are -- there's a fair amount of competition here from those willing to manage for those who are seeking management.

And so from an economic deal structuring standpoint, we obviously want to have as competitive and lucrative contract as we can get. But we have to be mindful of being competitive with the rest of the market who is doing the same thing that we are doing.

With the deals that we are doing we are very excited about the platform and it has a lot of benefits that you know about I won't reiterate all of them, but having the larger scale, having 900 Cubesmarts out there is very beneficial to us in number of ways some of which are more tangible than others. Chris you can add on..

I think you nailed it..

Okay thank you..

Thanks, Bin..

No problem..

And ladies and gentlemen, I'm showing no additional questions. I'd like to turn the conference call back over to Chris Marr for any closing remarks..

Okay. Thank you all for the questions and taking the time to participate in the call. I think just to reiterate it was a quarter very much aligned with our expectations. I think at this point the supply impact is fairly well determined for the balance of this year.

Again, we believe we are prepared and have the people and systems in place to maximize the opportunities that present themselves over this upcoming busy season. And we look forward to talking with you again on our second quarter call. So thank you and have a great day..

Ladies and gentlemen, that does conclude today's conference call. We do thank you for joining. You may now disconnect your lines..