Extra Space Storage Inc. (EXR) Q4 2012 Earnings Report, Transcript and Summary

Greetings, and welcome to the Sovran Self Storage Fourth Quarter and Year-End 2012 Earnings Release Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator Instructions) As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Diane Piegza, Vice President, Corporate Communications. Thank you. You may begin.

Thank you, Christine and good morning. Welcome everyone for a fourth quarter 2012 conference call. Leading today’s call will be David Rogers, our Chief Executive Officer. Also participating are Andy Gregoire, Chief Financial Officer; Ed Killeen, Executive Vice President of Real Estate Management, and Paul Powell, Executive Vice President of Real Estate Investment. Each of you should have received the copy of our earnings release last evening. If you did not receive it and wish to be added to our distribution list, please email invest@sovranss.com. As a reminder, the following discussion and answers to your questions contain forward-looking statements. Sovran’s actual results may differ materially from projected results. Additional information concerning the factors that may cause such differences is included in our company’s SEC filings. Copies of these filings may be obtained by contacting the company or the SEC direct. At this time, I’ll turn the call over to Dave Rogers.

Thanks, Diane. Good morning everyone and welcome to our call. Q4 capped the year in fine fashion, as a matter of factor it was our best quarter ever. Demand is held up nicely, the internet marketing team, revenue management group, customer care reps and the store personal have all been doing a terrific job. Our recent acquisitions are performing like they should and we’re pretty much hitting on the free spot. I’ll let Andy to provide the details on the quarter, kind of quarter’s operating results in a second, but it was another good one, and we’re especially pleased because we came over some pretty tough comps. We’ve bought 14 stores this quarter, all of them in a three week rush at the end of December. We announced these in a prior release, so I’ll just give a quick review. Six stores were played in the Chicago market, giving us a total of 10 Uncle Bob’s stores there. Three were bought in Austin, Texas where we now have 12, one was in Phoenix, which is our 10th there and we bought 2 in Fort Myers and another two in Clearwater adding to an already pretty big presence in South West Florida. The property totaled just over a 1 million square feet and cost us $83 million. Many of these acquisitions were not even on the contract as of the date of our last conference call. They worked for the most part, brought into the full, as a result of sellers concerned about increased capital gain rates. It drove a rush at yearend but its caused kind of a dirt of 2013 contracts at least as of today. We do see some opportunities on the acquisitions front but it’s the seller market and the competition for quality asset is pretty fierce. Our balance sheet and liquidity position are solid, debt-to-EBITDA and debt service rate coverage ratios are strong. Our maturities are for the most part far-out and well staggered and we have plenty of dry powder available. So we’re well positioned to capitalize on the opportunities as they do arise. So, with that, let me turn the call over to Andy, who can provide some details on our quarter.

Thanks, Dave. Regarding operations, total revenues increased $7.6 million, a 13.9% increase over 2011 fourth quarter and property operating expenses increased by about $1.6 million resulting in an overall NOI increase of 16.8%. These total company results reflect the impact of the 29 stores we acquired in 2011, the 28 stores we acquired in 2012, the one store we opened in Richmond three years ago and the increase in same store NOI The same-store results in the quarter include $361 of our 391 company-owned stores. We provided some additional detail on the press release regarding our same-store revenue and expense component, but I’ll provide some highlights. Same-store revenues were strong again increasing 8.2% over those of the fourth quarter of 2011. This was primarily the result of the 590 basis points increase in average occupancy and the reduction in incentives offered to new customers. We also continue to see increases in Tenant’s insurance commissions on a year-over-year basis. Total operating expenses on the same-store basis increased by 1.8% as the reductions in the yellow page cost, utilities and other operating expenses were offset by increases in repairs and maintenance and insurance. Property taxes showed a significant increase for the quarter but the year-to-date increase of only 2.3% was lower than we had expected namely due to successful assessment of deals. Overall, then, with same-store revenues increasing 8.2% and same-store expenses increasing only 1.8%, same-store net operating income improved a healthy 11.7% over that of 2011 fourth quarter. DNA cost were $1 million higher this quarter over that of the previous year. Aside from the $194,000 increase in internet advertising. The main reason for the increase is the fact that we operated 33 more stores at the end of this quarter as compared to September 30th of 2011 and our company…

Okay, Andy thanks. Before we turn the call back over to the question queue, I’ll just make a quick observation on the Self Storage sector. Overall, we see ongoing strength here. The recent themes we been talking about are reinforced. Scale with the large operators drives an outside vintech on market share. Technology has a tremendous effect on customer reach and pricing efficiencies, the lack of new supply of allowing solid occupancy growth. And demand for our product continues to be knee driven. So our industry and our company are in a good place right now and we’re optimistic for helping 2013 continually right into 2014. And with that Christine, I’ll let you open the queue for questions.

Thank you. (Operator Instructions) Thank you our first question comes from the line of Jana Galan with Bank of America Merrill Lynch. Please proceed with your question. Jana Galan – Bank of America Merrill Lynch: Thank you good morning.

How are you Galan? Jana Galan – Bank of America Merrill Lynch: Follow-up on, right now you’re benefiting from this lack of new supply but are there any markets where it would make sense to start seeing development pickup and are you considering starting new development?

Good morning Jana, this is Paul. Yeah, we’re not seeing a lot of development per say especially since the development that we saw in 2012. But there is, we’re seeing in a few of our markets some development happening, but we’re not too concerned at this point. But I think you’ll see development in some of the major markets Chicago, Atlanta, out West, on the West Coast. I think if any development keeps coming, it’s going to be in these core markets whether there is high demand. So, again I don’t foresee anything come in, coming out of the ground within the next two, three years that’s going to be a very significant impact of in our operations. So we’re very pleased with seeing that limited supply. Jana Galan – Bank of America Merrill Lynch: Thank you. And then just maybe Andy can you let us know the ATM activity was in 4Q and in January?

Hi, Jana, we didn’t have any ATM activity in the fourth quarter or in January. We do expect the match-fund going forward and have some ATM activity in 2013 but we did not have any in the fourth quarter or January. Jana Galan – Bank of America Merrill Lynch: Okay, and just on the guidance, are there any distributions included in that?

No, there is not. Jana Galan – Bank of America Merrill Lynch: Thank you.

Our next question comes from the line of (inaudible) with Cantor Fitzgerald. Please proceed with your question.

Good morning.

Good morning.

First question I have is on your operations. So if we look into your 4Q results, your move-in for the quarter was negative and move-outs were positive, could you provide details on what’s driving that? Is it more of a reflection of the seasonal factors or did you guys try to push rent which drove negative move-in than a positive move outs?

Hi, this is Ed. Well, you know we’re – in the fourth quarter of 2012, we’re really were batting up against an incredible 2011. If you recall 2011 was, it looks quite an anomaly and it was probably the first time I think in the history of our company that our house were left, they’re not in. So just given that, that alone you’re going to see our outwing, I just talked a bit. They were off 5.2 against our 5.3% against 4.2% last year and year-to-date up in so just given that that the loan given the fee are out being just a bit they were up 5.2% against 4.2 last year and year-to-date up 2.7%. So just by again that alone – ‘11 was just so strong, we really consider that quarter an anomaly.

Okay. And second question I have is on your guidance specifically revenue driver. So 2012 was the year of solid occupancy growth. So when you look into 2013 and I know in the previous call you talked about optimal occupancy level being low 90s how much occupancy growth and rent growth is embedded in your revenue guidance?

Hi, Paul, it’s a combination there is approximately 250 to 300 basis points of occupancy growth embedded in the guidance with the rest being rate growth.

And which market specifically have room for more occupancy gains?

Sure, Paul this is Ed. It looks there is some, we’ve had some really strong quarters in the Georgia markets North Carolina, we were a little bit weaker in the Northeast so we don’t expect in 2013 we’re going to get those same occupancy gains but frankly looking at 2013 it’s difficult to identify exactly what markets we’re going to see the occupancy gains. Right now as Dave and Andy said we’re certainly looking at occupancy gains overall but it’s real difficult to say this year going forward what markets specifically are going to be stronger than others.

I think what we’ll see is probably more activity in the younger stores the stores we bought in 2010, 2011 and last year they were for the most past little bit earlier on the occupancy curve so it’s not so much markets as such as – well Florida I think probably Florida has been now where we saw some nice growth in 2012 in Florida but there is room in Florida and probably in the pockets that we bought in the last 2.5 years.

That’s very helpful, thank you.

Our next question comes from the line of Ross Nussbaum with UBS. Please proceed with your question. Ross Nussbaum – UBS: Hey guys, good morning. I am here with Christy McElroy. Couple of questions, first, can you quantify how much contribution incentive reductions had in the fourth quarter and what you’re looking at for 2013?

Hi, Ross. The incentives year-over-year we do see incentive given per customer by a 16% fourth quarter year-over-year. So, it went from $82 per customers to $68. We saw significant increase from our decrease on the previous year’s quarter but it actually uptick a little bit from 3Q, 3Q we were about $65 average pre-rent for a customer we’re at 68 bucks in the fourth quarter. Ross Nussbaum – UBS: Is that seasonal or was that in response to changing traffic other than seasonality?

It was seasonal, we would expect that to dip, we’re not going to get the big concession swings that we’ve had in the past, but we do expect concessions will dip second quarter and third quarter. Ross Nussbaum – UBS: So, as you look forward to 2013, are you expecting continued double-digit percent of reductions on the incentive front?

No, I don’t know, they will be in the single digit reductions. Ross Nussbaum – UBS: Okay. On the occupancy commentary you just provided 250 to 300 basis points of upside in 2013, that would it was sort of straight lined across the year, what would push you above 90% during the peak summer months, is that the right way to think about it?

Correct. Ross Nussbaum – UBS: Why and as you think about balancing revenue growth here, how are you thinking about pushing street rents with respect to balancing those excepted occupancy gains?

We’re still going to be very conservative Ross. We still see the move out, when we push them. We pushed hard early in the fourth quarter and we saw more move-outs than we like to see. We back off in December and January. We will push again March and April but if there’s’ not as much gain there as it looks because of the move-outs that occur. Ross Nussbaum – UBS: That’s interesting comment to me because I guess, I wonder, historically the highest occupancy rate we really ever seen out of any Self Storage company has been in the low 90s at PSA and I am just sort of wondering at what point do you reach the upper balance of occupancy and if there’s not a lot of traction and raising street rents into this sort of the, how should I say is, this is the last drop 2013 for the industry, you can get pricing talent?

I think Ross what we have thought, certainly for the 20 some years we been in the business is sort of a sealing at 90 and I think notwithstanding, watching what PSA did, and they do things little differently. We felt that with the technology gains that we have and some of the things we’re trying even to the extent in some markets and some parts of the year overbooking on reservations, we see the opportunity, primarily because of the technology to get into the ‘92 to ‘93 peak range. And I think that’s now, the upper limit moved. let’s say from that old fashion ‘90 to that. I’m not going to say we’re going to get there right away but I think we do have more room because of the efficiencies and the technology to bump that and make better use of the space we have. But as Ross Nussbaum – UBS: What do you think..

Sorry. Ross Nussbaum – UBS: Why do you think that the industry isn’t having as much success pushing the street rent, is it because of the private players? Have occupancy rates in the low 80s and therefore the public guys just can’t get the traction of pushing the street rent?

Hey Ross, this is Ed. I think just touching on what David said with technology driving, our performance, driving our success. What we do with web marketing that in essence is giving up the ability in a very micro way to increase asking rents. Because we’re actually able to drive customers to particular market based on occupancy and based on what our spend is in some of the major markets, and pay search and even organic search. So, I think the, we’ve mentioned over the past few quarters that there is a little bit of separation between the REITs and the rest of the world and that is truly because of the used up technology and you can take what we do and let marketing and really look at it and say that it directly impacts what we’re able to do with asking rates. Ross Nussbaum – UBS: Okay. Last question from me. Dave, this is sort of a slow point for me. If I look at your general and administrative expenses as a percentage of you NOI, in 2012 it was running, let’s call it in the 20% range. You’re now forecasting a pretty decent jump in G&A expense for 2013. I am going back and looking at your G&A expense 10, 15 years ago and was running 8%, 9%, 10% G&A as a percentage of NOI. And I am struggling here with how is the G&A’s percentage of NOI doubled over the last decade, where is the scalability here?

There is a whole host of factors Ross. The business has changed quite a bit, I mean 10 years ago one of the (inaudible) our call center which started out as a rollover basis and then grew to what it is now a fully functional and totally all inbound calls center. So a call center went from 0 to about 2.4 almost $3 million. We put in internet advertising in there, we try to break it up, I don’t know, what’s your number, if you get down and look up, I think for the’13 guidance over ‘12’s actual. We’re talking about 4.4% growth and in there a good part of that is the internet advertising but also as we talked about couple of other calls we brought in some product lines here that drop right into G&A for example the whole idea of third-party management. The margin on that is abysmal compared to what we get when we run the stores. So if we’re talking about knocking down a 6% management fee and 1% call center fee, we’re paying pretty long dollars on that to earn that 7%, we’ve got to settle it. All of those costs go into G&A. So there is a pretty big skew. We look at the reports that has drawn we know that but a lot of the things we’re doing here had made sense on the FFO basis, they made sense on the business lines business it’s just max the crap out of G&A. Ross Nussbaum – UBS: Thanks, I appreciate that.

Our next question comes from the line of Todd Thomas with KeyBanc Capital Markets. Please proceed with your question. Todd Thomas – KeyBanc Capital Markets: Hi, good morning.

Good morning Todd. Todd Thomas – KeyBanc Capital Markets: I am on with George Taylor as well. Good morning. First in terms of acquisitions I know there is nothing embedded in guidance. You talked about increased competition but there continues to be an increasing number of trades and the public REITs are coming off of a pretty solid year of investment activity in 2012. What do you think could be a reasonable expectation for 2013, do you think you could at least match last year’s volume based on what you are seeing for that?

Good morning. We’re, when we were coming into 2013 the opportunities were like I think we did a 14 core acquisition and now three weeks of 2012 because I think there are lot of sellers wanting to sell for the so called fiscal cliff kicks in. So we knew, we just didn’t see lot coming as in 2013. As January come and gone, we have seen an uptick with some opportunities that we’re were looking at and talking with brokers who been in the industry. We hearing that they’re going to bringing some different portfolios to the market. So, I mean right now, I would say we hope to do 100 million this year and that’s, I know this kind of guys who gave me in the 2012 and fortunately we had higher activity. So at this point, I think we’re pretty comfortable we are saying we will be about 100 million this year.

Todd with lot of the stuff that we’re looking and that we liked is kind of opportunistic and so even if we do $100 million to 150 million, I hope we do. You won’t see it right now, sitting here in February but some of that stuff is going to be 3.5, 4 yield range going, actually 50% occupancy. So a lot of the stabilized, good quality assets in good markets are not really bubbling up as much as you might think. You know the stores are having difficulty. They are there on the market but some of the stores, the Mom & Pops have not – a good store, it is a good store still and I don’t think to crack them and get them to sell is unchallenging. Todd Thomas – KeyBanc Capital Markets: Okay, and then you have about $70 million of availability on the line. You talked about some issuance, I guess with the increase share count under the ATM but how should we think about funding investments throughout the year.

Looking on those Todd we may get like we did in the third quarter, if we keep coming we’ll get ahead of it little bit with the ATM but we’re going to match fund trying to do, 60% 70% equity on acquisitions. Todd Thomas – KeyBanc Capital Markets: Okay and then just lastly sort of a question on the FFO guidance itself, if I look at the full year nominal same-store NOI which includes only 333 properties, it’s on page 12 of the release, grow that by the 5.25% midpoint for your same-store NOI forecast. The incremental NOI is almost $0.24 a share and that added to the normalized FFO result of the year 328 that gets you to about 352 right there. So, I guess the share count increases a few pennies but that leaves almost 60 non-same-store properties where, we’re not really accounting for any growth or any new investment activity or there are some assumptions acting as an offset to the FFO guidance that I’m missing here that you can help me reconcile little bit.

Well I think, I think the expenses that really going to get hurt us which should be covered in the guidance, the property taxes, we’ve got some, we had some benefit in 2012 where we actually had some refunds that knocked out property taxes down that’s why you’re seeing that big number next year. I think this year 2012 I should say was under towards by some refunds and next year is going to look higher, and that’s a big chunk of our expenses on the property tax line and the acquisition you get a pretty good pop on the property taxes that year two sometimes municipalities don’t get to year one but year two you’re going to see a pretty big pop in property taxes. The snow removal, bank charges, utilities we expect popped in all three of those in 2013 compared to 2012. But other than the share count I think you got it. Todd Thomas – KeyBanc Capital Markets: Okay. So sounds like the non-same-same store properties you’re expecting there to be increased real estate taxes and some other operating expenses on that full properties that would offset any incremental growth from the non-same-same store segment?

Correct, I think the cost on those properties will be fixed heavier weight than our same-store pool. Todd Thomas – KeyBanc Capital Markets: Okay, thank you.

Our next question comes from the line of Paul Adornato with BMO Capital Markets. Please proceed with your question. Paul Adornato – BMO Capital Markets: Hi, good morning.

Hi, Paul. Paul Adornato – BMO Capital Markets: I got a follow up question on the guidance in talking about the full year 2013 you’ve said you’re expecting a strong first half and a second half. Is there anything specific to point to that gets you to a slower second half or is that just because it’s much visible further out there?

It’s a combinations of a few things Paul, it’s less visible and we have, we had two 8% growth revenue growth, third and fourth quarter, those are the tough comps that bump again. Our insurance kicks in March 01, so we’re going to have a bump here about 10% bump in the insurance cost that renews March 01, and we just signed up for that, it’s just, it’s tough insurance market for us out there right now so those are the drivers. Paul Adornato – BMO Capital Markets: Okay. And looking at acquisitions versus cost of capital I was wondering if you could walk us through the math these days that is, cap rate compression is that more than offset by improvement in cost to capital or, what is the how is the math expected for this year?

I’ll let Andy get into the details, because the idea that we’ve had for the last couple of years has been to buy the properties in an opportunistic events. We look forward – some effects in our markets. We know the markets, we know that the properties are underperforming and with some of our platforms put in place, we can grow those from our 3.5%, 4% over a period of three years to a pretty healthy say 8, 8.5% yield. So that’s the going in part. So, when you start in that first year, it was up pretty low yield. We want to keep our balance sheet conservative and yield. So, the idea of the match funding doing outs here than in addition or in conjunction with that issuance is sort of how we looked at it.

And I think Paul, the big picture we look at and step back and their cost to capital, let’s look at the preferred market and see what your long-term cost taper with. Yes, we can fund with 2% money today, but. Year in, mid to high 6s perverting market out there now. Next sort of what we look at the examination. Sure we can get pass that long term cost capital and we do that. Right now, we’re using the ATM and the max bonded in the line but we see that long-term profit capital being above 6.5% Paul Adornato – BMO Capital Markets: Okay. And finally, I was wondering if you could just touch on your third-party management business, what are your expectations for 2013 in terms of adding properties and what kind of opportunities do you see in that platform?

Good morning, Paul. Yeah, in 2012 we added 17 properties to our management platform probably to that 71 including our JV partners. We’re moving full steam ahead with our third-party management platform. We’re out quite a lot being with owners. We’re being little more selective on the properties that we bring into to management because these are typically properties we want to acquire at some points. So we’re somewhat conservative there. So, it’s hard to say, I know our UVM team has been very active traveling over the last few months. We brought in a couple of already this year and so I would say we would hope to bring in another 20 to 25 this year and hopefully it’s more but that’s what, that’s what we think we’ll do this year in 2013. Paul Adornato – BMO Capital Markets: Okay, what’s the marketing efforts, do you guys call on property owners or is it incoming calls?

No, it’s some incoming calls but we’re very proactive. We network with a lot of brokers and mortgage brokers out there that work within the industry, we get a lot of referrals that way. There is a lot of calling and actually word of mouth now has been very good addition to us, people that we’ve taken on their properties they’ve been very pleased and so we’re getting some referrals in that regard. So it’s really affective to step up especially this year and going into 2014. Paul Adornato – BMO Capital Markets: Okay thank you.

Our next question comes from the line of Eric Wolfe with Citigroup. Please proceed with your question. Eric Wolfe – Citigroup: Hi, good morning.

Hi, Eric. Eric Wolfe – Citigroup: Just wanted to follow up on Todd’s question because I am also struggling with how you get the sort of call it, 6% core FFO growth this year when you are doing 5.25 same-store NOI growth. Are you assuming that it’s going to be turning up in line with equity proceeds or because I am struggling I get the same math that he is I don’t see how you get down to 6% when you are already getting more than that from your same-store NOI growth alone?

Yes, Eric we will be – we do not expect to term out the line. We do expect to replace a portion of it with the ATM. We do expect we have $100 million coming due in September we would term that out, we’ll probably go to the private market, we don’t think we will hire, that’s eligible 250 million available asset time to do a public offering. So, we do expect there will be some ATM issuance that’s again issuance those shares of 3.1 million shares for the year is a good way to use and I think that’s what dragging it down in your model. Eric Wolfe – Citigroup: Okay. And then also are you seeing any contribution I know you are not from 2013 transaction activity that’s clear but are you seeing any benefits from the assets you bought in 2011 and 2012 as well as your enhancement program just in 2013, I am just trying to understand because in the past you talked about buying the yield that initially were not accretive but over time than become accretive as occupancy ramped up, so I was trying to understand if there is any benefit in 2013 from that activity?

Eric regarding the expansions 10 million of those were completed in December and we expect a drag for the first few months of those, come the busy season we would expect to see some activity on those obviously. But we budget a 24-month to get the 85% so our guidance assumes that those expansions we’ve done they are going to get to 85% over 24 months so that’s how we determine our guidance.

With regard to the acquisition Eric the 2010 acquisitions that we made popped in this year and they were very nice. They were a group that we bought in Carolinas primarily Charlotte in December of 2010 they came into the same-store pool in January of 2012 and they went from about 53% occupancy when we bought it to the low 70s at the end of 2012 so it was about 2000 basis points jump in two years that was great. The stuff we bought in 2011 for the most part that was a little more mature and there is big joint venture product but a lot of the 2011 stuff was pretty mature. The stuff we bought in 2012 won’t enter into the same-store pool until later especially the opportunistic stuff that we bought but that will, that should push us in 4Q especially when we bring on those in the same-store pool. But I guess the short answer to your question is the older stuff that we bought 2010 or ‘11 is working well that is in the same store numbers the stuff we bought in 2012 especially the half that we bought the last three weeks of the year it’s going to take a little bit up of ramping up to do but it probably by June we should be hitting it pretty good adding some value and some NOI to those properties. Eric Wolfe – Citigroup: Got you, that’s helpful and then last question if I could just dig into the G&A a little bit more, it looks like your management initiative line item went up by about 30% this year and obviously you guys had a fantastic year from the stock performance perspective and a growth perspective obviously expect incentive comp to be up but can you just help us going to understand how much of that increase was due to increased compensation versus what was due to increased personnel as a result for the acquisition?

It was a combination of both but the incentive comp went significantly up in 2012 over 2011, there is probably another $1 million paid in 2012 on the incentive comp. The record is really to cover those management contract, the increase in internet advertising that was what was driving the G&A and the revenue and the total new department in ‘11 we added more in ‘12. So that’s grew the G&A in ‘12 also.

You should know Eric that the incentive comps went down to about 140 people that was a pretty widely displayed but we had as I said the best quarter even and one of our very best years ever. So the way we’ve compensated folks here has been pretty much, everybody in the corporate office including the area managers, out in the field, the project managers, out in the field and the field trainers and so forth are incentive on a overall plan. So it went deep but is there any sort of little over million dollars this year that is not ahead, whether they’re certainly in 2011, 2010, it will be nice if it was there in 2013, we’ll have to see. But that was a big chunk and most of it was – we striked some of that out through the year but a bunch of it is at the end as well. Eric Wolfe – Citigroup: Sure, certainly. You’ve done a fantastic year, so understandable. But, and then just for 2013, it sounds like from one year last answers it’s mainly major driver and I know it’s going to go buy by 4% or 5% the driver for 2013 is Internet advertising just that ramp there?

Correct. Eric Wolfe – Citigroup: Okay, great. Thanks guys.

You’re welcome.

(Operator Instructions). Our next question comes from the line of Jeremy Metz with Deutsche Bank. Please proceed with your question. Jeremy Metz – Deutsche Bank: Hey, good morning guys.

Hi. Jeremy Metz – Deutsche Bank: Just a few quick questions. First off Andy, earlier you had mentioned mass recruiting some of the older assets in 2013, could you provide a little more color on that? Do you have any of the market right now, or TW hit the market?

No, good morning Jeremy this is Paul. Yeah, we continually review our portfolio and we’re looking to sell assets in mature markets or markets where we want to exit. We’ve got a few, we’ve identified but they are not actively marketed yet. So it’s going to be, we haven’t made a final decision on which on. So we’ll be, we hope, we’re thinking maybe, 5 to 10 max this year. So we should start marketing it two days over the next month or two. But nothing really been finalized at this point. Jeremy Metz – Deutsche Bank: And if you sold those other 10 units range of just expected proceeds from this?

We don’t because we haven’t decided which ones we want yet but... Jeremy Metz – Deutsche Bank: Okay.

I think for modeling purpose Jeremy you could assume less than 50 million. Jeremy Metz – Deutsche Bank: Okay great thanks. And then just going back to the expense gains excluding the real estate taxes it seems a little high at 3.5 to 4.5 it sounds like again you are expecting a pretty big bump in insurance coming in March. Just what are the long items really driving that increase?

The few items, remember were unusual in 2012 Jeremy with utilities the snow removal we’re going to get into snow removal definitely more than we did last year and we’ve had some recent incidents that will cause that to spike. Bank charges that went away last year remember so we’ve got some tough comps on bank charges they are going to be show like a 10% increases, utilities we’re looking at a 5% to 7% and then insurance at 10% so there is some good bumps in those and the property tax is a big number I mean that’s 28% of our expense lines so property taxes dragging us out.

The other think we’re missing and we’ve had a pretty big decline in Yellow Page advertising over the last 2.5 years or so that’s pretty much leveling off now. We have a little bit of a decline but for the most part the low hanging fruits have been taken as ease out the Yellow Pages and over to internet. Jeremy Metz – Deutsche Bank: Okay, that’s helpful thanks. Then one other and I’ll – sorry if I missed this but I know you have 100 million of maturities coming due in September, you have 100 million on the line right now. Is there a thought that that you would adjust all with the ATM is that what’s the assumption in guidance?

Well, the assumption in guidance Jeremy we paid down some of the line within ATM, you know 100 million coming due in September we expect to term that out we like long term is at least 10 years you are going to see us go out but I don’t think we expect to use the ATM to term out that 100 million that is due in September. Jeremy Metz – Deutsche Bank: Okay. And the last one from me is just looking at your first quarter guidances $0.80 to $0.82 versus $0.83 in 4Q, is there slowdown there, especially given that you just have the acquisitions late in 4Q so they should really be rolling in, is the slowdown there really driven by and the expenses going up or do you expect now little bit of different occupancy?

It’s really the expenses going up Jeremy utility is a very high in Q1, now removal will be high so there is a few, it’s the expense line that’s driving the revenue lines is holding pretty strong.

And some of the 20B was a pretty good concentration we haven’t, we’re just now getting those stores those 14 that we bought in December online so the startup 14 all hit back in January and early February.

There is couple of other unusual items Jeremy there, software amortization for our revenue and software that’s full blown in 2013 and so we purchase some truck in the fourth quarter and their depreciation will hit in 2013 so there is a couple of old ball things they are not used but they will hit us in 2013. Jeremy Metz – Deutsche Bank: Got it, that’s it from me, thanks guys.

Our next question is a follow up question from Ross Nussbaum with UBS. Please proceed with your question. Ross Nussbaum – UBS: Hi, thanks. Hey Dave do you have off the hand what the occupancy of your non- same-store assets is?

We added now with the 14, I don’t think we have it with the 14 but I don’t think we have. I know it’s considerably less than the 87 we put out at December, we’ll see that back actually now we don’t have it broken out. Ross Nussbaum – UBS: Okay I’ll follow up with you. I’m trying to figure beyond your core same-store growth, sort of what, how much true cash flow growth and how many quote is from those non same store assets?

Okay. Ross Nussbaum – UBS: Okay, well fine appreciate it.

Mr. Rogers, we have no further questions at this, I would now like to turn the floor back over to you for closing comments.

Thank you, Christine. And thank you everyone for your ongoing interest in our story and your continued support. Take care and thank you.

Ladies and gentlemen, this does conclude today’s teleconference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.