Jeff Norman - IR Spencer Kirk - CEO Scott Stubbs - CFO.

Gwen Clark - Evercore ISI George Hoglund - Jefferies Todd Thomas - KeyBanc Jenna Gallagher - Bank of America Smedes Rose - Citigroup Ki Bin Kim - SunTrust R.J. Milligan - Baird Ryan Burke - Green Street Advisors Jonathan Hughes - Raymond James Todd Stender - Wells Fargo Wes Golladay - RBC Capital Markets Ross Nussbaum - UBS Jeremy Metz - UBS.

Good day, ladies and gentlemen and welcome to the Extra Space Storage First Quarter 2016 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference is being recorded.

I would now like to introduce your host for today's call Mr. Jeff Norman, Senior Director of Investor Relations. Sir, you may begin. .

Thank you. Welcome to Extra Space Storage's first quarter 2016 earnings call. In addition to our press release, we have furnished unaudited supplemental financial information on our Web site.

Please remember that management's prepared remarks and answers to your questions may contain forward-looking statements as defined in the Private Securities Litigation Reform Act. Actual results could differ materially from those stated or implied by our forward-looking statements due to risks and uncertainties associated with the Company's business.

These forward-looking statements are qualified by the cautionary statements contained in the Company's latest filings with the SEC, which we encourage our listeners to review. Forward-looking statements represent management's estimates as of today, Tuesday, May 3, 2016.

The Company assumes no obligation to revise or update any forward-looking statements because of changing market conditions or other circumstances after the date of this conference call. I would now like to turn the call over to Spencer Kirk, Chief Executive Officer..

Hello, everyone. We are off to a strong start in 2016, revenue growth exceeded expectations coming in at 9.1%, mild winter helps moderate expenses leading to NOI growth of 12.3%. We ended the quarter at 92.8% occupancy, the highest in our company's history at this time of year.

We acquired 25 stores during the quarter, six of which were through an off market transactions where we bought out a partner. Pricing remains competitive and so our expectations are high, we continue to find some accretive acquisitions in the open market and through our managed asset pipeline.

We ended the quarter with 1,371 Extra Space branded stores. Per share FFO as adjusted grew 25% year-over-year, this is on top of 21% growth to previous year, resulting in FFO growth of over 50% in two years. Our multifaceted strategy to increase shareholder value has five components.

First, operating performance, 12.3% NOI growth is outstanding by any measure and for any asset class. Second, accretive acquisitions, we’ve strategically purchase 4 billion since 2012. Third, joint ventures, they have and will continue to produce an outsized return on dollars invested.

Fourth, third party management, our program the nation's largest provide significant economies of scale in off market acquisition opportunities. And fifth, an optimized balance sheet. These five components have enabled us to produce 22 consecutive quarters of double-digit FFO growth. Now I'd like to turn this time over to Scott..

Thank you Spencer. Last night, we reported FFO as adjusted of $0.86 per share exceeding the high end of our guidance by a penny. The beat was the result of better than expected property level performance, including costs associated with acquisitions, non-cash interest expense and 4 million legal expenses, FFO was $0.79 per share for the quarter.

Our same store revenue growth was primarily driven by higher rates to new and existing customers and increased occupancy. Our 2016 same store pool increased to 564 stores, the change in the same store pool positively impacted our revenue growth by 30 basis points.

Our top performing markets included Atlanta, Dallas, Los Angeles, San Francisco and Tampa/St. Pete all of which experienced double-digit revenue growth. Our slowest market included Chicago, Memphis and Washington D.C. Baltimore all of which still grew revenue at 3 plus percent.

In addition to the strong performance of our same-store pool, our 2015 acquisitions including SmartStop performed ahead of our underwriting, our platform continues to maximize results. Year to date we have 520 million closed or under contract all of which are wholly on acquisitions.

In addition, we have 191 million in joint venture acquisitions where we will invest 50 million in 2016. Based on our solid first quarter results we have increased our full year guidance. FFO was adjusted, it's estimated to be between $3.71 to $3.78 per share.

FFO is estimated to be between 3.59 and 3.66 per share, guidance includes $0.05 of dilution from our 2015 and 2016 certificate of occupancy stores. It also includes 2015 and 2016 acquisitions that as anticipated will require time to be brought up to our performance standards.

Once they're performing at our portfolio average, these acquisitions should produce an additional $0.10 per share. I'll now turn the time back to Spencer..

Thank you, Scott. Demand is steady, and while new supply is appearing in pockets, it's still muted across the country. We see exceptional performance in many markets and even our slower growth markets are posting steady revenue increases, as we indicated last call, we expect 2016 to be another strong year.

Lastly, outstanding results of Q1 are the direct result of 3,278 dedicated employees focused on and working hard to maximize shareholder value, to each of them I say thank you. I’ll turn the time over to Jeff to start our Q&A..

Thank you, Spencer. In order to ensure we have adequate time to address everyone's questions, I would ask that everyone keep your initial questions brief. If time allows, we will address follow-on questions once everyone has had an opportunity to ask their initial questions. With that, we will turn it over to Kia to start our Q&A..

Thank you. [Operator Instructions] And our first question comes from Gwen Clark of Evercore ISI..

This is kind of a bigger picture question. It looks like you have a number of new markets added to the same-store disclosure such as Norfolk, Columbus and Greensboro. With the exception of San Diego, they look like they are pretty low rent per square foot markets.

Can you talk about the operating performance since ownership and how you guys are thinking in regard to the future for these assets?.

This is Scott. I'll go ahead and take that one. The performance of the assets in Southern Virginia have probably performed a little bit below our original underwriting estimates. In terms of the other markets, they have performed fine and these markets are like most markets across the U.S.

I think they will be cyclical in nature, there will be times they’ll outperforming and there will be times outperform within the portfolio average or even slightly below, I mean, it's tough to comment on a specific market like that. .

Okay, thank you.

I guess as a follow-up looking five years out, how do you see your exposure within these markets?.

We'll continue to invest across the U.S.

I think on average, we want to keep our portfolio demographic similar to what we have today on average, so if we investing one of those types of markets, hopefully we're also investing in some of the very dense metropolitan areas with low -- high ramp per square foot and good population and income demographics.

So on average we are not looking to decrease the average of our property portfolio..

Okay that's helpful. Thank you..

And our next question comes from George Hoglund of Jefferies..

Just a couple of questions here.

First, just on the $4 million settlement charge, can you just give some color on that?.

Hi George, it’s Spencer. Big picture this is classed action in New Jersey it has to be with consumer contract and it cuts across many, many industries and many, many companies. So we attended a mediation where we reached an agreement on the parameters of the settlement.

We are in the process of finalizing the terms of that settlement and getting court approval. And we've accrued an estimated cost of settlement in that’s what we've been talking about.

We expect it to be a onetime expense and it could be tough to better estimate until all of the negotiating is concluded, but we are giving you our best number and giving you as much color as we can..

Okay, thanks. Also just in terms of Chicago, it is a market that has underperformed the rest of the portfolio as of late. If you could just sort of address that.

Then also it seems though there is a large portfolio in the market that has about 30 odd stores in Chicago area, is that a market you would look or would be interested in increasing your exposure?.

The Chicago for us, it would be long term it’s been a good market for us. Clearly it's one of our focus markets, we like it, it's that great demographic, there is the lot of people there. Chicago if you look at few years back was one of our top performing markets as I commented on earlier these markets typically go in cycles.

So we would look that Chicago as a long-term play, it's something that we would be interested in increasing our exposure in..

And our next question comes from Todd Thomas of KeyBanc. .

Just a question on third-party management in that business. I believe historically you said that adding -- or every 20 properties added about $0.01 to $0.02 per share of FFO.

Is that still the right way to think about the direct contribution from those properties or has that changed at all?.

I think it's still pretty consistent, it's going to depend on where are those properties are and the ramp per square foot of those properties. The properties in New York City 6% of $30 rents is significantly more than 6% of $6 rents. So on average I would say that's still correct..

Outside of the management contracts that you have been adding or properties that you have been adding to the platform from the strategic, the two other entities of strategics deploying capital for, how is the demand like from other operators to utilize third-party management at this time?.

We continue to see strong demand. We were at an industry trade show this past week and our booth was fully the entire time, we continued to talk to people. A good source recently has been some of the new constructions coming on. So while new construction is coming into the market we are bringing those on as management contracts..

Okay. Just one last one if I may. Spencer, you have been plugged into the technology industry over the course of your career prior to EXR and at EXR and I know you spent some time with the team researching and trying to understand the full service or valet storage operating businesses. Curious to get your read on what you think here.

Is it positive for storage, just tapping into new customers, creating awareness or is it changing the way consumers think about storage on some level and how the storage business may operate in the next couple of years? Would just appreciate your thoughts and comments a bit..

Thank you, Todd. Just a few observations first of all that valet or concierge or full-service, however we want to characterize it is a logistics business. And we are looking at it very carefully. My personal opinion is, I don’t think it's likely to be a disruptor for a self-storage.

I think there is a segment of the population that will dial in into it and we are going to continue to monitor it, but today we are not making any announcement that we are getting into valet because it is questionable whether it is a viable business model. .

And the next question comes from Jenna Gallagher of Bank of America..

I appreciate your comments on the different market performances. I was curious if you could provide a little bit more color around New York City and Houston.

They did great but a little bit below the portfolio average, so just curious if they are seeing any impact from some of the supply?.

So Houston I think it's probably a supply as well as an economic issue there.

Our portfolio is about 2% below where it was the year ago, but even Houston has suffered from the energy downturn as well as some building, our same-store pool was about 5% and revenues were ahead of where they were last year and our bigger pool was about 7% ahead of where it was last year.

So still solid performance and last year those properties did very well. New York City as a whole I would tell you is not suffering from over building, I think over building is going to affect in a micro market more than it is on the whole.

But New York City on a whole is still three feet per square foot per person, it's still very low square feet per person in New York City..

I was just curious if you could provide an update on where occupancy is now?.

Occupancy is slightly higher than where we ended the quarter, call it 30 basis point or so..

And our next question comes from Smedes Rose of Citigroup..

I wanted to ask you just a little bit about the quality of the product that you are seeing on the market as you look across -- when you are looking at acquisitions. It looks like you continue to be fairly active there and we have heard some sort of mixed commentary around pricing and quality and be interested in your perspective as well..

So Smedes, its Spencer. As you look at what's out there, first of all there is a steady deal flow that’s coming in. I think all of the larger company the REITs are getting call to bit. And with steady deal flow coming in, we see asset quality spending to spectrum, the one constant in all of this is prices are high, really high.

And you can have crappy assets that we think are just a way out of market, and you can have really nice assets that even for us or maybe even some of the REITs are getting a bit too rich to transact.

So we are looking for those accretive acquisitions, the opportunities that make sense geographically and economically, and when they do we are going to act but quality spans the spectrum..

So could you maybe sort of quantify the change in cap rates over the past year or so roughly? Is it 25 basis points or 50?.

They are lower and call between 25 and 50 basis points..

And our next question comes from Ki Bin Kim of SunTrust..

So just had a couple of questions regarding how pricing trends are coming out or playing out, end of spring. I guess in the winter, things were a little bit better than expected, getting the bigger year-over-year increases.

Was just curious if you are -- I know it is only May 3, but is this spring, are you getting the year-over-year increases so far that you have been used to in previous springs?.

I would tell you pricing continues to be strong, January-February we were close to 10%, above where we were last year. Going into March and April, we are still 6% to 7% above where we were last year, which proves spring is still pretty solid..

Okay. I mean obviously that 7% in April is not a small number but it is a little bit down from the January, February.

Any particular reason your revenue management systems or the results are lining up that way?.

So we pushed rate harder in January, February and we gave a little bit on occupancy and you saw our year-over-year delta come in a little and now we are kind of easing off that and going a little bit more with occupancy..

Last question. Obviously your revenue management system is trying to optimize revenue, we get that.

But just curious if we did see a little bit more move outs and less move in this quarter? Any patterns or reasons why more people left or less people moved in that you can point to that happened this quarter that might be unusual?.

Yes, I would tell you part of it is the unusual comp from last year.

Last year you had a really odd thing in the North East, we had some pretty severe weather, which had very few move outs and very few move in, so I think part of it is year-over-year, if you look at a bigger average, call it five to seven year average, we are right in line with the five to seven year average in terms of move-ins and move-outs both..

And our next question comes from R.J. Milligan of Baird..

I was wondering if you could just give a little bit more detail on who those buyers are for those really low cap rates and how much appetite you think there is out there from that competition?.

R.J, it's Spencer. There is a lot of appetite for self-storage, I think it's not secrete that it's probably the best performing asset class year in and year out. We are seeing pronounced competition everywhere we turn, from trade buyers and non-trade buyers.

And the only comment I would make is as we look at this, it's great to buy this asset class, but once you’ve purchased it somebody has got to operate it. It is operationally intensive and we think that that creates opportunity. And we will just have to see how things play out, but there is a lot of money chasing this assets..

Okay.

And then on the C of O [ph] deals, can you talk about the sort of underwritten development yields that you were seeing maybe a year ago versus today and sort of where that middle ground is in terms of a cap rate where you guys are willing to buy those assets?.

You’re still look in the cap rates, but we kept, we underwrite them 150 to 200 basis points, I would tell you today big were on the 150 basis points range recently, we’ve said notice some deals and we continue to see things coming in the 7.5 to 8 yield once they’re stabilize..

And our next question comes from Ryan Burke of Green Street Advisors..

You disposed of a handful of assets, small dollar amount but it is relatively uncommon for you.

What was the specific rationale for selling those properties? And can you give us an update on your plans for further dispositions, if any?.

So from our perspective, we will continue to look at markets and whether it’s, markets that are difficult for us to operate in or whether their markets that we still maybe have reached their potential or they may have need for CapEx to be put into those.

So those are markets we’ll look to dispose of assets, some of these were a little bit more rural and maybe not as core as we would hope for in terms of rent per square foot and the income of population demographics..

Ryan as you know, we are trying to build the company and dispositions have not been something that we talked a lot about.

But I think you can expect going forward that you will see us looking at the very bottom end of our portfolio and taking really good look at the economic performance as well as the physical characteristics of that particular bottom segment. And rationalizing whether it should be in the portfolio.

And I think you’ll see some activity year-end and year-out at the bottom-end, but it’s not going to be a wholesale initiative on our part, because we are trying to build not dismantle..

Sure.

Are you able to give us a feel for what percentage of the properties the bottom end defines?.

1% to 2%..

Okay. Separate question just back to New York City development. I believe that all of the properties in your current pipeline in the NYC boroughs are minority stakes.

Does that speak to a desire to control your exposure there or is it more just the fact that that is the opportunity that has presented itself there?.

It’s a combination of the opportunity that’s presented itself as well as ability our leverage our returns in the lower cap rate environment..

Okay, and you picked up one property or a JV interest in one property in the Bronx during the quarter. That was 42% occupied as of March 31.

Do you happen to have what the occupancy was on that asset as of January 1?.

I don’t have that specifically in front of me, but it’s one that’s open recently, it continues to lease up really well..

And our next question comes from Jonathan Hughes of Raymond James..

I just had one, most of mine have been answered.

But what renewal rate increases were you able to pass on to tenants in this first quarter? And then maybe how many left or vacated due to not wanting to pay those renewal rate bumps?.

Let’s take the second piece one Jonathan.

Our existing customer rate increase program continues to show financially that we are hitting the sweets spot, there might be a few move outs where people won’t accepted, but economics are compelling in terms of the gain that we pick up from the high 90%, 95%, 98% whatever it is that accept it and don’t move out, because this is a very sticky product type.

Existing customer rate increases, the 9% to 10% range quarter on and quarter out and works well..

And then are many just not leaving because they simply don't want to take the time to move their stuff out or is it just to get lack of available space?.

Must be realistic about this Jonathan. If you are renting a unit any of yet a rate increase letter that says your rent is going up 15 bucks, you are not likely to go get a U-Haul truck take a Saturday morning, pack-up your stuff, go down the street, unpack your stuff, return the U-Haul truck to safe 15 bucks.

People just want go through the effort to do that, it’s an incredibly sticky product type. What we have found that if rate increases more often than not my finally signal to somebody. The problem that I was trying to solve has past, maybe I should move out.

And that is as I said a very, very small percentage, single-digit, low single-digits of the total customer based. So existing customer rate increases, it’s a great program, we think we’re operating in the sweets spot..

Okay. It’s great color. Thanks..

And our next question comes from Todd Stender of Wells Fargo..

Just on discounts, what percentage of customers are receiving some type of promotion this quarter? And also just wanted to get a sense of what you are budgeting for discounts this spring leasing season? You are obviously coming off of a higher occupancy level having smoothed out some of the Q4 seasonal dip. Just want to get a sense of discounts..

Yes discounts during the first quarter about 75% to 85% of our customers moving in -- coming in first time renters or new customers receive a discount. That is higher than it was last year when we originally looked at the year I think we had hopes that discounts would be flat, now we are projecting they will be up slightly.

But if you think of it in terms of whether discounts are up or down our rates are up 5% to 10%. So clearly if you rent to the same number of people discounts will be up 5% to 10% over where they were last year.

We’d hope to be able to cut them and keep them flat as a percent, but now we are seeing that they will be up slightly and we are projecting the same into the spring leasing season to up..

Thanks for the color, Scott. And just one last question. I wanted to follow up on the question about the assets you've sold already. You are going to be managing them on a third-party basis.

Can you just go over maybe what the standard agreement you have in place is? Is a cancelable by either side? The reason I ask is usually you get into the third-party management with the potential to buy the property, but I wanted to see if you can get out of this since you are obviously disposing of it?.

Yes so it's pretty simple, it's a month-to-months contract. We do advance the money for the rebranding of the asset and if they opt out before 36 months has transpired we can get some money back on that on a pro rata schedule.

And we do not have the right of first refusal, we make this easy and hopefully our performance is enough to keep people in that they don’t want to go somewhere else and we want the flexibility to do what we need to do. So time, I think we are coming up on 8.5 years of third party management.

Todd and we've learnt something's but work in terms of seller expectations and we've learned something's in terms of management expectations both coming and going and we are very comfortable that our property level performance and the results we deliver on a month contract speak for themselves and has work very well..

And our next question comes from George Hoglund of Jefferies..

Just a follow-up on the transaction environment.

Are you seeing any change in the motivation of sellers in terms of -- is it -- are you seeing more assets because pricing is so good or are you seeing people looking to exit for other reasons as could be seeing some private equity backers look to exit their investments maybe sooner than one would think?.

Yes, all of the above..

Yes, I think it's tough to comment on seller’s motivation, I mean they all have a different motive..

Yes, it's all of the above its pricing, its motivation, it's everything..

And as far as concerns about development, I feel like people keep talking about it but it is kind of waning now. People may be getting more concerned about an economic downturn in ’17.

How do you think storage would behave differently through this time around if we head into a downturn versus the last time? Some factors are different; you don't have the oversupply issues we did last time.

But how might revenue management impact things? And it seems last time basically PSA just lowered rates significantly that impacted of the industry, how do you think things would be different?.

George. It's Spenser. So what I would tell you is we are comfortable that self-storage is a great business to be in, it’s a recessionary system, we've already proven that the industry has proven that.

We were amongst the last to go into the recession amongst the first to come out of the recession and the REITS are better equipped at this point than at any other time to acquire customers. The chasm between the haves and have not has widened and the rate at which the chasm is growing is accelerating.

So if there is a downturn I'm highly confident of the national players the REITs are in the best possible position to capitalize and produce the very best result. .

Alright thanks for the color. .

And our next question comes from Wes Golladay of RBC Capital Markets..

Sticking with that last question regarding the downturn, I noticed you guys are having some pretty good success pushing rate and now you mentioned you want to build occupancy a little bit.

Are you seeing anything in your predictive analytics that has given you caution or is this maybe the occupancy move specific to certain markets?.

Now typically we are focused on just overall revenue growth and our models have certainly inputs and so you can tweet them slightly I would tell you early on in the year it was focus more on revenue growth meaning street rate growth and now we are focusing -- we tweaked the models slightly to focus a little more on -- just on occupancy..

Okay. And then you mentioned a lot of people active in the market.

Is SmartStop actually getting a little more active? Are you running into them and can you get some meaningful management contracts later in the year?.

They continue to be active I think that we see them we see the other REITS as we hope they continue to be successful. We are not able to buy, we wish them the best because we have a good relationship with them, I think it works well for both of us..

And our next question comes from Jeremy Metz of UBS..

Hi guys, it's actually Ross Nussbaum here with Jeremy. You touched on just a little earlier, but I just want to make sure I understood it.

The vacates for the quarter were up 6.4% year-over-year, what exactly are you guys attributing that increases to?.

It's tough to attribute to anyone thing, part of it I would tell you is the comp year-over-year, last year had low vacates, it could be pricing, it could be a myriad of things. So we haven't attributed with anyone specifically..

Also with more customers Ross, you’re going to have more vacates. We’re at the highest occupancy we’ve ever been..

Yes, I think that is fair although the 6.4% number did catch my eye a bit.

I was wondering, did you look at for those vacates, was there any trend in terms of average length of stay that it was more short-term people, more long-term people that you had received more than one rent increase? Was there anything in there that caught your eye?.

No, in fact our average length of stay increased, so we continue to increase our length of stay, but we have had some vacates but not anything concerning to us at this point..

And Ross just two other points, if you look at an 8 year average, its well within the bounds of being normal, and second as Scott said earlier in this call you look at April occupancy is going up which means obviously we are doing something right. We can’t look at just short periods of time.

We need to look at this thing in terms of micro terms and we think 2016 is going to be a strong year..

Same type of question on the rental side. The number of rentals were down but again that is probably because your occupancy is higher and you've got fewer units.

Can you give us some sense of what the traffic numbers looked like both at the store, on your website, on mobile, at your call center and those numbers look year-over-year in the quarter?.

Year-over-year our opportunities are within normal range or expected range and our close rates were also within the expected or target ranges..

Okay. So no discernible change, there weren't a lot of numbers in that answer.

So no discernible change in trend in terms of traffic?.

That’s correct. The traffic on the internet are traffic to our call center were all within in the expected range..

Yes, I think maybe one thing should looking for, mobile continues to be really important to growth rate as customers coming to us through mobile devices is growing well into the double digits. It's a phenomenon and we’ve got a terrific mobile platform and its part of what's helping us to deliver the kind of results we have then..

Got it.

Last one for me, can you give us a sense where in-place rents are today against street rents, what that variance is?.

So it's kind of mid to high single digit, but that depends on the time of year and the seasonality Ross. During the dead of winter it’s in the high single digit, at the peak of summer its low single digits, if it's not right on top of each other..

I think Jeremy had a question..

Yes, so I just want quickly on the dispositions, I know there was small but were those assets acquired SmartStop deal where those legacy extra states assets and that was keeping the management contracts a requirement of the deal? Thanks..

No, we purchase those in June of 2011 as part of 15 property portfolio and keeping the management contracts is not a requirement but it obviously will lead towards the seller that which willing to do that..

And our next question comes from Ki Bin Kim of SunTrust..

Thanks, just a couple of quick cleanup questions here. Noticed a certificate of occupancy deal move out of the pipeline in Naperville.

Anything to look at there?.

Yes, this was the property that I would tell you it's probably pretty typical what you seeing in SEO deals and what you seeing in the development.

This is one that we got we could get done the developer was pretty conformable that they can entitled, we put it under contract we received some opposition from a neighborhood group and it's all out of contract due to the inability to get the project done..

Probably in some weird way, that is maybe a good thing for the industry..

I think it's pretty standard, I think you see that not just with this one project, I think you are seeing it across country..

Okay.

Is there any discernible trend in your New York MSA between the boroughs versus New Jersey? Performance wise?.

I would tell you performance is going to be a more on a micro market and depending on new competition within that market but overall it's pretty consistent, between boroughs and New Jersey, Northern New Jersey..

And just last one, can you comment on the SmartStop deal and what kind of growth you are getting in that portfolio in NOI right now? And if it is meeting your pro forma or better than expected?.

I would tell you it’s slightly ahead of our projections, discloser to street was we originally projected that it would be about 5.5% cap rate in year one and I'd tell you it's add or above that in terms of that we're actually getting a little bit more in rate and occupancy is coming a little bit slower than we've expected although, we saw some good occupancy growth in April.

.

And our next question comes from Todd Thomas of KeyBanc. .

Can you remind us what your typical rent increase pattern is for existing customers, what the thresholds are and how frequently you increase rents to existing customers? And has that changed at all over the last year or two?.

Really hasn't changed in much over the last decade. Its five months for the first trade increase, its nine month thereafter, nine months thereafter and nine months thereafter.

We do have covers on that, too far above the existing street rate, we bet the existing customer rate increase, but as we're pushing street rates up each and every year, customers that may have dropdown of the eligible pool, find themselves back in the pool and so, as I said, between 9% and 10%, we do this every single month and quarter to quarter, it provides meaningful revenue for this company, we like what we're doing and statistically we've shown that's the program that we have in place works in a good economy and a decelerating economy, we haven't changed that..

Okay, got it. And then Spencer, you mentioned that some of the move outs from rent increases, they tend to generally occur from customers that no longer need storage so their problem has been solved.

Any sense for what percent of the portfolio might be discretionary at this time or not really need storage any longer? Is there sort of a way to gauge that based on how long people say they need storage when they move in or some way to arrive at an estimate?.

I don't know their thoughts and intents, I don't know even how to quantify that, but what I can tell you Todd is that I think it's kind of in mid to low single digit as the customer base, where there's any question mark, surrounding whether they're going to stay around or go.

Okay, it seems much lower than what I think we had maybe talked about or heard back in ’06 or ’07 when I think it was closer to maybe 15% or 20%.

Is that not an accurate assessment or has something changed today versus maybe that last cycle?.

What I would tell you is over the course of the decade, a lot of things have changed including our repository of data and our understanding of our customers and without looking at some very specific numbers, I'm just having that give you off the top of my head, that this is something that has not materially changed and I don't know where the 15% to 20% number came from previously I’d have to go back and look, but I personally believe it's lower than that today..

Considerably, to quantify this Todd, we’d be purely speculating or guessing. I mean this is really a customer need or customer decision here. .

Okay. Thank you..

And I'm showing no further questions at this time. I would like to turn the call back over to Spencer Kirk for closing remarks..

Thank you, everybody for your interest and your time today. We look forward to next quarter's call. Thank you..

Ladies and gentlemen thank you for your participation in today's conference. This concludes the program. You may all disconnect. Everyone have a great day..