Jeff Norman - IR Joe Margolis - CEO Scott Stubbs - CFO.

George Hoglund - Jefferies Smedes Rose - Citigroup Juan Sanabria - Bank of America Gaurav Mehta - Cantor Fitzgerald Todd Thomas - KeyBanc Capital Markets Jeremy Metz - UBS Gwen Clark - Evercore Jonathan Hughes - Raymond James Ryan Burke - Green Street Advisors Wes Golladay - RBC Todd Stender - Wells Fargo Vikram Malhotra - Morgan Stanley Neil Malkin - RBC Capital Markets.

Good day, ladies and gentlemen and welcome to the Extra Space Storage Incorporated Q4 2016 Earnings Conference Call. [Operator Instructions] As a reminder, today’s conference is being recorded. I would now like to introduce your host for this conference call, Mr. Jeff Norman. You may begin..

Thank you, Kevin. Welcome to Extra Space Storage’s fourth quarter and year-end 2016 earnings call. In addition to our press release, we have furnished unaudited supplemental financial information on our website.

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

These forward-looking statements are qualified by the cautionary statements contained in the Company’s latest filings with the SEC, which we encourage our listeners to review. Forward-looking statements represent management’s estimates as of today, Wednesday, February 22, 2017.

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 Joe Margolis, Chief Executive Officer..

Hello, everyone. It was another strong year for Extra Space. We executed at a high level and produced great results coming off 2015, the best year for storage. 2016 same-store revenue increased 6.9% and the NOI grew 9.2%. FFO per share as adjusted, increased by 23%.

For the fourth quarter, same-store revenue growth was 5.2% and we were able to decrease year-over-year expenses by 2.1%, resulting in NOI growth of 7.9%. FFO per share as adjusted, increased by 18%. Our FFO growth was driven by property performance, accretive acquisitions, joint ventures, third-party management, and an optimized balance sheet.

We are focused on using all of these tools to continue to grow shareholder value. As we expected, revenue growth moderated throughout 2016, as the benefit from growing occupancy went away and street rate growth trended from peak levels to more of historically normal levels by year-end.

Despite the moderation, the fundamentals of the storage sector remained positive. While we saw de-acceleration of revenue growth in certain markets, we are also encouraged to observe re-acceleration in other MSAs, demonstrating the cyclical nature of markets.

We continue to enjoy the benefits of a well-balanced diversified portfolio and operational scale. In the fourth quarter, we acquired 27 wholly-owned stores for a total purchase price of $316 million. This includes the buyout of a joint venture partner’s interest in 11 stores, which we announced on our last call.

For the year, we invested $1.1 billion in acquisitions. The large majority of these transactions were not broadly marketed and came from joint ventures, our third-party managed portfolio or through other relationships. I would now like to turn the time over to Scott Stubbs..

Thanks, Joe. Last night, we reported FFO as adjusted of $1.03 per share, exceeding the high-end of our guidance by $0.05.

The beat was a result of three factors, first, outperformance by our 2015 acquisitions including SmartStop and our CofO deal; second, timing of our Q4 2016 acquisitions that closed earlier than anticipated; and third, lower property and G&A expenses.

For the year, FFO as adjusted was $3.85 per share, also exceeding the high-end of our guidance by $0.05. Occupancy for the same-store pool ended the year at 92%, an 80 basis-point decrease from the end of 2015. This includes the impact of six expansion projects which were completed during the quarter.

Excluding the additional vacancy created in these six stores, our ending occupancy would have finished 20 basis points higher at 92.2%. During the quarter, we completed a $1.2 billion unsecured credit facility. To-date, we have drawn $662 million.

The five and seven-year tranches have delayed draw features, and we will access the remaining available term balances as needed to finance future acquisitions and to pay off debt. The unsecured facility further diversifies our capital structure and reduces our average interest rate.

Our goals include having access to multiple types of capital, laddering our maturities and maintaining financial flexibility. This credit facility helps accomplish these goals. Last night, we provided guidance and annual assumptions for 2017. Our new same-store pool will increase by a 168 stores for a new total of 732.

We expect the change in the same-store pool to positively impact our revenue growth by an average of 50 basis points over the year. For 2017, our acquisition guidance includes 325 million in wholly-owned stores. We also project 225 million in joint venture acquisitions with approximately 75 million in capital to be contributed by Extra Space.

This results in total investment in 2017 of $400 million, approximately half of which is currently identified. Our guidance assumes the remaining balance will be weighted to the back half of the year.

So, our pricing expectations are still high and we are committed to being disciplined and only transacting at prices that are accretive for each shareholders. Our full year FFO as adjusted is estimated to be $4.15 to $4.24 per share.

Our guidance includes $0.08 of dilution from our CofO stores and additional $0.08 from value-add acquisitions for a total of $0.16. I’ll now turn the time back to Joe..

Thank you, Scott. During 2016, there was significant focus on new supply and de-acceleration of revenue growth. The effect these issues have on same-store NOI is an appropriate topic to focus on, but not to the exclusion of FFO growth and the overall health of the industry. But, I’ll make a few comments on these areas of concern.

First, we are seeing new supply. This supply is generally concentrated in certain markets but there are many other markets that have minimum new supply. We benefit from our highly diversified portfolio, which reduces the volatility of cyclical markets.

Much of the new supply delivered early in the development cycle has had minimal or only temporary impact on our stores due to pent up demand and not one of our MSAs experienced negative revenue growth for the year, but our hedge is not in the stand.

We recognize that new supply may have greater impact as we get further into the development cycle, and we have factored that into our guidance. Also, the development cycle has presented opportunities. We are adding new purpose built assets in key markets. These stores are performing well and adding value to our portfolio.

We are also managing many newly constructed assets on a third-party basis which provide fee income, strengthen our brands and increase our scale. Second, demand is steady. Traffic to our stores, website and call center remains consistent. And our ability to capture customers is greater than that of the smaller operators.

We expect 2017, same-store revenue growth and NOI growth in the 4% to 5% range, which we believe will be better than nearly all the other state sectors. Third, we have other tools that contribute to our FFO growth. We acquired almost $3 billion of assets in the last two years. And our CO deals will add to our growth in the future.

We will continue to acquire assets, but only if we can do so accretively, given current capital and market conditions. We will expand our third-party management platform, and we will utilize the most advantageous forms of capital to grow the Company and maintain a flexible balance sheet.

This is the formula we have used to become the best returning REIT in the U.S. over the past 10 years, and we will continue to executive on this strategy in a disciplined and focused manner. Let’s now turn the time over to Jeff and start our questions and answers session..

Thank you, Joe. 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 the opportunity to ask their initial questions. With that, we’ll turn it over to Kevin to start Q&A.

[Operator Instruction] Our first question comes from George Hoglund with Jefferies..

What’s the current level of street rates on a year-over-year basis?.

Our street rates year-to-date for January and February have been between 3% and 4%, which I would tell you is fair amount different than some of the reports that are out there, but we’ve seen solid street rates year-to-date..

Okay.

And what level of existing customer increases are you able to push through in January and February?.

We continue to push at the same rates, high single digits..

Okay. And then, just can you comment on a couple of the markets that were -- had negative same-store NOI performance for the quarters, Houston, St.

Louis and Sarasota?.

It’s probably just a cyclical nature of the markets. Houston has seen some new supply; it’s also a market condition in Houston in particular. And I would also tell you that those markets are immaterial. Some of those have experienced taxes. But when I’m talking, I’m talking more in terms of revenue.

But, all of those markets I would tell you are in immaterial in terms of our overall revenue..

Our next question comes from Smedes Rose with Citigroup..

I wanted to ask you your revenue increases that you are projecting same-store 4% to 5%, is that primarily driven by revenue increases -- rate increases and where do you see occupancy going by year-end 2017 from the [multiple speakers] that you ended this year?.

Yes. I would tell you, our occupancy assumptions for the year are that in our core pool, it’s essentially flat, plus or minus a small amount in the new same-store pool which includes SmartStop, it is up slightly but not a material amount. So, majority of that growth is coming from street rate growth and a small amount from occupancy from SmartStop..

Okay, thank you. And then, the other thing is just could you update us on what you are seeing of total new supply across your portfolio? And I guess, maybe specifically just as you look to the top five markets, which I think are comprised of over 50% of your NOI, maybe if you could just drill down a little bit there, so LA, New York, D.C.

[ph] Boston and San Francisco?.

Sure. Thank you, Smedes. So, overall, CoStar’s reporting about 900 stores to be delivered in 2017. I’m sorry, CBRE, my mistake, and that’s a good number as we can come to. We’ve looked at eight of our top markets in depth and tried to aggregate as many different data sources as well as our people on the ground and brokers and our partners.

And that accounts to little over 40% of our NOI. And we found 360 stores in those markets that were either newly completed, under construction or in some stage of the planning process. About half of those stores competed with our stores in that market.

So, we are certainly seeing new deliveries competing with some of our stores and we’re seeing other markets where we don’t have the same level of competition. The most difficult thing is of those 360 stores, a 135 of them are somewhere in the planning process.

And we see a significant level of those stores fall out due to inability to get permits or financing or some other reason..

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

Just following up on that supply question from Smith, just can help us benchmark that 360? I mean, do you have a sense of what that was at this point last year? And as part of that question, any views on how supply looks at this point for 2018 relative to 2017; do you expect it to be flat, higher, lower?.

It’s a really good question, and it varies significantly by market. So, for example, if you look at Chicago where we would identify 41 new stores, 23 of those have already been delivered. So, you are already deeper into the cycle with more stores delivered than being planned.

Dallas is maybe on the other end where we have identified 83 stores and only 39 of them have been delivered. So, it really varies widely by market. Our sense is that there will be fewer deliveries in 2018 than 2017, certainly CBRE as well, I think their number was 400, but time will tell..

And then, just back on the same-store revenue guidance.

What are the street rate growth expectations, I guess as we go through 2017; and is there a SKU and how -- in the same-store revenue growth over the course of the year, is it accelerating or decelerating as the year progresses?.

Our guidance assumes that it decelerates a little bit more. So, you are going to start the year slightly higher than we end the year. And the SmartStop will actually start a fair amount out there with coming up against tougher comps at the end of the year.

So, it will show more deceleration in that particular pool of properties, but overall, slight deceleration..

And then, any color on the street rate growth that you’re kind of assuming as the year goes, particularly into peak leasing?.

I would tell you, it’s going to be three to five; it’s going to depend a little bit on strength of the market and your occupancy..

The next question comes from Gaurav Mehta with Cantor Fitzgerald..

So, following up on that deceleration comments on same-store revenue growth 2017, would you expect it to stabilize in second half of 2017 or would you expect it to continue to decelerate?.

We would expect it to stabilize in 2017 in second half. And again, the rate of deceleration has slowed. You are not seeing that drop, a significant amount quarter-over-quarter but we are estimating it will continue to decline slightly throughout the year..

Okay.

And I think in your prepared remarks, you mentioned that you are seeing reacceleration from MSAs, can you talk about which MSAs those are and do you expect that to be sustainable?.

Yes. The examples I would point you to, in particular Chicago, Denver and Philadelphia, all three markets have seen reacceleration. Denver -- our same-store pool was slightly negative but in the bigger pool, it was positive and it’s come back from being negative..

Our next question comes from Todd Thomas with KeyBanc Capital Markets..

Just following up on the revenue growth guidance, what’s in the model for effective move-in rates; how are discounts and pre-rent trending and then what’s in the model?.

Discounts are up slightly year-over-year, but it’s probably a little bit more in line with your rate growth. So, if your rates are up 3% to 5%, your discounts are automatically going to be up 3% to 5%, but they are up slightly above that and not a significant effect. So, it’s mainly coming from rate this year..

Okay.

And then, in terms of new supply, I mean, can you talk about your appetite for CofO deals and lease up properties here, maybe just give us a sense for how large the 2017, 2018 and 2019 pipelines might be for Extra Space?.

Yes. We’ve become -- as we get deeper into the development cycle, we’ve become increasingly more selective for Co deals. As I said earlier, there are some markets that if we can find deals where there is barriers to entry and no or limited new supply and we’re getting compensated, we would certainly look at that deal.

I’d think, the case of our investment in CO deals will moderate probably significantly. But we are very comfortable with the deals we’ve had. We have done very full due-diligence; we have underwritten conservatively; and performance to-date has prudent that out, if you look at how our stores perform.

We also have a target cap of 3% on the amount of dilution. CofO stores will in aggregate contribute or detract from our performance. So, we want to keep within that cap.

And then, the last thing I would point out with respect to our appetite for COs is we have executed a number of these deals in joint venture format, which both reduces the risk to us and increases our returns..

Okay.

And just lastly, looking at a couple other markets and just thinking about the occupancy, year-over-year decrease that you are seeing portfolio wide, but looking at some of the other markets like Boston, LA, San Francisco, some of your top markets, occupancy is lower year-over-year and that year-over-year negative spread actually grew larger in the quarter, worsened a little bit.

Are you thinking about occupancy differently than you have in the past as you think about maximizing revenue or is occupancy coming down as a result of new supply in these markets? What’s sort of happening here?.

I think it’s market-by-market; California had a really tough comp the prior year. I would tell you we are not necessarily thinking any differently in terms of occupancy. It’s obviously important in our model to drive revenue. But, I would tell you, we lost a little bit of occupancy, but we’ve kept some rate.

So, you know the fact that our street rates are up 3% to 4%, is a good thing. Our bottom line is to grow revenue, and occupancy is a big part of that. It’s possible that going forward into the New Year, our budgets and our guidance assumes that we spend a little bit more on marketing also..

Our next question comes from Jeremy Metz with UBS..

As you think about that sort of slowing towards the long-term average from here and stabilizing starting in the back half of the year.

In terms of some of your markets where revenues and NOI have moved negative or even just below the larger portfolio average, have you seen anything in particular from revenue management to give you confidence in your ability to react faster and therefore recover quicker back to that long-term on average or even just stabilize that average versus moving below the long-term average which is something, I think a lot of people wonder about and worry about?.

Yes. We’re consistently trying to improve the inputs to our revenue management system and its ability to both react and predict market conditions and how we optimize revenue in that. So I think we’d be the first to say that last year in Denver our reaction was not optimal, and we’ve learnt from that, and we continue to try to improve..

Okay.

So, some of what you’ve learnt from Denver is actually already playing out and then helping overall in terms of what’s going on in the current portfolio; is that fair?.

Absolutely, yes..

I believe so. I don’t want to ever say that our learning is done and we will continue to try to make the machine better and make sure that when it doesn’t work, there is human input. But, yes, we are better than we were last year..

Okay, great. And then, Scott, in terms of longer-term funding plans, you have the $400 million of investment activity in guidance, let’s call it $200 million and $300 million of debt maturing. You obviously have room on the lines and capacity from the unsecured notes you issued in October that you talked about in your opening remarks.

I think you saw about couple of hundred million on the ATMs.

I’m just wondering what’s baked in the guidance in terms of further capital raises, if anything, and then just longer-term funding plans for some of that activity?.

Yes. Our guidance assumes a $100 million of OP or some type of equity. We’ve just included in there is OP. And then, from there, it assumes that the rest is with debt. And if you look at the growth in NOI, I would tell you our ratio has remained the same.

So, we’re not looking to lever up, and we will look to remain -- keep our leverage ratios similar to where they are today..

Our next question comes from Gwen Clark with Evercore..

Going back to rate growth, I think you said it should be up 3% to 5% for the total pool.

Can you talk about what your expectation would be for the 2015 acquisitions such as SmartStop?.

Yes. They will be higher than that but you are going to grow your revenue in that portfolio from a combination of rate as well as occupancy.

So, if you think of street rates, in a portfolio where you are trying to push occupancy, you will get more from occupancies than you will form street rates and you’ll also get more from moving your existing customers up to the current market rates. So, it’s going to be a little bit different in terms of mix.

But, I would say, overall, that’s why I’m saying 3% to 5%, and that’s obviously a range depending on market conditions. But SmartStop will get more through occupancy and more from existing customers than the other pool..

Okay, alright. That’s helpful. I guess moving on to a bigger picture question. One of the questions that I feel like everyone has been asking is the trajectory for NOI growth and that was touched upon earlier.

But can you talk about the scenario which could actually drive overall same-store NOI growth negative in say in 2018 or 2019?.

It’s tough to even fathom that. I think that from our perspective, the only time we’ve ever been negative was in the great recession. It’s a recession that was bigger than I think most people are going to see in their lives.

And we were call it, 3% negative in 2009 and then we are positive first quarter to the next year and now today is not the exact same market as that, but I would tell you I think it’s going to take a pretty big event for everything to be negative for the year..

Okay.

So, it seems like it would be fair to say that the new supply which is probably going to hit in 2018 isn’t really enough in your mind to drive it like to a hard landing of negative growth?.

It’s really hard to say what the level of new supply that’s going to hit in 2018 and 2019 is. I would tell you that if there is continued delivery of new supply, it probably means the industry remains pretty healthy..

Our next question comes from Jonathan Hughes with Raymond James..

Good afternoon, guys. Could you just talk about the level of demand you are seeing in January? One of your peers mentioned they had a really strong start to the year and a homebuilder this morning mentioned they’ve seen a release of pent up demand for housing.

I am just curious if you are seeing similar trend of increased demand so far this year?.

I can’t really comment on what our peers have seen but I can say that we have seen demand to be relatively flat. It’s stable..

So, no outsized growth in the first six weeks of the year?.

Nothing significant..

Okay. And then, just one more from me. One of your competitors quantified the impact of new store openings on projected revenue growth at about 200 basis points to 250 basis points below the portfolio average.

Does your guidance include a similar impact at stores exposed to new supply?.

Our guidance includes the impact of stores that are being added. So, I can’t comment on what they are seeing, but we have taken into account where we have a new store coming on line near one of our existing stores..

Our next question comes from Ryan Burke with Green Street Advisors..

Just a couple questions on the development pipeline. Joe, your comments earlier about slowing development, probably as we move forward, do contrast a little bit with the fact that the development pipeline increased in size pretty meaningfully this quarter.

Can you reconcile those two dynamics? And then, second question is just scanning the 2018 projected opening. It does seem like there is a greater percentage of properties that are located -- and I don’t want to call them in secondary markets perhaps, but maybe non-major metro areas….

Yes. I -- sorry, finish your question..

Well, just curious if the strategy there -- if it is a strategy or if it just happens to be the outcome of what was available..

Yes. I would tell you, the jump in the pipeline comes from us putting certain properties now under contract that we are doing with the joint venture partner in a couple of areas of the country, one is in the Northwest and the other one is in the New Jersey -- kind of New York City down to Philadelphia markets.

And those are our joint ventures that we have been discussing and looking at for a year to two years, and they actually just went under contract this quarter. And so, we’ve had the policy or the standing that we don’t want to talk about them unless they are under contract.

So, this was just kind of an odd quarter where many of those went under contract, even though we’ve been talking about those for a long time..

Okay.

So, pipeline is kind of in place, but if things play out the way that you think they might in terms of operating fundamentals, et cetera, we should expect the pipeline to not grow significantly for the out years, beyond 2018?.

I think that’s correct. That’s my comment about increasing selectivity in future years is that’s what I was trying to drive at..

Our next question comes from Wes Golladay with RBC..

Looking at the expansion projects, where are those located; and do you have much more of those planned for this year?.

So, we have a few those, one is on Long Island, we have one Chicago, one in Salt Lake City are kind of the bigger ones. And we have ongoing expansions all the time. This was an odd one; typically you’d pull them out of your same-store group, but they completed quicker than we expected.

And so, part of that was just timing and we felt like resident changing the same-store group in the fourth quarter, we would just leave them in and talk to it. But we always have expansions going on..

Okay. And then, trying to look at supply. I mean, how should we view it? I mean, we always talk about the nominal store count, but is there -- what do you see as a manageable supply level on a percentage of facilities; is it like a 4% to 5%? You mentioned the pent up demand.

Are there any markers where there is large clusters that you’re concerned about, in the other markets you are like it is not a big deal? How should we view it from the cluster point of view?.

Yes. So, overall, I would tell you on a national level, I think that equal to population growth is healthy. And you’ve got to look at square footage versus store count because stores today are being built bigger than they were before.

I think that there are certain markets we are clearly concerned about and watching closely and there is other markets where you just have not same supply come. On the West Coast, California has seen very little new supply compared to the population. Texas has seen a fair amount, Atlanta; anywhere where it’s easy to entitle things, you’ve seen supply..

And would it be fair to say, you’re going to try and expand more in the supply constrained markets, is that where you guys will target those?.

Absolutely..

Okay. Thank you..

I mean, from our perspective, you are always going to look for low saturation -- population per square foot -- square foot per population..

[Operator Instruction] Our next question comes from Todd Stender with Wells Fargo..

Hi, thanks.

And Scott, I think you gave some color on SmartStop, but I just wanted to see -- or if you’ve talked about how it’s performing relative to plan? And just as a reminder, when does that begin to show up in the same-store pool?.

So, it goes in January 1 of 2017, it’s in there, and that’s what’s causing the outsized growth. And compared to plan is -- it is performing a fair amount ahead of our underwriting..

Is that on the occupancy? I think you guys were bifurcating it at one point, maybe in a presentation..

In a presentation, we’ve bifurcated it; going forward, it goes into our same-store pool this year, so 2017. And like I said, it continues to outperform our underwriting..

Okay, thank you.

And just get an update maybe on paid search costs as much detail as you can on how much you’re budgeting for Google search this year and maybe any changes in strategy as you head into the spring leasing season?.

Yes. Our budgets assume a 6% increase in marketing, which last year we were actually down slightly. So, it’s a tough comp it’s up against. But costs, we continue to try to be more effective and more efficient, but reality is as more people are bidding, so costs are going up. So, we need to try to keep the cost for acquisition down..

Is that a reflection of the Google, their rates are up and maybe utilization is down, what -- how do you look at that?.

So, Google rates going up are just there is more people betting, which drives the rates up. Utilization, people use paid search consistently. So, we’ve found it’s a good way to drive traffic. We will continue to spend money on paid search..

Our next question comes from Vikram Malhotra with Morgan Stanley..

So, I wanted to just get a sense of, as new supply is coming on line in the markets where you are seeing new supply, what are competitors doing in terms of maybe discounts or offering; how are they driving tenants into their properties versus your existing properties or even peers’ properties?.

I can tell you how we react and I would tell you that that depends on a little bit of the velocity. So, if the store comes in, and for instance, if we open a store in Venice, California, the store filed up in six months, I would tell you a store that competes with that store, shouldn’t have done anything; they should have just weathered the storm.

So, typically when we open a new store, a CO store, we’ll open it with rates 10% to 20% below market and we’ll discount every single rental. So, it really depends on velocity and lease-up velocity when you make a decision on what you are going to do with the store..

Okay. That makes sense. And then, just your comment on supply having sort of minimal impact, I guess so far.

What -- either tactically or from the revenue management system, what factors could drive street rate growth, materially lower from here and vice versa, could you see reacceleration, post-2017?.

So, street rate changes, I would tell you are just one of the factors in the model. If you want to drive occupancy, the way you drive occupancy is your lower rates, you increase paid search spend, and you increase discounts. So, it’s just one of the levers.

So, it’s going to depend obviously on your occupancy and your revenue growth; it’s just one of the factors in that..

Our next question comes from Neil Malkin with RBC Capital Markets..

Hey, guys. Thanks for taking the question.

First, what is the premium to move-outs above move-ins in the fourth quarter, and then, what are you seeing in January?.

So, if you look at our -- when we talk about premium on move-outs, we don’t talk about the rent roll down; what we’re talking about is our average in-place rents compared to our average street rate. And I would tell you that on average for the year, it’s mid to high single digits, depending on the time of the year.

So, in another words, when we’re raising rates in the summer that roll down or that negative mark is lower. But everybody does not move out in equal -- what I’m saying is you have more churn. Our medium length of stay is 6 to 7 months but our average length of stay is 14 months.

So, you have a group of units that are constantly churning to have a very short length of stay. So, many of those customers never received a rate increase or received one rate increase, and some of those moved in below street rates.

So, when they move out, it’s actually very little impact and also you have a large number of those that churn all the time. So, our negative mark-to-market is different than our in-place rents compared to our street rates..

Okay.

And then, do you have a sense at all what your portfolio gain to lease is, so just kind of putting into terms the in-place versus market? Would you say it’s mid single digit or…?.

I am not sure I understand the question, Neil..

So, if everyone were to move out and replace with marketing your portfolio, what would the roll down look like?.

I would tell you it’s -- where our average leases are fairly close to market, and it’s property-by-property..

Okay. And then, last one from me. Go ahead, sorry..

No. Go ahead..

You guys have commented for probably about 24 months now that the pace of lease-up on development in your CofO deals are well ahead of long-term trends.

Are you seeing that abate at all or is lease-up still very -- the pace is pretty aggressive, I mean just given the supply -- new supply coming on, are you seeing those timelines elongate?.

Yes. That’s a good question. So, the earliest CofOs we delivered, we stopped within a year, most of them, just way ahead of historical margin underwriting. The more recent deals are leasing up between 1 and 2 years, on average. So, certainly, the pace of lease-up has slowed down, but we’ve underwritten all of these deals at 36 to 42 months.

So, they are not leasing up as fast as they were but they are still leasing up generally ahead of projections..

Our next question comes from Gwen Clark with Evercore..

Sorry. I just have two hopefully quick follow-ups.

On G&A, can you remind us on how much I guess it costs when you put a managed asset into the pool?.

So, we actually have not just put that out in the public; it’s something we’ll consider looking at. But, we put a management fee into our properties that is what we consider a cost to manage when we underwrite..

Okay. That’s helpful.

And then just next, can you just walk us through the performance of the New York City boroughs?.

Sure. So, the five boroughs as opposed to our New York MSA which includes northern New Jersey and Long Island at revenue growth in the fourth quarter under 2% and for the year under 5%, about 4.7%..

And I’m not showing any further questions at this time. I would like to turn the call back over to our host..

Thank you everybody for joining our call. We appreciate your questions and look forward to speak next quarter. Thanks..

Ladies and gentlemen, this does conclude today’s presentation. You may now disconnect and have a wonderful day..