EXR
#Yes, so I mean our models obviously are always going to focus on maximizing revenue.
And when we looked at the models early in the year and the end of last year and estimated where the model would take us, we estimated that we would have more occupancy benefit than we have had.
The model has taken more rate and not pushed as much towards occupancy.
There are certain markets where we have maybe tweaked the model a little bit, in markets such as Denver where we have seen some softening of occupancy.
A couple of other markets where we've seen supply we have had to do the manual inputs into the model rather than ---+ just because things were going on within that submarket or that overall market that the model ---+ it is impossible for the model to read.
I would tell you Boston is one that is up against tougher comps.
We have seen some construction but not significant amounts of construction.
Boston was a very strong market for us last year.
And Washington DC is another market that has never been great.
I wouldn't tell you it decelerated significantly, it has been steady.
We actually had snow costs slightly above where we had estimated.
So we had a late storm and then it is timing of some invoices and things like that.
We had made some accruals, but our snow was slightly higher than what we were estimating.
I would tell you, <UNK>, over time I think it is going to be difficult.
Whether that is 4Q or Q1, I don't know.
I think it is going to depend a little bit on the strength of markets.
But I think things will at some point revert more to the historical norm.
I think that is just going to be natural.
That is the beauty of a diversified portfolio, some markets will be stronger than others.
You have seen some markets revert more to that historical norm already and others are lagging.
Our payroll and our turnover is very similar to prior years and we are not seeing a lot of pressure on our wages.
There's been some discussion about minimum wage and it has not become an issue for us just based on where we pay our managers today already.
So, <UNK>, it is <UNK>.
Let me give you just a little performance.
You have got revenue expenses, I am going to focus on NOI, because that is really where the rubber meets the road.
Over the last 10 years the simple average for NOI growth for the entire (technical difficulty) sector has been 5.3%.
For Extra Space during that same 10-year period it has been 6.7%.
The fact that we just posted 9.4% ought to tell you that even with some moderation we are still way above any historical norm.
And I don't see us falling off a cliff by any stretch.
Storage, if you go back to 1998 when I started with the Company, was used by about 6% of the US population.
Today that number is more than 9% of the US population.
One of the questions is, does that top out at 10%, 11%, 12%, 13%.
I don't know, but I think that at the end of the day we are in a really good position to maximize revenue.
And as I tried to state in my closing comments, look, NOI is only one contributor to our overall FFO performance.
You look at joint ventures, the most successful acquisition program in the industry and all the other elements that I enumerated which I am not going to repeat, they all contribute to what we are trying to do and that is grow FFO.
And we have got multiple levers that we are pulling to [produce] the industry's best FFO growth year in and year out.
It is just a good [markup] for us.
I think again, it is the cyclical nature of it.
I think Atlanta is doing really well today.
I think next year it could slow a little.
I would tell you it is probably ---+ I think supply will have some impact but I think also it is somewhat the fatigue within a market.
At some point you can't continue to push rates at 9%.
So we have been successful in keeping up our acquisition pace primarily through off-market transactions and transactions we are able to generate through our management plus or joint venture pipeline.
Pricing on the open market, for some of the reasons you mentioned, is difficult for us to get our minds around in general.
But we still think that these other avenues of growth are going to be available to us and will continue.
Prices are good particularly in the stores we manage.
We have been able to take their NOI up to very attractive levels.
And it is a good time to be a seller.
So, <UNK>, it is <UNK>.
As you look at our revenue management algorithm which has 56 different inputs, the whole philosophical underpinning is not about rate or occupancy, it is about maximizing revenue for a particular unit size code and a particular property, based on what we know about those elements that are under consideration.
So it is not rate, it is not occupancy, it is revenue.
I would tell you in terms of trends in the updated NAREIT I would tell you it continues to be ahead in revenues and behind on expenses.
So when we said it is performing within our expectations that is in terms of NOI.
So revenues are better, expenses are higher.
The majority of those expenses are timing.
We probably spent more earlier on R&M and on some of the office supplies, repair and maintenance type supplies than we originally estimated.
And we hope to recover some of those throughout the year.
But overall revenues are strong.
And then in terms of same-store pool, it will go in next year, January 2017.
So, <UNK>, it is <UNK>.
Just a couple of observations.
Number one, we do triangulate to the best of our ability using broker data, our own external field observations, the hardware vendors' data and just what we hear from other sources to come up with an estimate.
And when we talked about the 700 properties being built in the United States at this time, you have to recognize there are 14 states we don't even do business in.
And back to my earlier comment, it really doesn't matter what the number is, it just matters what the number of properties are that are being built within your competitive trade ring, whether it is 1 mile, 2 miles, 3 miles.
And I don't know how as an industry at this point we provide something that all analysts can triangulate on, but I think each of the individual public companies have generally been guiding toward what is coming up out of the ground that is within the trade area, because if it is not in the trade area it doesn't matter.
I actually don't have that right in front of me, but I know it has been trending in line with our estimates.
Our philosophy and our understanding is we think that we are approaching max occupancy.
And the reason being is it takes time for units to turn.
They typically sit vacant for a certain number of days before the new renter moves in.
They don't necessarily pass each other in the hall as one is moving out and the next is moving in.
And that comes from a lot of factors whether it is demand or whether that is our reservation policy at the time, where we allow someone to reserve a unit for maybe 7 days or 14 days depending on the occupancy of that unit.
And then that reservation may or may not turn into a rental.
So, at some point you are theoretically full, we have estimated that to be around 95% ---+ 96%.
So, 95%, is it possible.
Yes.
Right now we are not estimating we will hit it this year.
There is a good amount of product on the market.
I would say that a lot of it is of lesser quality.
We think cap rates have compressed a little bit this year, maybe 25 or 50 basis points.
Clearly there is a big premium for portfolios, we saw that in the large portfolio transaction that was previously announced by one of our peers.
And it is just ---+ it is a competitive lift.
The secret of self storage is out and there is a lot of money chasing it.
I think I would answer yes to most of your questions [with that], <UNK>.
The fact of the matter is the market is red-hot and for Extra Space, looking at 630 assets that are not wholly owned that are in our system to us is a meaningful acquisition pipeline that we can go after for years to come.
And I believe that every market travels in cycles.
And although things might be extremely competitive today, that necessarily won't be the case in future years.
So for us, we are going to continue to use a multi-pronged approach to growing this Company.
And I have talked about several growth levers that we are employing to make sure that we deliver the industry's best result.
<UNK>, I would maybe at one other possibility to kind of your realm of possibilities there and that is the deal doesn't actually sell.
At some point pricing will get to that point if it continues to not meet people's IRR curdles and their return hurdles.
It is possible things don't transact.
And I guess lastly, as was previously mentioned, you have seen us do a few more transactions in a JV structure because we get a premium return through that structure, which helps kind of bridge the gap between market pricing and the return that we are trying to get for our shareholders.
So it obviously differs by market by property.
If you look at where we compete with brand-new properties that are opening, I will give you a couple of examples.
We had one up in Harlem where we had a property open by one of our peers, a large property that filled up quickly.
Our properties still grew at almost 10% that year.
Now, that is not to say it couldn't have growing at 15%, but we still had a very solid growth.
We have had another property or two where for a year's time we had flat or slightly negative growth, but we haven't seen them fall off the map by any sense here.
So, we are pretty happy with where we are.
We don't see it going up significantly.
But if you look at the markets historically at least recently the bets on variable-rate debt have been right.
And we feel like it is at a point that is good for our shareholders as well as prudent.
I would tell you in terms of properties we buy that were not managed as well as CofO properties there is more runway.
Typically these properties are at lower rates than our properties, so we have the ability to push them for longer.
And typically in a Co O store we open at a rate that is below market and so we have the ability to push rates longer because it takes them a little bit of time to get them up to Street rates or what are normal market rates.
<UNK>, it is <UNK>.
There is one other thing on this renter fatigue.
I wouldn't take it too far because more than 50% of our customers walking in the door have never used self storage ever.
So they don't even know what they are up against.
So it is the more mature properties where you have got a lot of really long-term tenants that you might start to feel it.
