Charles Place - Director of IR Christopher Marr - CEO, President & Trustee Timothy Martin - CFO, Treasurer & Principal Accounting Officer.

Smedes Rose - Citi Juan Sanabria - from Bank of America Todd Thomas - KeyBanc Jeremy Metz - BMO Capital Markets George Hoglund - Jefferies Eric Frankel - Green Street Advisors Rob Simone - Evercore Todd Stender - Wells Fargo Jonathan Hughes - Raymond James.

Good day, and welcome to the CubeSmart Second Quarter 2018 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Charlie Place, Director of Investor Relations..

[Technical Difficulty] ….call. Participants on today's call include Chris Marr, President and Chief Executive [Technical Difficulty] Our prepared remarks will be followed by a Q&A session.

In addition, to our earnings release, which was issued yesterday evening, supplemental, operating and financial data is available under the Investor Relations section of the company's website at www.cubesmart.com.

The company's remarks will include certain forward-looking statements regarding earnings and strategy that involve risks, uncertainties and other factors that may cause the actual results to differ materially from those forward-looking statements.

The risk 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 second quarter financial supplement posted on the company's website at www.cubesmart.com. I will now turn the call over to Chris..

managing for owners, acquiring existing assets on balance sheet and in our joint assets, and selective joint venture development. Third-party management continues to expand. During the quarter, we added 41 new stores, 11 of those additions during the quarter were existing operating stores and the 30 remaining were newly opened developments.

Looking ahead to the next 2 quarters, our pipeline of third-party management contracts is greater than at any point in our history, and we see no signs of a slowdown. We have mutually agreed with one of our third-party owners with 42 assets, primarily in Louisiana, to end our relationship effective at the end of October of this year.

We're working together to transition the relationship and have factored the impact into our unchanged annual guidance for property management income. While the timing of newly developed properties entering our third-party program is certainly subject to change, based on our current information, 2018 is shaping up to be a record-breaking year.

Our now 535-plus managed stores continue to be an excellent pipeline for acquisition opportunities. Two of the sites acquired within our JV were previously managed by us, and our wholly-owned acquisition during the quarter also came in from our 3PM platform. We have updated our new supply data for our top 12 markets.

The good news is, no significant change from our data at the end of the first quarter in terms of expected 2018 openings. We do see projected opening dates continue to be pushed back. Several projects we had identified as opening in Q2 did not open, and we have shifted those with an expected third quarter opening.

We continue to see delays from municipalities in permitting and inspections and pressure in the labor markets. Our current data continues to suggest that in our top 12 markets, '19 deliveries will be less than '18 deliveries.

While that is certainly an encouraging signal, given the delays we discussed, certainly some of these projected '18 openings will slip to '19, and we will have some additional projects kickoff in the next few months that could conceivably be delivered in '19.

So as we move through the year and gain more and more visibility into '19 deliveries, we strengthen our convictions that on a 3-year rolling basis, the cumulative impact of supply in our key markets in 2019 is shaping up to look a lot like it has in 2018.

So it is always comforting to get to this point in the year and have our expectations entering the year around operating performance and the amount and impact of new supply prove to be accurate. We will remain focused on executing against our business plan, and we see a bright future for both Cube and the self-storage industry.

With that, I'll turn it over to our Chief Financial Officer, Tim Martin, for some additional commentary..

Thanks, Chris, and thanks to everyone joining us on the call for your continued interest and support. We reported second quarter 2018 results last evening, including a headline result of $0.41 per share of FFO as adjusted, which was at the high-end of our provided guidance range and represents 5.1% growth over last year.

The quarter's results were very much in line with our expectations. 3.2% growth in both same-store revenue and same-store expenses yielded same-store NOI growth of 3.3% during the quarter. Both average occupancy and discounts as a percentage of rent were flat for the quarter.

Expense growth was driven by real estate taxes, higher utility costs and higher advertising costs, which were impacted by timing of spend this year versus last year. New supply, of course, has an impact on operating results for stores that compete against new product within a competitive trade ring.

As we've discussed previously, when we introduced 2018 guidance, it included the expectation that about 40% of our same-stores will compete with new supply in 2018. And that we expected those supply-impacted stores to trail on our nonsupply-impacted stores by 200 to 300 basis points of revenue growth.

We're trending currently at the low end of that range year-to-date, but believe the range is still not right. On the investment front, we acquired a store in Houston during the quarter for $19 million and another after quarter end in Washington, D.C. for $34.2 million.

We also remain active buying properties through our HVP IV venture, adding 4 stores during the quarter and 8 year-to-date, investing a little over $40 million of our capital. Business is usual on the development and C/O front. No stores from that pipeline opened during the second quarter, and we didn't add any new projects to the pipeline.

We have 2 C/O deals for $40 million that we expect to close in the back half of this year. And at quarter end, we had funded $102.8 million of the $250 million of expected costs on our 7 development projects. Of the 7, our development in the Bronx is the only one we expect to open in 2018 with the remaining projects slated for 2019 deliveries.

And then rounding out our external growth initiatives, we continue to enhance our market position in existing markets and expand the CubeSmart brand nationally through our third-party management platform, as Chris touched on in his comments.

From a balance sheet perspective, we continue to focus on funding our growth in a conservative manner, consistent with our BBB/Baa2 credit ratings. During the second quarter, we issued 3.1 million shares under our at-the-market equity program, raising $95.4 million at an average share price of $30.78.

Our revised earnings guidance and the underlying assumptions are detailed in our release from last evening. Highlights include an improved outlook for same-store revenue, same-store NOI and G&A expenses, offset by the impact of the equity we issued during the second quarter.

Our annual expectation for FFO per share as adjusted was unchanged, and we introduced third quarter FFO per share as adjusted guidance of $0.41 to $0.42. Overall, as we approach the end of July, 2018 is playing out very much as we anticipated. We continue to see solid customer demand.

We're maintaining high occupancy levels and low levels of discounting. The impact of new supply is real, but manageable. New stores, both ours and those we compete against, are leasing up. And as they do, pricing power in those micro markets will begin to return.

We're seeing a few select opportunities to invest capital and grow, and we remain focused on expanding the platform, both on balance sheet, through joint venture investments and through our third party management platform. With that, thanks again for joining us on the call this morning.

And Michelle, why don't we open up the call for some questions?.

[Operator Instructions] The first question comes from Smedes Rose of Citi..

I just wanted to ask you a couple of quick questions.

First, the ATM issuance in the quarter, were you just trying to be, sort of, opportunistic around pricing or is there something specifically that you're raising capital for there? And then could you just maybe talk a little bit about what you're seeing on the asking rates side going forward thus far in the third quarter or how you're thinking about it going forward?.

Smedes, this is Tim. I'll take the first half. On the ATM, It's a little bit of both of what you suggested. We're obviously interested in raising equity capital opportunistically when we like the levels at which we're trading.

We do certainly have a use for the capital as we -- as we've stated in the past, we intend to operate our balance sheet with credit metrics that are consistent with our rating and as we fund our development pipeline and as we identify external growth opportunities.

Of course, to maintain those credit metrics, we do need to complement that growth with a level of equity capital. And so I would say, it's a combination of both of those things. On the asking rates side, I'll let Chris jump in on that one..

Smedes, if you think about asking rates, they're very consistent with what we've seen on a compound annual growth basis over the last several years. They're basically bouncing around between 1% and 2% up over the prior year. If you look at our 3-year annual compounded growth, it's 1.2%.

If you look at where we've been since post-recession, June of '09, its 2.1%. So we've been pretty consistent in that 1% to 2% for quite a few years now..

Okay.

And then I just wanted to ask you -- and in the second half, you mentioned some of your projects being delayed and some of the conversations we've had suggest that maybe some of the, kind of, relative outperformance in the first half of the year was partly due to projects not coming online in time that will likely open in the second half of the year, so we might see accelerated supply.

Are you seeing that at all in your markets? Do you think there's some validity to that line of argument or..?.

No, I would disagree. I don't think the magnitude of the delay is that consequential. Certainly, the fact of the matter is, as I mentioned, on a variety of fronts, the supply we're tracking and even in our own experience, you're seeing delays in getting things to certificate of occupancy.

But we don't attribute any differentiation in performance relative to expectations to that and don't expect it. Because equal number of projects that are supposed to open in the last 6 months will likely be pushed into the first half of next year. So it's just a rolling deferral..

The next question comes from Juan Sanabria of from Bank of America. [Technical Difficulty] A - Christopher Marr We understand that you can hear us but we're not hearing any questions. So bear with us while we try to resolve the technical issues..

Okay. The next question is going to come from Todd Thomas with KeyBanc..

I just wanted to ask a couple of questions around investments here.

First, can you just talk about what you're seeing in general between sort of core acquisitions for Cube on a wholly-owned basis? And then also in the HVP joint ventures, maybe just in terms of volumes of deals that you're seeing on the market and then also in terms of pricing?.

This has been a horrible call in beginning..

[Technical Difficulty] And for everyone on the call, apologies. I'm not sure exactly what the technical issues are that we're experiencing, but thanks for your patience as we work through them.

Todd, on your question, we are seeing, as you typically would at this point in the year, opportunities to underwrite acquisitions, both stabilized and stores and lease up, present themselves more at this time of the year as folks tend to like to bring things to market when they get some benefit of the leasing season.

So we are seeing more opportunities to look at. There are -- I would describe it as a continuation of a lot of interest, both from public and private sources. There's no shortage of folks that are bidding on transactions. We continue to focus a lot of energy on identifying opportunities that are coming out of our third-party management platform.

We, of course, do monitor and look at things that are brokered. Cap rates remain very aggressive because there's a lot of capital that is interested in investing in the storage sector.

Obviously, we improved -- increased, I should say, our guidance for external growth opportunities modestly as we're cautiously optimistic that we'll be able to harvest a couple of opportunities from a third-party platform and otherwise.

So I would say, not a lot of change other than we're at that time of year where you tend to see a little bit more opportunities than you had been..

Great.

And did you look at the simply self-storage portfolio that was announced earlier in the month for the joint venture? I guess, was that a consideration at all? And is there appetite to do something of size like that in a joint venture format?.

We're certainly aware of that portfolio and that opportunity. Doing something in scale either on balance sheet or through a joint venture if the terms and we can achieve attractive risk-adjusted returns would always be of interest to us.

That particular transaction, obviously, didn't fit either of those buckets for us at the pricing at which it traded..

Got it. And then just last question from me here. I know you touched on this last quarter. The additional investments that you're making related to some system enhancements and also the growth in the third-party management platform, two questions here.

First, when will that normalize? And then also why are the expenses associated with growing the third-party management platform flowing through the same-store? What exactly is happening there? Can you provide some additional detail?.

On the first part of your question, the continued investments that we make in system enhancements, I would characterize that conceptually as something that we have always done and are likely to always do to varying degrees.

I don't think -- as our sector continues to evolve and the technological enhancements continue to evolve, I don't think that's an area from an R&D and system improvement and trying to build a better mousetrap, I don't think that ever stops. And so the bad news is, I guess, from a cost perspective, it never stops.

The good news is, it's not really impactful to our results, because that level of spend has always been part of our structure. And so I would just expect a continuation of that. Your second part of your question, you need to help me a little bit. I'm not sure I quite followed the third-party costs (inaudible)..

Well I guess, that's not necessarily in the same-store. But you're noting that operating expenses were higher in the quarter -- this second straight quarter, right? Some of that's attributable to the system enhancements, some of it to growth in the third-party management.

Can you just talk about, sort of, some of the things that you're doing there? It's an elevated number. You're saying that it's been -- it's something that you'll be maintaining on a go-forward basis here. But it's certainly newer as it pertains to being an elevated expense over the last 2 quarters.

Is that correct?.

Well, no. Just to be clear, none of that is in any description that we have provided as to describing our same-store results.

If we're looking at describing overall levels of expenses, both for same-store, nonsame-store and expenses that support our platform on the third-party side, of course, those expenses are increasing because we're expanding our store count.

And so we can't expand and manage an additional 41 stores this quarter and grow our third-party platform by 37% year-over-year without adding incremental costs.

And so what we're referring to there in our disclosures is that those costs -- those nonsame-store costs are increasing as we add district managers, as we add accounting staff and otherwise to support a much larger store count under our platform. So I'm not sure what was lost in translation there.

But that was our intent in describing that increase in operating expenses..

The next question comes from Jeremy Metz of BMO Capital Markets..

In terms of development, you talked about some of the constant labor and municipal pressures on development. I was hoping you can comment on what you're seeing and hearing on the lending front of new development.

You guys obviously have great asset to capital, but I'm thinking more broadly here in terms of where the lending market is today? Any notable changes? And what that means for supply going forward, just given the fundamentals are holding and the margins are obviously still good here?.

Jeremy, it's Tim. I don't think there are any notable changes in the financing market for construction. You generally have the same cast of characters and the same lenders that have been consistently involved in financing new development since this cycle started.

I think terms remain disciplined, certainly relative to the last cycle back in the 2004 to 2006 range. You're still seeing lenders require recourse and loan-to-values, I believe, are rational.

And so I don't see anything -- I haven't heard of anything nor do I observe anything that would lead me to believe that lending standards are evolving materially in any direction at this point..

All right. Chris, in your opening remarks, you'd commented on discounting as a percentage of in-place rents that they were basically in line with last year. The rents are up over 3%, so that would suggest your gross promotional dollar spend is higher.

Just wondering if you can maybe give a little more detail on promotional trends, maybe average per customer versus last year a percentage of new customers receiving a discount? Just trying to get a feel for how net discounting trended? And kind of what the opportunity of potential drag is from here on the discounting side?.

Yes, so when you think about, during the quarter, discounts per new rental were up just a little bit, north of 5% in terms of absolute dollars. So we continued to see discounts on an absolute basis being part of the strategy balanced again against increases in street rates to produce the net effective rent growth.

As we look at going forward, again, our strategy as we entered the year, we thought we would have to be a bit more promotional as we went through the year, particularly, in those supplied markets. I think that's playing out that way.

I think we're positively -- we're positive on the fact that relative to last year, on a percentage of rents basis, it stayed pretty consistent. But again, the overall themes are back to that supply and no-supply markets. And the markets where we're experiencing some impact from supply, we're being incrementally more promotional in those markets.

New England is a great example where occupancies are through the roof and customer demand is outstanding, we're able to sharply reduce our reliance on the free rent idea for attracting new customers..

Got it. Last one for me. The same-store revenue, the deceleration of 70 basis points from the first quarter, if I look in the (inaudible) 2017 and the 2016 pool, the deceleration was less.

So the right way to think about this is the new acquisitions and development that afloat into the core (inaudible) are stabilizing and that's causing an outsized portion of the move versus any fundamental demand issue here?.

Yes, I think that's generally the right way to look, Jeremy..

The next question comes from George Hoglund of Jefferies..

The 42 assets will be leaving the third-party management or is that one pool of assets or small groups of assets? And do you have any color behind what's causing the exit? Is it -- is management being internalized? Or are they switching to a new manager?.

So it is one ownership group, the assets are primarily in Louisiana. There is a few in Mississippi and a few in some of the Texas markets.

In terms of where the owner has elected to go, I think, again, in the constructive nature of how we're unwinding this, I would respectfully suggest that it's their opportunity to share when they feel it's appropriate or if they feel it's appropriate how they are planning on taking that on moving forward.

I wouldn't want to put us in a position to answering that for them..

And then also just regarding third-party management.

Since you guys have been growing very rapidly, are you experiencing any sort of growing pains with the program? How is kind of customer satisfaction? Because what we've been hearing anecdotically and this is not just CubeSmart-specific, but just generally speaking that third-party management customers have been complaining more so lately.

And also lots of the recently developed projects are maybe following short of lease of expectations in terms of rental rates achieved.

So just kind of what are you seeing or hearing on that front in terms of -- are you experiencing growing pains? And how are the lease up of the managed assets going?.

Yes. That's an interesting question, George. In CubeSmart, and when we speak to some of the other more dominant third-party management programs, we sort of chuckle at that anecdotal feedback. No, we're not experiencing growing pains in terms of the quality of our platform and our systems and our ability to take on more and more projects.

I think we are coming to a point, where macro -- where developments that would've opened in the last few years or starting to get to their point of rubber meeting the road as to how things are going and are we seeing collectively lower rental rates than would've been pro formed several years back.

So absolutely, we're seeing that in our own portfolio and I'm sure every single developer who's trying to do a project or open a project in some of these heavy supplied markets are seeing it. So no, I don't think there's any thematic pressures here.

I think the -- I think in general, the satisfaction, and we do an awful surveying of our customers, remains pretty high..

The next question comes from Eric Frankel of Green Street Advisors..

Could you possibly just share what prompted the increase in your acquisitions guidance? Was it any particular deals? Or is that your cost of -- you perceive your costs of capital changing? Or is it a combination of both?.

It's not really related to our cost of capital. It's related to opportunities that we're finding that we believe are attractive for us to deploy capital, whether that's utilizing the leverage capacity we have on the balance sheet or otherwise. It's updating for where we think we're going to land.

We, obviously, have acquired some things already and have others under contract and if you add those up, they get you to the midpoint of the range that we have provided. So we don't -- our investment strategy and our investment activity is not dictated by our share price. We have a conservative balance sheet that provides us with ample gunpowder.

If we find something that's attractive, we will pursue it even at times that perhaps our equity valuation is not as attractive as it is at other times..

Understood. Just going back to the [simply] portfolio. It was, obviously, a pretty significant transaction and it seems it's so far pretty healthy priced, given the quality or the location characteristics of the portfolio.

If you weren't a buyer of that portfolio, would you consider doing something more strategic with your own portfolio? Given that cap rate was -- appeared to be quite low? And maybe you could redeploy the proceeds more aggressively into other external growth opportunities?.

Yes, Eric, it's Chris. As we look at the construct of our existing portfolio, we're pleased with where our assets are located, the quality of our assets. We will always look at opportunities where it makes sense to dispose of properties and redeploy. I think our expectations around that are included in our guidance.

That specific transaction didn't impact our thought process in one way or another..

Okay, not to harp on it too much, but with the simply deal, it certainly seems like cap rates for, call it, secondary or tertiary MSAs have come down a little bit.

Is that the right read from that deal? Or do you think cap rates are relatively flat relative to last year?.

Yes, I don't know that you've seen -- I mean you've seen more interest in -- from the private owners in the secondary and tertiary markets. So I'm sure it puts some pressure there.

I think anytime you have a transaction that provides an opportunity for a significant amount of capital to be invested in storage, you tend to get and apply portfolio premium that makes it difficult to take that and somehow extrapolate it to any sort of single asset deal or even a small pool in secondary and tertiary markets..

The next question comes from Rob Simone of Evercore..

I was wondering if you could just share where your in-place occupancy, kind of, stands today? It looked like it was down about 10 basis points as of Q2. So just wanted to see if you could share that. And then I have two quick follow-ups, if there's time..

Yes, about the exact same, in that down about 10 basis point range..

a, has the view on supply changed that at all? And b, is it fair to assume that some of that headwind is due to the hurricanes last year? What specifically is, kind of, driving that now in today's environment versus when you first laid out guidance, I guess, 6 or 7 months ago?.

Yes, nothing has really changed in our view other than we have 6 months behind us. So we brought up the low end of our expectations, but things performed in the first half very much as we expected them to perform. So our confidence level in our range, obviously, increases.

The further you get through and as you get towards the end of the rental season, you've done a lot of the work to impact your 2018 results at this point. So I would say nothing inherent in the assumptions that are in our guidance other than we have a little bit of more actual to go with forecast..

Got it, okay. And then last one for me, I'm just going to take out a heavy swing at this one.

But is there any way you guys could share whether the competitor that took the contract is public or private?.

Swing and a miss..

The next question comes from Todd Stender of Wells Fargo..

Did you guys provide cap rates on your recent deals, one in Texas and one in D.C., I think wholly-owned?.

So on both of those assets -- this is Chris, the one in Texas and the one in D.C., both were unstabilized assets, so we had acquired during their, sort of, early to mid-ranges of lease up, and we would expect a stabilized on those to be fairly consistent with the market for each, mid 5-ish for D.C. and a little bit higher in Texas..

Are those assets there, maybe not specifically or maybe you did, you passed on a [see-a-woe] opportunity.

Just wanted to see how they'd play out? How do you guys look at that stuff if you're buying stuff that's still on lease up?.

Yes, no, both of those were assets in the third-party management pool relationships we had had, and -- or we just presented an opportunity to be able to take a look at them based on those relationships, the sellers in both cases. They just made a determination on their own that they were looking for an exit at this stage..

Okay.

And what -- or how much did your initially yield expectations changed as some of these developments have shifted a couple of quarters? How much can we expect that to maybe impact more '19 than '18?.

Yes, I guess, just to understand the question on the assets that we are involved with, either that are to be delivered, that shifted no change in our expected yields on those, just some delays in the actual openings.

I guess, if your question was going towards the broader supply question, again, assets are going to shift between quarters, there are delays out there, don't really think that's had any impact on our '18 expectations. And frankly, don't think it will really meaningfully impact how we think about things going forward.

So I'm not sure if I answered the exact question here between those two?.

Yes, you did.

There's probably more accretion for next year, but maybe also a shift in greater dilution into next year or that's not meaningful?.

Yes, no. I think, the timing here we're talking about weeks not months. So it's just the nature of the calendar. I wouldn't read too much into it, one way or the other..

The next question comes from Jonathan Hughes of Raymond James..

Just one from me. Chris, you mentioned deliveries continue to be pushed back and delayed due to permitting and labor issue.

Didn't look like there was an increase in your expected investments in your JV development portfolio, but I guess my question is, what are you seeing in terms of materials cost inflation? And has that led to some projects in your observed competitive new supply pipeline to be scrapped altogether that you're aware of?.

Yes, I think as it relates to our projects, yes, again, as you noted, no change in the cost, just some change in the exact expectation of which quarter they'll be delivered. As we look at the market as a whole, without a doubt, you're seeing some impact from tariffs and other issues related to raw materials.

Certainly, we're squeezed from a labor perspective. I don't think land costs certainly are not going down. Obviously, interest rates are going up. So from all of those -- and then again, in these markets that saw supply early on, you continue to see rental rates that are lower than certainly they were a year ago.

So I think all of that puts some amount of pressure on a project that you'd be looking at today. But it's still micro market specific that I don't think that means there's going to be no new supply in some of these more heavily supplied markets.

But I do think you're starting to see -- and our expectation is, you will see a fairly good drop off from '18 to '19 in markets like Chicago, in Dallas/Fort Worth, in Denver and Houston, where the supply built up pretty rapidly in '16 and '17 and this year and for a whole variety of reasons.

I think you are starting to see the end in our opinion in many of those markets that saw the new supply coming earlier in the cycle..

Okay, that's helpful.

And have you gone back and maybe touched base with deals you've passed on in the past to see if they actually happened? And if so, maybe what's been that, kind the, fall out or attrition rate? Or is it kind of too early to tell on that basis?.

Yes, I think it's too -- a little bit early for us to tell we track all of these.

I think you have some markets, Charlotte, Raleigh, where you've just seen projects that are out there if you get the broker blast, it's the same deal that keeps coming round and round and round, that moved from a development opportunity to a buy-and-feel opportunity to a "how would you like to buy the land" opportunity.

And I think that happens and as we get to this stage in the cycle, I think it will continue to happen. But I wouldn't describe it as a wave..

Our next question comes from Juan Sanabria of Bank of America..

I apologize if this was answered, given I've got cut off for maybe 10 minutes or so. But your guidance supplies kind of a decel in the second half of about 100 basis points.

Is it fair that, that will kind of happen ratably in your estimations over the balance of the year? And I guess, looking further out, I know you expect '19 supply to be less, but is that end trajectory to finish '18 kind of a good runway to start kind of thinking about '19? Not sure what you can say to that or the trajectory this year?.

Yes. I think the -- our expectation is that the -- that embedded in our guidance was and continues to be the expectation that the deceleration and top line growth would be more or less ratable as we work through the year and that's the way it's playing out.

I guess our number in the second quarter print was a little bit lower than perhaps ratable, but it doesn't change our perspective. And obviously, our overall guidance range, we tightened and increased the midpoint modestly. So I would continue to expect a ratable decline within the annual range that we've provided..

And Juan, I guess as you think about your question on '19. I think it's clearly early to tell. I could take the most optimistic view based on the supply data we have now and say, '19 could actually end up being much less impactful than certainly we would've expected entering the year.

I'm just a little bit cautious with jumping on that right now, given again how many are going to delay from '18 and move into '19 and then you could still start a project here in the next couple of months and have it delivered in '19.

So I think the news on supply at least in our top 12 markets just continues to make us more and more comfortable with our original expectations going into the year as they relate to that rolling for a year and will be back in three months and we either validate that or possibly have more a bullish view on how '19 may play out..

And Juan, before we wrap up, when we got disconnected or whatever happened there technically during the last time that you had the floor, I did receive several great suggestions on what we should do during that time.

So I appreciate those who waited and I can confirm that we're highly confident that it was not Russian hackers and the suggestion that we just go ahead and ask ourselves questions was a good one, but we elected to just wait because your questions are very good..

And then if I could just have one more question on that supply.

Can you quantify, kind of, the range that you're expecting at this point, the drop-off versus '18 deliveries? And then if you could just compare what you though '16 deliveries were versus, kind of, what '19 number is at present on a 3-year roll?.

Again, I could -- the fact of the matter at the moment is that '19 deliveries in our analysis in our top 12 markets look a lot like '16. Again, I would suspect that by the time we get deeper into this year, we would expect '19 deliveries to be greater than '16 deliveries. As we sit right now, it looks flat..

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

Thank you. So again, thank you all for your patience with the technical difficulties. Thank you for your interest in CubeSmart. We continue to be focused on delivering against our expectations.

Certainly in my 20-plus years in the self-storage industry and then the self-storage industry in a public company environment, the volatility we've seen this year continues to surprise me, but what we can control is our transparency and our message and our expectation, and we focus intently on delivering against that expectation and we'll continue to do that for you.

So for the long-term holders of CubeSmart, thank you for your continued investment. And we look forward to speaking to all of you at the end of our next quarter. Have a great weekend..

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