Greetings, ladies and gentlemen, and welcome to the U-Store-It Trust third quarter 2007 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, Mr. Dean Jernigan, President and CEO for U-Store-It Trust. Thank you, Mr. Jernigan. You may begin.

Good morning to all of you. I'll start with the cautionary statement. The Company's remarks will include certain forward-looking statements regarding earnings and strategies that involve risks, uncertainties and other factors that may cause the actual results to differ materially from those forward-looking statements. These risk factors that could cause our actual results to differ materially from forward-looking statements are provided in documents that the Company files with the SEC, specifically Form 8-K filed this morning, together with our earnings release with Form 8-K in the "Business Risk Factors" section of the Company's Annual Report on Form 10-K. Additionally, the Company's remarks will include reference to non-GAAP measures. A reconciliation between GAAP and non-GAAP measures can be found on the Company's website, at https://www.cubesmart.com. This morning, I'll let Chris Marr, our CFO, start and talk about the quarter. And then after Chris, I will come back and make some comments. And then we'll go to Q&A. Chris?

Thanks, Dean. And as Dean mentioned, he'll proving an overview of the operational achievements for the quarter. I'll touch briefly on that and then focus on the balance sheet and P&L points of focus for the third quarter of 2007. We are pleased with the occupancy gains that we were able to make during the quarter, a sequential gain of 220 basis points over -- on our average occupancy, over what we were able to achieve in the second quarter of 2007 and as compared to the third quarter of last year a 130-basis-point improvement. We've addressed and resolved our issues that we had with accounts receivable, which when you think about the fact that moving most of those tenants out and auctioning of the units actually creates, obviously, a vacancy. The occupancy achievements that we were able to realize during the quarter are even that much more satisfying to us. From a balance sheet point of view, we did close in mid-September on the 14-property acquisition for a $121 million. To finance that acquisition, we entered into a $50 million financing, which we were able to do with spreads equal to our existing credit facility, which when you think back to the market turmoil in mid-September was execution that we are pleased with. We drew down actually on that facility $47.4 million and when we used our revolver to fund the remaining capital needed for that acquisition. We also paired back our floating rate exposure late in the third quarter by entering into $75 million of swaps and $40 million of caps, and those are outlined in our supplemental material, which is available on our website. We currently have approximately $58.5 million of capacity under the existing credit facility. We were impacted by the sharp rise in LIBOR during…

Okay. Thanks, Chris. The quarter is a good example of what I've thought for many years is a difficult environment for a real estate company who owns and manages and operates long-lived assets to be measured on a quarter-by-quarter basis. We played a very good gain during the third quarter. However, the final score did not result. The final score did not represent, I think, the gains that we achieved during the quarter. And I want to talk about some of those. When we started the heavy discounting in June 15, we talked about their last quarter's call. We obviously enter into a rebuilding year, as far as I'm concerned for '07. We knew '07 was going to be a rebuilding year to begin with. Going into the year that became an even more important rebuilding year, as we met the market with discounts and started to add occupancy, which Chris spoke about and it's, of course, in our new release during the third quarter. We also, as Chris mentioned, invested in our assets during the third quarter. We have added, at each division -- four divisions across the country. Some very important people to us are called facility service managers. And these are construction guys who are responsible for bringing our product up to a certain level of acceptance as far as we are concerned from a management standpoint and as far as we are concerned from a management standpoint and as far as our customers are concerned. For example, so far this year, we've repainted 100 properties. We have about another 60 to go. So during the quarter, as you would think, considering the climate across 26 states in which we operate, we got a lot of work done in the third quarter -- in the second quarter.…

Thank you. We'll now be conducting question-and-answer session (Operator Instruction). Our first question comes from Christine Mcelroy with Banc of America.

Hi, good morning. In the past you guys have talked about the portfolio is being in different buckets, some of which are good assets, some of which either need to be proven or need work. Can you give us a sense, as you look at portfolio today? What's your strategy for non-core assets sales?

Hi. Christy, it's Chris. As we come to the close here in this year we are also bringing to a close a process that we've been working through for the last several months and looking at all of the assets in the portfolio and developing a ranking with your best asset all the way down to the assets that falls through to the bottom of the list. It's a process that we did at storage USA and it was repeated. Thereafter, the company was sold and we basically replicated that process here. And it gives us a fabulous amount of data on each asset and allows us to eventually look at things from really a hold IRR type approach to say, if an asset may in fact to be well occupied, but is in a lower rent part of the country, and the upside to that asset is fairly muted to perform an analysis to say we better off on all things relative, taking in to account cap rates in those markets etcetera. Looking to exit that asset and redeployed that capital in to markets that have higher growth potential, even if in the near term, it's at a lower cap rate. That process is drawn to close, out of that will come a disposition effort, which will begin later this year, or at the beginning of next year. And we do anticipate having as a source of capital in 2008, proceeds from the sales of those assets that don't fit long-term into the growth strategy of the portfolio.

And then, what about assets that are in a non-great shape, but on really good real estate, is there any redevelopment in our expansion potential within your portfolio? And you -- would you ever consider bringing -- potentially bringing in a partner to help provide investment capital?

Well, Christy, I'll let Chris to speak to the capital part out. As far as the assay is concerned, I mean we certainly have ongoing programs as it relates to income producing capital expenditure programs, where we are converting some stage decline withdrawal. We've had an addition going and we will have some, I'd recall, an early model product, maybe one that's build in the 80s who have a situation where we will redo the office completely. Maybe chop-up the officer and build a new storey building. So, those are going to speak the capital and I'll be surprise when you look partner for that.

A partner for that given the dollar volume is probably, not necessary nor the right answer. In general, we've spoken before, we have had great experiences with the joint venture concept in the past. We had several in places at storage USA. And so, again as we work through the assets and our ability to move forward growing the NOI. The idea of potentially bringing in a partner given where the equity capital markets are today to help provide some growth capital is something that we will continue to look at.

Okay. And then just lastly in terms of the incremental repair and maintenance and housekeeping cost, I just want to make sure I understand your comments earlier. How much of that increase will be recurring going forward? And how much was one time in nature? Is this basically the new run rate for operating expenses?

I think our R&M will settle down for next year. And in other words, we're getting everything fixed this year that would be expenses in R&M item. As far as the maintenance CapEx item is concerned, we still do have some paining. And I'll Chris speak to that, but we do still have some work to do next year.

And right now as we are looking at the capital per square foot for next year that number is coming in on the entire portfolio around $0.30 a foot.

Okay. So, the expense part of that should settle down, but the capitalize cost should stay?

They are consistent right. And I think just given all the work that was able to get done in the warm October, the way we've reflected the guidance, we've assumed the continuation into the fourth quarter of heavier R&M and then that will stabilize in '08.

Okay. Thanks guys.

Thank you. Our next question comes from Jonathan Litt with Citigroup.

Hi, this is Sadler Jordan with Jonathan Litt. Given that cash flow excluding one timers was around $0.20 and the dividend is $0.29 what would be a recognition of the quarter?

Yeah, good question. We've been very consistent in our response to that question. In mid December, we have an annual board planning session, at which point we will have the 2008 budget process completed. We will have our capital expenditure budget another $0.30 number as I spoke as if today finalized and we will go through a process rooted in data in facts to identify our '08 expectations. And then the ultimate decision on the dividend will come out of that process. It is Board decision as to what the dividend policy is for next year, and we've said all long we'll have all the facts that you would expect we would have and would need to make a decision on that. It will be made in December. And we will provide both the dividend as well as the FFO guidance at that time.

Okay. And on asset sales of I guess non-core asset sales, do you have any idea of the expected range of proceeds in 2008?

Now at this point in time as I said, we are coming to the end of the process and we'll have more information for you and an ability to quick dollars around that in an accurate way as we talk after the fourth quarter.

And my final question is, when did, I guess which was the decision to spend the money to or spend the money now to improve if we look at the assets, as suppose to I guess starting on this earlier or later?

As far as early is concerned, as far as earliest we could do it. As I said there are facility service managers in place in the second quarter and I mean its not like that we wont investing in the obvious step, but being in 26 states and many on Northern state's is very difficult to get things done in the first quarter and even into most of the summer second quarter. So that lot of work just does fall in the summer time, but we are investing when and where appropriate adequate numbers of dollars to make this portfolio competitive and or getting there.

Okay. Thank you.

Thank you. Our next question comes from Kristine Kim (ph) with Deutsche Bank.

Hi, good morning. Just in terms of the expense this quarter and it looks like drivers, there was a primary driver for the reduction in guidance, I mean when do we changed from last quarter that you didn't know then in terms of how much you are going to spend on this properties?

Well it's not the fact to being out there, but it's basically everything that we've talked about. We have brought the people on board to go out and make sure that the asset is as presentable as it needs to be. There are things that can get done that we were able to get done during the quarter that came at a cost. The continuation of having Sunday hours, the adding of personnel at the sites to make sure that we always had our Manager, President, that we were stepped up to meet customer demand. All things driven towards making sure that we're able to capture more than our share of the customers, who drove by or picked up the phone and called So it became just a continued investment in both people and assets to gain the physical occupancy and that ended up paying-off, we think in terms of the gains we're able to make versus what the industry, national data shows and what we've seen reported from the other public companies.

Does that all make sense, but and it was skill for the program just not as big when you gave your guidance last quarter?

I think it's the skill for the program, its the pace that which things were able to be accomplished, it was the collaboration of the whether which allowed for a lot of the patching and painting and things like that to get done. It was culturally a push to say, we want to be in a position on January 1 that we've got this work complete. We've got the people in place to rent the units. We've got the facilities looking as good as they can. And less gain as much occupancy as we can between now and then. So that we hit 1-1 on a much higher basis than where we started 1/1/07 and then built for mat occupancy objectives as we got to July 31 of next year.

And could you just touch upon how the occupancy is been trending following the end of the quarter and what sort of occupancy pick up you have in your new guidance assumptions?

We're now moving into a seasonal mode where you would expect to see net vacates as we remove through toward the end of the year, so our same store occupancy assumption for Q4 is an average occupancy of 82% and that compares to the average occupancy during the quarter of 83.6. So you can see the seasonal trends, as things slowdown in September, you have less move-inn and October, November, December. The flip side of that is, you also have less move-outs. But generally speaking we would expect net vacates during the final three months of the year.

Great. Thank you.

Thank you. Our next question comes from Paul Adornato with BMO Capital Markets.

Thanks. I was wondering, if you could just give us an example of some capitalized items that you spent on during the quarter.

Items that get ended up being hunk up on the balance sheet or items that ended up getting expensed?

On, the balance sheet.

That would be painting an entire facility, re-roofing, replacing all of the light fixtures those type of cost.

Okay. How much do you expect to spend on those items going forward.

That would be the $0.30 per foot that we talked about in 2008.

Okay. And finally on the rising type portfolio, what economics did you achieve on bringing those in-house.

Yeah. The integration now, obviously was very easy as we were managing those asset, those facilities, it's a great question, and let me make one point. Our total portfolio occupancy, as we have laid out in the earnings release at 81.5% at September 30. That does include the rising tight assets in that figure. So those asset at the end of September were 70.6% physically occupied. So absent those, the entire portfolio was 82% physically occupied, I think that's a point that I'm glad you brought about, it's important for folks to look at. The cap rate, that we're looking at as we look at Q4 guidance for those asset is they'll yield about 5% in the fourth quarter, and as we said on the last earning call our expectation for all of 2008 is those move up closer to 6% as we lease them up, but clearly there will be dilution not only in Q4, but in the first two quarters of next year until we really get in to court of rental season.

Okay. And looking at bad debt, is that 2.4%, does that have any kind of hang over clean up from earlier in the year.

Yeah, I would say the third quarter as we expected, we still had some clean up in the early parts of the quarter, but as we have said the problem has been fixed, it's not something that we would find it necessary to dwell on going forward, and again I think as we move in the 2008 the year-over-year compression will be much to are benefit.

Okay. And so what should we assume as a percentage of bad debt going forward?

The 2.4 -- just also make sure, we are all here on the same page. That's the AOR, that's actually greater than 30 days old as a percentage of our projected rent. Bad debt as a percentage of revenues have been running right around 3%, coming down from as much as 5% in the fourth quarter of '06. And you would think both revenue growth and that number comes down in Q4 going forward that 3% will just trend down.

Okay, thank you.

Thank you. Our next question comes from Michael Knott with Green Street Advisors.

Hi, guys. Can you talk for a minute about the performance of the non-same store pool? I think it's about fixed in 6 million square feet or so. It looks like the NOI actually came down a lot compared to second quarter even though you added the Rising Tide at some point during the quarter. Can you just talk about the performance of that pool?

Sure. That would be mostly the assets that were purchased in 2006. From a yield perspective, while the net operating income across the board would have been negative, those assets -- it's a tough comp, because you're going to have them coming in obviously on a staggered basis during the first few quarters of 2006, and then we've got them for the whole period. The other thing that tends to impact those assets negatively, when we talk about the prior question on bad debts, now those are some assets where we would have had slightly heavier write-offs, as we brought in receivables and then had to go through the integration of making sure the managers that are there either stay and if they don't stay bringing in replacement managers etcetera. So those are an area. We are on the integration of those properties into the portfolio. There is usually some slippage there. And we ended up paying for that a little bit more heavily in that pool as we clean that up.

If I look at the 2Q supplemental and compare it to the 3Q supplemental, it look like the NOI from that pool fell by 40% or so, is that bigger variance explained by all those sectors?

No, I also think that you have got that as kind of a bit of a bucket that's the catchall for operating expenses that don't really hit, that are not property specific to some extent. So there is clearly some -- by looking at the way you're looking at it, you are taking a lump of non-direct property operating expenses that in the data that you have right now is hitting those and you're going to look at it that way. So it would be, I think as we get the filing the Q, I think the tables in there will be a little bit more self-explanatory to break those out without those costs.

And what's the aggregate cost of this non-same store pool?

The actual investments are in those assets?

Yes.

Well, I don't have that number of top of my head.

Okay.

Hi Mike, it's Dean. When I am out there looking at properties, when I am out there talking to managers and our DMs and whatnot, I really don't see a lot of difference between the non-same store and the same store. I mean, we're just liking to see numbers pretty close, we're operating them saying. So I am not sure what the accounting perspective is on this and what you're -- the answer, that Chris has gave you, but I mean, I think its pretty safe to say debt arising type coming in at 70% as I see, during quarter that our non-same store properties tend to look like our same store properties of this point in time.

Thanks.

Thank you. Our next question comes from David Toti with Lehman Brothers.

Good morning guys.

Good morning.

Good morning David.

Couple of question maybe I missed this. Could you talk about your, if there is any strategy around 2009 debt explorations?

The majority, we did not. Good question. The majority of the debt that comes due in 2009 is the term loan and the credit facility both of which have one-year extension options that can be pushed back into 2010. So that is all our floating rate debt. And at this stage we're still looking at, what the various strategies are to, either term that out or pay that down as we go forward whether that proceeds from dispositions, whether that's proceeds from a joint venture as we talked about earlier whether that's simply terming that debt out or re hoping on the revolver.

Okay. Second question will be different, are you seeing any change in the dynamics between the mix of residential, private customers and business customers? And with regard to the business customers is there any change in the length of stay for those customers on average?

We're not seeing change David and that really surprises me because the numbers that I am looking at know and in the October surveys, basically the same as we saw on the September surveys that we did back in 1995 and 1996, about 40% of your first time, -- I mean the customers walking up during the months of October, 20% said that were restoring for commercial reasons. And what happens as your, 10 years ago 12 years ago, our average length of stay or our length of stay was about 11 months and you heard me say that we're now up to almost 12 months, which would state to the commercial customer staying a little bit longer. It has been 26 months average length of stay for the commercial customer and about and about 6 months, 6.5 months for the residential customer. We're refining those number right now obviously our September our October surveys we just over with couple of days ago. But it doesn't appear at first glance that it's changing much. When you say 20% in your customers are commercial customers then if you do the math and you say the other 80% change turned on a 6 to 6.5 months basis and the 20% you keep to adding and they stay 26 months. If you take snapshot of your facility, each facility should look, like it has about 30%, I mean, one point of time -- between 30 to 35% commercial customer usage, but those are kind of the numbers away they are now and as we refine our survey results we'll write off some more bad debts as we go forward.

Okay. Thanks just and then just one last question. Can you give us a quick update as to the state of your internal systems in terms of the integration with the facilities, if there is any dynamic pricing capacity that you integrated from these systems recently, I am just wondering what the progress is there?

Yes, we integrated this CenterShift system. All the properties were up on that in October of last year. So we are quite happy having October of this year come upon us because we now have the ability to analyze information on a year-over-year basis coming out of the same system and presented in the same fashion, so that will make our lives much more productive here going forward. Within the capabilities of that system, there are revenue management components to it that impact pricing. We do have two-person revenue management department, which analyzes all of the data available to us on a daily basis and helps make decisions on increasing rents to existing customers, changing street lamps etcetera. So we are about 12 months under our belt now with that system. We now have a full 12 months worth of historical data, which is very important to be able to build off of going forward. And so I think our revenue management capabilities are going to be sequentially improving as we move forward now that we have good historical data.

Great. Thank you, guys. Operator: Thank you. Our next question comes from Chris Pike with Merrill Lynch.

Hi. Good morning, everybody.

Hi. Chris.

Real quick, just to follow-up back upon that, who is doing your revenue management?

Within the company?

Yeah. Are there any new hires either regionally, back at home office specifically for this job, I mean who is doing that?

Well, what's the -- as far as the particular people are concerned, one is the former Storage USA employed and the other one was a U-Store-It regional manager when we got here, You know it was that MBA-type that is very keen on this particular job, and he was a natural fit for us. And they have been at the job now for about a year, but the fact is that we have -- the data that they had worked with is been -- we have been refining that data for the past year. And as Chris said, now that we have year-over-year numbers, we expect to have even better forecasting models and the opportunity for these folks to do their job in a little bit better fashion.

So Dean, I guess, is the staffing both at the regional and their new headquarters, is everything complete? Should we expect any new hires in the next three, six, nine months? Are you lacking in any capacity in any format?

Yes. I will tell you as we go forward, there is a key hire that I have online was for 2008. And that is someone who has real estate development experience in self-storage as we moved into a development stage in 2008. Right now, I'm the developer in the company and I'd be looking for some support. So, there would be -- that's my only key hire. Everything else is done, in place, but I am looking to add one person in 2008.

Okay. And I guess back to your comments regarding the disposition strategy. Are there any assets out in the marketplace right now or is that going to happen later on in '07, early '08?

You would expect to see things come out in later in this year, in the early next year.

That means announced sales or you guys are putting assets out in the market?

Putting assets out in the market.

Okay. And the proceeds of those assets -- I am sorry -- I got on a little late -- what would be the ultimate proceeds of those assets?

Yes. We have not put a dollar parameter around that yet. We're getting close to finalizing that whole program and so we would have more information on that as we release the report?

No, no. Where would they be if recycle bin too--?

I am sorry, Chris. I didn't understand the question.

I'm sorry about that.

We would look at a combination of bringing down the leverage that was put on to acquire the 14 assets we closed on in September. And than as we always have, take a look at where the shares are trading and the relative accretion, both FFO and NAV from a buyback and always look at -- have the acquisition markets here move in 2008 and see if there is any compelling opportunity there on top of what we could get by, by buying back our shares.

Good. That was my next question, Chris. I guess the Form-IV showed some relatively modest and sober buying display to where the shares were trading this quarter and can you just remind me if your current authorization and I guess, Dean, can you talk about how you feel about buying back stock, with the ten handle on it right now?

The current authorization is $3 million. Given the capital constraints following our closing of our acquisition, we have not yet utilized that capacity. And again, as you would expect, we look at it by saying what's the relative NAV accretion, how does it impact FFO? And consistent with what we said last quarter, to the extent we have proceeds that would allow us to buy back stock without continuing to increase our leverage, that is certainly something we find attractive.

What kind of NAV accretion do you guys think you have better in that proposition?

I mean that kind of comes back to where do we think our own internal NAV is and that's something that we've never been comfortable putting out there.

Okay. I guess you're pretty pragmatic on your forecasting, Chris. I guess as we stand today here and when we look at over '08, '09, when do you think the dividend will be covered by AFFO given your upsize CapEx assumptions?

Yeah. I mean, that comes to the question that was asked earlier on how do we look at dividend and the answer was we have a Broad strategic planning meeting in mid December when will have the 2008.internal budgets and be able to look at our AFFO. We've talked a lot about what are CapEx requirements are and the mode at that point armed with the facts will make a dividend policy decisions for 2008. And I think the outcome of that will make answering your question a lot you hear in the next call.

Well, I guess I didn't ask, what the board, what you're recommendation for the board will be, with their ultimate decision would be I guess, the question was, where we stand right now, when is the dividend covered?

From an AFFO prospective.

Yes.

It's hard for me that answer because again will be jumping the gun on what our outlook is for 2008 even on a run rate basis so I prefer to maybe able to answer that afterwards.

I guess for Dean, I guess you indicated that your assets are competitive and everything is market based in terms of where the demand is. But I guess, if you were to put your assets into let say three buckets, where you would consider one bucket being B plus, A minus assets or A assets, another bucket being institutional quality, but let say little order, a little more tired with C plus B minus assets. And then if there are any outliers, which, could be some of these, disposition candidates. What percentages of your total portfolio would fall to each of those three buckets?

Brian (ph) I think there's even a little bit more then to it. So I think, as I've said before ideally you locked on this many properties as you can in the best markets in the United States. And I have a goal of maybe having more then 50% of our AFFO coming out of, half of those markets, five or six markets. So, not only are you, it also gets back to markets and sub markets forgiving about the quality of the assets. And right now we are in 26 states and we're spread across in a lot of states with not much representations in those states and even though the quality is good, the location might have been good from a growth potential stand point you'd be better off moving those dollars out of Mississippi to California, Florida for a example. And so, we are as Chris said, we have over the last, probably four months now, would help us on outside consultants survey, all 400 plus assets and we put them into Court House. And so, that is almost finished and we have not grown the line there what you are asking about, where is the line, where is the bottom whatever you're ready to just spin out. And I don't think it will be a clear distinct line because I think it will be really as I said some driven more market driven than property, quality or location driven. But in a round about way I'm trying to answer your question without giving you a number, but I tell you that we do expect to re position this portfolio on a substantial basis as we go forward, moving assets, moving investment dollars out of lower quality assets, out of lower growth potential markets into higher quality assets and higher growth markets.

Okay. Thanks a lot guys.

Thank you. Next is a follow up question from Michael Knott with Green Street Advisors.

Hey, guys. I know the former management team, some of the family members have been on public record before saying they were supporting the board to consider strategic alternative that are sale. What do you think the boards outlook will be with respect to the operating turnaround going with an outlook have gone into '08?

Well, we have a very important meeting coming out in Czech (ph) December where we will lay out the operating plan for 2008 and beyond for that matter. And that is appropriate time, that is a strategic plan and meeting. That is appropriate time to look at all alternatives not only internal but external alternatives. And so it would be quite a guess on my part to venture out to answer you question right now Michael. But we clearly, had that on the docket for December and as we get by that meeting. I'm sure you'll here more and more as to, how this company will be positioning itself on a go forward basis.

Okay. And then as to your last comment about repositioning the company should we take that to mean as you sort of higher cap rate markets and maybe eventually reallocate capital to lower cap rate markets. But that could have a negative impact on the earnings profile but it should be at least neutral from a shareholder value perspective if not positive?

Yeah. That's where I cannot, Chris do it sometimes because I'm looking five years out as far as the growth potential for a market is concerned. For example, to plan we got a lots of examples. But I'll be looking and it could be you might so at a higher cap rate on a short-term basis and move in something on a lower cap rate where you've got a negative arbitrage if you will. On cap rates and it could hurt little bit short-term but long-term it's the right decision. And then it just comes back to kind of what I was talking about earlier. As far as maintaining these assets for the long-term that's short term. And same thing there, you want to -- you want to be in the markets in the sub markets where you has a greatest opportunity for growth going forward on a long-term basis. We're not going to manage this company for short-term for the third quarter results.

Okay.

Thank you. Our next question comes from Jeff Donnelly with Wachovia Securities.

Hey guys, I guess my first question, have to with. How do we keep the management and the employees and motivate it. You know since, you guys have joined another people who have hired there and I believe most of the subject either stock or option grants. You know the price is down about 50% and I guess I'm wondering how do we keep that team focused to execute upon this turnaround. Should we be expecting sort of a new complaint in '08 to address that?

Well, I think that's my job. And I don't consider that to be such a huge job right now, we've got to motivated to the people who understand the long-term prospects of this company and we put a complaint in place, this past February. That is working, and I think on a go-forward basis, we will continue to look at our folks and how motivated they are. But, they are not short-term motivated, they are long-term motivated and we have a comp plan in place, which I think works. And I don't think that will be such a big issue on a go-forward basis.

That's helpful. And considering the (Inaudible), I believe they are no longer insiders. Does that make them, I guess, subject to maybe ownership waivers that you might see for so called, traditional institutional investors, when they own reeds. And that's what they have to make their intentions known to you until they themselves buy or sell shares.

Yeah. I'm not a lawyer, but I do believe they have filing requirements to the extent they buy or sell shares given the percentage of the stock that they own. And I also believe that the IPO, there were provisions put in place to address the five and fewer rule that I believe, allow them to own up to the high 20% range. I know I can't quite tell you facts whether it's 28 or 29, but they do have that ability.

Yeah, I think it's just over 29. It's in the chart.

Was it conceived when you guys were working on the rising tide, I guess purchase from them that they would use their proceeds to reinvest it back into the stock. Was that, I guess, part of the negotiation or was that something that they did after the…?

They did not ask us how we thought they should use their proceeds. You wanted to ask them whether that was not part of the negotiations, as to what they were going to do with the proceeds.

Okay. Thanks, guys.

Thank you. Our next question comes from Buck Horne with Raymond James.

Good morning, guys. Just wanted to get a little bit more specific on some markets here, and particularly California. And just -- maybe you can talk about what the market is like out there, why the occupancy doesn't seem to be moving dramatically or what is it going to take to move the needle in California and any other additional color you can give me on the competitive environment out there?

I mean California, it's a big state, and so let's break it out. You can't even break it into three components. You really need to break it into multiple components. Right now, I guess, the Sacramento, that valley area up there is a little bit weak. The Bay Area is strong. Orange County is always strong. San Bernardino is weak, and I'll come back to that one. San Diego County always manages to do well. And so our concern right now is San Bernardino, where we have I think 16, 17 properties, and one market. We own the market to an extent and we have a good upside opportunity, and you heard me speaking in the past about the fact that on my trip out there, on two different occasions, I discovered that we had no Spanish-speaking managers, and about 75% of the market is Hispanic. And so, we are almost ready, in fact, I am suppose to see it this week, today, I guess, the results of the marketing program that we have hired to specifically market to the Hispanic folks, not only in San Bernardino, but also Southern California, Southern Texas and Southern -- South Florida. So I think the 76% occupancy you see right now has tied to California, mainly is brought down by San Bernardino and we have marketing getting ready to in place that we will hopefully be able to address that in a positive way for 2008.

Thanks, guys.

Thank you. Our next question comes from Chris Pike, with Merrill Lynch.

Hey, guys I just had a follow up, to the Green Street question regarding the MSTEL (ph). I guess part of the settlement was that, they have to see some to assist. Is there a time limit on that or is it possible that in 6, 9, 12 months we start getting rumbling from these guys again?

On Atlantic the set of filings that we do have standstill with them through XGN (ph).

Okay. Thank you.

Okay.

(Operator Instructions) There are no further questions. I'd like to now turn the floor back over to management for closing comments.

Okay. Thanks. Again top result for the quarter, made a lot of gains during the quarter. The company is poised to do much, much better on go-forward basis. As it relates to our systems in place and people in place we appreciate those of you who continue to supporters of the company as we continue to manage this company for long-term growth and success. Thanks. We'll be looking forward to, speaking to you again next quarter.

Ladies and gentlemen, this concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation