Good day and welcome to the CubeSmart First Quarter 2014 earnings call and webcast. All participants will be in listen-only mode. (Operator Instructions) Please note this event is being recorded. I would now like to turn the conference over to Mr. Charlie Place, Director of Investor Relations. Mr. Place, please go ahead.

Thank you, Kate. Hello, everybody. Good morning from Malvern, Pennsylvania. Welcome to CubeSmart's first quarter 2014 earnings call. Participants on today's call include Chris Marr, President and Chief Executive Officer; and Tim Martin, Chief Financial Officer. Our prepared remarks will be followed by a Q&A session. In addition to our earnings release, which was issued yesterday evening, supplemental operating and financial data is available under the Investor Relations section of the company's website at www.cubesmart.com. The company's remarks will include certain forward-looking statements regarding earnings and strategy that involve risks, uncertainties and other factors that may cause the actual results to differ materially from those forward-looking statements. The risks and factors that could cause our actual results to differ materially from forward-looking statements are provided in documents the company furnishes to or files with the Securities and Exchange Commission, specifically the Form 8-K we filed this morning together with our earnings release filed with the Form 8-K last evening and the Risk Factors section of the company's Annual Report on Form 10-K. In addition, the company's remarks include reference to non-GAAP measures. A reconciliation between GAAP and non-GAAP measures can be found in the first quarter financial supplement posted on the company's website, at www.cubesmart.com. I will now turn the call over to Chris.

Thank you, Charlie. We are very confident based on where we executed in the first quarter that we are well positioned to enjoy a strong rental season. In looking at the first quarter rental trends, we experienced slightly reduced activity in January and February, which we attribute to weather, as the customers arrived in droves during a very strong March. We ended at 89.5% occupancy on the same-store pool, up 390 basis points over the prior year. Asking rents to new customers continued their upward trend. We pushed asking rent each month throughout the quarter. And comparing to the first quarter of last year, same-store street rates averaged 2.4% growth during the quarter. Discounts as a percentage of rents declined on the same-store pool to 5% from 5.3% in the prior year's quarter. We are very pleased with our operating expense growth in light of the weather-related costs incurred. Our 9% same-store net operating income growth and 25% funds from operations per share growth were very solid and at the upper end of our expectations. It was a very productive external growth quarter. Competitions for deals is very strong and we continue to be disciplined in our approach. Our focus on select opportunities to acquire built-to-suit stores and co-investment development is bearing fruit as we announced the opening of a new store in the Bronx during the quarter. New supply in our core markets remained muted and all signs point to another solid year for our company and our industry. At this point, I'd like to turn the call over to Tim Martin, our Chief Financial Officer, for his commentary. Tim?

Thanks, Chris, and thank you to everyone on the call for your continued interest and support. We had a great first quarter and we're well positioned as we head into the rental season. Our reported same-store NOI growth of 9% was the result of 7% growth in revenues and a 3.2% increase in operating expenses. Occupancy gains across our portfolio continued to be the primary driver of revenue growth as same-store portfolio physical occupancy averaged 400 basis points higher than in the first quarter of 2013. The more severe winter in 2014 was the primary driver of our 3.2% same-store expense growth, causing higher utility and snow removal costs. Our financial performance for the first quarter beat the high end of our expectation, as we reported FFO per share as adjusted of $0.25. The beat to our expectations came from the combination of a few things. As Chris mentioned, we had a strong March on the rental front. And additionally, we benefited from the timing of several items including our marketing spend, repair and maintenance expense, real estate taxes and G&A. These were all timing related and don't change our full year expectations for any of those line items. Our same-store pool properties was reset on the 1st of the year as per our historical practice. We added 48 stabilized assets to the same-store pool in 2014, increasing the pool to a total of 346 properties that represented 91% of our NOI during the first quarter. Our same-store results were modestly impacted by the newly added properties, as you can see in our newly added disclosure on our Page 17 of our supplemental information package that we released last evening. We followed the lead of one of our peer storage companies in providing this additional disclosure, as we believe it…

(Operator Instructions) Our first question comes from Christy McElroy from Citigroup.

I just wanted to follow up on your comments on guidance. I understand that the beat in Q1, there was some timing-related items there. But just in terms of the guidance assumptions, the overall range was up only about $0.50 at the midpoint, but you increased the same-store NOI growth by 50 basis points. You've got all these additional acquisitions under your belt. I realized that net of the ATM issuance. But I'm just trying to get a sense for why guidance wasn't up a little bit more. It seems like with the better core growth overall and the greater acquisitions, it should have been up a little bit more.

I think it's a multi-pronged answer here. The first one that you heard was the $0.50 beat was largely timing. We don't anticipate, as I mentioned, an overall change to most of those line items. It was simply a shift from first quarter to later periods in the year. On the investment side, we include in our guidance the impact of announced deals. So of the $187 million of activity to date, $73 million of that was included in our prior guidance, as we had announced that in conjunction with our initiation of the 2014 guidance last quarter. So then that leaves you with $114 million of incremental activity. As we've seen in prior years, our investment activity is a combination of stabilized acquisitions and lease-up opportunities. And as you noted, we continue to remain very focused on proactively raising equity capital through our ATM. Oftentimes, we're raising that capital in advance of closing the acquisitions. So we remain very excited about the opportunities we're finding and expect to create great long-term value for our shareholders. The reality is when you combine all those variables together, the impact to near-term earnings is pretty negligible. But again, longer term, we're very excited about the long-term NAV creation and value creation. And then finally on the core component of it, we did have a strong March. We feel good entering the rental season. We still have not great visibility into our ultimate ability to push on asking rates and have any higher than expected levels of discount reductions. So as we sit here, we're certainly more comfortable with the high end of our guidance today than we would have been a quarter ago when we initiated the guidance. So I think all that stuff combines. I understand your question. I appreciate it. I think it all comes down to the point with what we know right know, we believe our guidance range is appropriate as we sit today.

So if I'm understanding correctly, as I think about the acquisitions in terms of the blended initial yield versus the blended cost of capital initially is sort of FFO neutral, but more accretive over time.

I think that's right. And when you combine that also with the fact that in many cases and in our expectations, oftentimes we're actually raising the capital in advance. So you have a little bit of a drag, because you've funded it before you've even closed.

And as I think about the funding, I realize it's not in guidance, but in terms of the range that you put out that you think you would do in the year, how do you think about funding that? Is that more ATM issuance?

Well, certainly we would expect a component of it would be funded through equity as we remain focused on maintaining our metrics. Again, it's going to be a combination of looking at where public and private market valuations are, where we trade, whether we're opportunistically raising that capital in advance or being a bit more patient. It's hard to predict that exact timing. But generally speaking, we're expecting to raise that capital at or before the closing of the acquisition. It's typically been our strategy.

And then just lastly on the expense side. Chris, I think you talked about the increase of the expense growth that's tied to weather. Tim, you mentioned it as well. You had some of the lowest expense growth in the sector, despite the weather. Was there any muted weather impact, given that some of your centers are more urban? Or was there anything in the year-ago number that made the comp a little bit easier?

We were certainly expecting the result that we derived there. I think the difference versus our expectations came in a lot of those other line items that I mentioned, one of which would be repairs and maintenance. There were many projects that were delayed as a result of the weather, but the weather costs themselves no surprise to us.

Our next question comes from Gaurav Mehta from Cantor Fitzgerald.

Following up on acquisitions, you mentioned that you're seeing higher than expected level of activity in the market. Can you talk about the product flow and the impact on the cap rate?

I think the thing that you heard is, is there's pretty a competitive market out there. We continue to see good opportunities in our core markets, both from our third party managed platform as well as deals that we source on a direct basis. And that continues to be our preference and our bread and butter. Cap rates continue to be pushed down. There is a lot of interest in storage, as one would expect, given the very, very strong performance as an industry. So as a result, we're comfortable with our guidance. We obviously had a nice pipeline of deals from the fourth quarter that carried over and closed into the first. We have pretty good visibility here on a single asset basis throughout the balance of the year and are comfortable at the levels that we described. I think the upside to our expectations would likely come from a portfolio transaction that may come to market and make sense for us from a quality perspective and then from a pricing perspective. But that combination of quality, pricing has been difficult to come by and very difficult to predict. So I think common theme here on this call, we are very confident in our ability to deliver within our guidance, both externally and internally, very confident towards the upper end of all of that, but are again at this stage in the year being cautious and not getting ahead of ourselves.

And second question I have is on occupancy. So how much more upside you think you have in your portfolio? And at what occupancy levels, would you expect to see stronger end growth?

The levers are a little together. We're real pleased with the ability to continue to push street rents up in the first quarter, continue to get up into that 2.5% kind of range overall. Again, when you look at that from a market perspective, that goes from markets with significantly higher opportunities to push on street rates. We've seen particularly strong results in Dallas, Fort Worth. Street rates were up a little bit north of 8%. Chicago has continued to a strong market, up about 5.5%. All Florida markets, really led by the Miami area, have been very strong as well. Our only challenging market and one day I'll stop picking on it, continues to be El Paso, where fortunately we've been able to see some good occupancy gains there, but nothing on the rate side. So they move together. Same thing with reduced levels of discounting. We said last quarter and nothing has changed. This same-store portfolio should be able to get into that 92%, perhaps as much as 93% at its peak. And certainly as we have better visibility into that, you can get a little more confidence built in on your ability to both push on rates to new customers and on discounts. But they all move together. Our objective is not to maximize one individual component of that. Our objective is to work the three together to get to the highest level of revenue possible in our portfolio.

Our next question comes from Ross Nussbaum from UBS.

Hi. Jeremy Metz on with Ross. So just based on what you had just said, if we take higher street rate growth, lower discounts occupancy, blended all together, can you give us some color on how realized rents for move-ins in Q1 trended on a year-over-year basis? And then how did those realized rents compared to move-outs kind of mark-to-market in the quarter?

Effective rents for customers moving in were up about 3% is one way to answer that question. The other way is that if you look today and said, someone is vacating a 10x10, someone is moving into that exact same cube, the person moving in is moving in at about 1.5% higher phase rate than the person who is vacating.

And then just on comp basis for the 2013 pool, the 298 assets, if we strip out kind of reinsurance the other income, what was just the year-over-year trend there in rental income, so the components of that 6.5% same-store revenue growth?

Yeah, that's the figure I don't have at my fingertips. I think my sense of that is that the trend doesn't change any, given that the growth in the other and the growth in the rental have been not that inconsistent. So we can have a follow-up on that. It's not a number we have at our fingertips. But I would suspects trends aren't that different.

And then last from me is just looking at your guidance, you had 7% same-store revenue growth in Q1, obviously guidance of 5% in a quarter to 6% in a quarter suggests slowing in to your end. But can you just give us some additional details just on what you're baking into guidance for the progress of that quarter-by-quarter?

The biggest impact there is if you look at the fact that we have talked about the contribution of our revenue growth is coming half, maybe a little bit more than half is coming from occupancy, clearly our occupancy comps get more difficult as this year plays on. We have 400 basis points higher occupancy today. As Chris just touched upon, if we were to peak somewhere in the 92% to 93% range and if you just, for argument's sake, picked the middle of that range, for this portfolio occupancy peaked last year at just shy of 91%. So you'd be looking at for the back half of the year arguably having a gap in occupancy year-over-year of something in 150 basis point to 200 basis point range instead of 400 basis point range that we're enjoying today. So there's clearly a more difficult occupancy comp. Apart from that, we are expecting some continued contributions from rates to new customers and the roll that Chris spoke of and reduced levels of discounting, all that combining to get us into the range that we expect.

I guess we look at how that would trend. I mean that I think in theory could get you down to 4% level, 4.5% level by year-end. Is that fair?

Yeah, I think that's a little bit right. But I think the reality of our expectations is that we can see the past to the occupancy. And in general, I would say we're being very cautious in our expectations about our effective rate growth relative to a reduced discounting and higher street rates. So I think the margin of error is definitely more on the upside than the downside.

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

First question just following up on the investment pipeline. I just wanted to talk about the landscape overall from a competition standpoint. I was just curious if you could talk about the capital that's on the sidelines. Is it private equity individuals or private operators? I mean who are you really pumping against most at this point and sort of who is coming in with the most competitive bids?

Well, you certainly have the other three REITs who are very active, particularly on portfolio basis. So you have that competition, which had been last year as well. Private equity continues to show up. To my knowledge, there's not been a significant transaction yet. But I think again, back to my comments earlier, the industry is doing so well and expected to continue to do so well that it is clearly drawing the attention of disparate array of capital coming into the space. Now all the challenges that come along with that, obviously starting with the need for a sophisticated operating platform and again the current environment and aggressive cap rates makes penciling out return somewhat challenging for folks who have high [ph] octane capital. On a single asset basis, still not seeing a significant amount of competition from the local or regional operator. I think deals in the markets that we focus are priced out for their cost to capital. So other than the addition of perhaps a few new names with some of the private equity world, I think the overall landscape is about the same as it was in the latter half of last year.

And then, Chris, you've mentioned portfolio a couple of times here. Is there something out on the market or anything out there that you're looking out today that you can maybe put some context around in terms of size or location?

Yeah, there's nothing out there at this moment that CUBE is interested in. There is one portfolio in the market of reasonable size, I hate to put a number on that for you at this point because we're not in the mix, but there is one transaction that we're aware of out there. And we'll kind of see how that well shakes out. I would suspect that there'd be some public disclosure of where that is before everybody reports second quarter results.

And then regarding the built-to-suit opportunities, I was just wondering how big the company's appetite is for these types of deals and what sort of volume we might expect to see over the next several quarters?

Yeah, when we look at that risk, so whether it be co-investment development where CUBE is taking some risk from acquiring the land through completion and then lease up, or just us taking the risk on the lease-up portion of that spectrum, I'd put it in two different buckets. I think on each, $50 million to $75 million a year of closing is an area where we get comfortable. Right now, we have three projects that fit into that built-to-suit that if everything happens according to plan, will close in '15 and '16. And we have four development projects where we're actually involved from the moment the land is acquired that will all, if they move according to schedule, open in late 2015. And the total of those two buckets is about $200 million.

I was just looking through the markets that you list out. Boston revenue growth was down slightly year-over-year sort of standing out within the portfolio, given most markets did pretty well. You only have three properties there. And I was just wondering if that performance is due to a lack of scale in that market or if there was something else going on.

Well, it's a combination of factors there. One, we had a competing property go from a private ownership to public ownership and that definitely improved the performance of that store and that had a small near-term impact on us. And then from other factors, I think that may be a market I would describe as us getting a little bit ahead of ourselves in terms of rate. And we saw a blip in occupancy. And we've reacted. And I think weather probably has a little bit to play in there. I think those properties, one of which is a heavy student property, will have started to rebound quite nicely in April and I think will have a good summer. Boston is a good market.

Our next question comes from Jana Galan from Bank of America.

Curious on the supply front. What are you hearing about construction lending for private developers?

Yeah, no real change. I think it's fair to say on the supply front that getting construction financing is the biggest impediment at the moment. And I think that will continue until the regional banks decide to change that. And I don't know what would be their impetus to do so. So that continues to be a frustration for folks who would like to develop. When we look at supply across all of our markets, it continues to be very muted. We see very little happening. As I go through all of our current markets, we had one store that opened in the fourth quarter in Washington, D.C., and just given the general lack of supply there, you'll have to consider that a competitor to our two stores, even though they are not that geographically convenient. And we really didn't see much of a pit there. It does impact you. We lost about a 1% of occupancy relative to where we would have thought we would have been. But again, as that store leases up and I'm sure it will play nicely, Washington is an underserved market and everybody will be fine. When you look in New York, there were two private operators. One opened the store in Queens, one in the Bronx. I would not consider really either of those to be competitors to our existing inventory. And then I look at the rest of the country and you had three openings in Chicago, one private, two REITs. The two REIT stores, I guess, we would consider to be within a reign that would be competitive to us. We've not seen any impact on our Chicago portfolio from that private operators in a location that we wouldn't consider to be a competitor. So if you look at that in terms of all the way across the country, that's a de minimis amount of products. So continues to be challenging. There absolutely is a lot of discussion around it, but it continues to be very challenging for folks to get product into the market. And I don't see that changing at least for the next 12 months.

And when you think about your two developments, how are you forecasting lease-up and potential stabilization there?

Yeah, our theme here is conservatism. We continue to be pretty conservative in our expectations. We're looking at 36 months lease-ups for both stores. The store in the Bronx has been opened for about 40 days. It's 10% occupied. And our store here at Malvern is about 34% occupied. It's been opened since the beginning of January. So both are moving faster than expected. We don't bank on that. But again, I think the marketplace, if you're in the right sub-market, we would think again the bias is that lease-up would be obviously be faster than our expectations.

Our next question comes from Ki Bin Kim from SunTrust.

Going back to the trend in occupancy. Could you just help paint a little bit more clear picture, you've had a big benefit from year-over-year occupancy gains, how does this kind of trend down throughout the end of the year? I know you mentioned 150 basis points to 200 basis points, but do you think you've pushed the rates high enough in time to take up a difference?

So, Ki Bin, you're asking as to whether your premise is correct?

Yes.

I don't know how to answer the question other than back to there are multiple levers of how to maximize revenue growth. Our focus here has been to the past 18 to 24 months has been heavily weighted towards that occupancy gain. We did that back in 2012 with some pretty significant adjustments to our asking rates. That has cycled through to an extent. But our mix of contributors to our revenue growth is perhaps different than some others. We believe that the combination maximizes revenue for our portfolio.

As you know, I think if you look at your levers and then the impact of those levers in terms of quarter-to-quarter, the most immediate is sell-through discounting. So for example, if you were to completely shut off discounting in a particular quarter, you could show quite robust revenue growth, because every customer you're getting is coming in as full pay. And you may take it on the chin in terms of your occupancy, because you're turning away a portion of the consumer for whom that portion of free rent is an attractive play. But your near-term results could be impacted quite positively. The positive impact of that obviously flows into the portfolio slower, because you're relying on that churn every month in order to get the impact there. So probably stating the obvious. But that's just the reality of how those various levers impact quarterly results.

And just sticking with that, along that same line of thought on promotions, what percent of your customers are receiving promotions today, what percent of new customers? And you could maybe talk about those promotions 50% lower, the promotion that people get or maybe some kind of parameters around that.

So again, you have a two-part question. So last year, in the first quarter on the same-store basis, about 82.2% of our customers received the discount. This year in the first quarter on a same-store basis, 81.6% of our customers received the promotion. So the number of customers receiving the promotion is going down. Now the absolute value of that promotion obviously moves with where your rental rates are moving as well. So you have two pieces there. But I think the direction you can say is less customers getting promotions and promotions as a percentage of rent as I described has continued to decline down to 5% in the first quarter.

Last quick one. Where do you think that 81% can go down to in the summer?

We don't selectively pick one lever. So again, it could go to zero if you in fact then found that by dramatically reducing your asking rents to new customers, you were still able to attract folks to your offer. It could stay where it is, but you could push your street rates up dramatically and that customer in some market, it may be more appealing for them to come in a with a modicum of free rent and they're willing to pay the higher rent in the future. It really is going to depend upon what our systems tell us is the highest probability of maximizing the overall revenue.

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

The new same-store performance breakdown is very insightful. It does seem to indicate that the 2012 and 2013 additions to the same-store pool actually provided a drag on NOI growth for the quarter, which seems like that's probably a counter trajectory as to what most would have expected. Backing into the numbers behind those actually additions, it implies pretty strong expense growth across those properties. I assume some of that is geography related, but hoping you can speak to that. And if we did see a drag from those properties this quarter, what should we expect moving forward?

The primary driver of what you're seeing there is exactly as you suggested, is the new additions to our same-store pool over the past two years have been predominantly in our focused investment markets, but are predominantly Northeast, which were heavily impacted by the snow. So the percentage of assets that were newly added are clearly way disproportionately weighted in the markets that had the big snow increase. So when you look at the NOI, mathematically you are correct that they actually had a slight drag impact on the overall. But it's almost entirely related to where they are on a relative basis and the impact of the severe winter.

So you think that drag from this quarter is not necessarily something that happens going forward and that potentially turns positive?

That would be my expectation.

Our next question comes from Paul Adornato from BMO.

It's kind of a follow-up. Was wondering if you could talk about how long after a new acquisition is integrated into the portfolio, does the property continue to outperform in terms of having your systems benefit that property?

The first 12 to 14 months you capture the low-hanging fruit and they're very lowest you would catch fairly quickly. Obviously the longer tail items, if you had an acquisition where the prior owner was not offering tenant insurance that you had zero penetration, it is a challenge to go back to the existing customer base and sign them up. So that's one for example that would tend to positively impact the acquisition over a longer tail period, because you're churning those customers and the new ones coming in are picking up insurance. Occupancies, rental rates and discounts you can have an immediate impact. Obviously branding and marketing has a more immediate impact. So I would say the immediate add-ons from month one and possibly out as far as month 14 and then some of the other items tend to benefit the store for a more elongated time period.

And if we were to drill down to the specific unit sizes, how often does your revenue management system kind of pump up against full occupancy with respect to a specific unit size?

Certainly the standard sizes are very appealing to most of our customers. So you start with a 10x10 or 5x5. Now those are the sizes that appeal to most customers. And so in a market like our great exposure in New York, we had a point near (inaudible) where there is a scarcity to that cube size and the availability tends to be in the lockers of the smaller size cubes and/or something that's unusually large.

Our next question comes from Paula Poskon from Robert Baird.

Following up on the same-store discussion and the trends there, so on Page 16 where you have the trailing five quarters, the net rental income for the five quarters, what would that number have been for this pool of assets in December 2012? So if you were just going to take that trailing six quarters instead of five?

I don't have that in front of me partially, because all the stores that are in this pool, we didn't own in the fourth quarter of 2012. So I don't have that and I'm not sure that I could get to it, because I don't have that population to compare to.

What percentage would you, say, Tim, of this pool of assets that you're not owning in 4Q '12?

In the fourth quarter, I'll have to go back and look. So you can see that we added 48 properties. Of those 48 properties, how many of those were acquired in the fourth of '12, I don't have that at my fingertips. We may be able to grab here quickly.

And then just sort of a bigger picture question. It's been a few years now since you've embarked on the super-center with offering all the ancillary services in the hope of increasing your penetration with business customers as well as the rebranding initiative. What's been the result of that? Do you feel like you've obtained the benefits that you hoped for? Has it exceeded your expectations, fell short?

I would say that, again, depending on which of those items you wanted to look at, and it's hard to parch the two, the overall benefit has met and/or exceeded our expectations. The power of the brand and you look in a market like New York City, where in the first quarter we just experienced extraordinarily strong organic growth in terms of customers finding us online through non-paid search items. So said a different way, customers in the Burroughs are increasingly finding us by going directly to CubeSmart as opposed to searching for self storage. And so there is a market where the brand, it's fresh¸ it's clean, it's interesting, it's catchy, you remember it is having a huge benefit for us in terms of searching how we find our customers. So you add that to the employee morale boost, the pleasure they have in being involved with the brand, you look at our overall performance then, and I think the best way to look at it is going from occupancies in the '70s to occupancies in the '90s, you look at the kind of revenue growth that we have and all of that certainly has had a contribution from those things that you mentioned.

What percentage of your customer base, would you say, are businesses versus individuals?

Yeah, I think businesses, we would say, again it's a little bit of an exact science, because many of our business customers are small businesses who rent on our own names. But again, it's in that 30% range. So the overall movement up has not been a significant change, but the individual stores that have features on locations that appeal to a business customer continue to gain a good share of that type of customer who is a great customer for us, because they stay longer and tend to use more services.

And what is the average length of stay now overall versus, say, a year ago?

Yeah, very little change. I think it's elongated out on the median by about six days. So again, you still have customers on average who are with us about 14 months.

And then finally, what percentage of your third-party managed assets have adopted the CubeSmart brand?

At this point, about 10% of our total pool is branded CubeSmart.

Just a real quick follow-up to your question, we acquired five assets in the fourth quarter of 2012. So I don't know what the impact would have been to answer your other question. That would have been a different pool that we would have never looked at that way.

Next we have a follow-up from Christy McElroy from Citigroup.

Hey, guys, just a really quick sort of modeling question. Do you have what your unconsolidated JV NOI was in Q1?

By utilizing what's disclosed, you can take the equity and losses of real estate ventures number from the income statement. And then if you go to the FFO reconciliation, there is an add-back of depreciation expense attributable to the venture. If you add those two together this quarter, it will give you a pretty good approximation of NOI or half of the NOI to venture level. What that won't include is the management fee income that we earn by managing the venture. And starting next quarter, you won't be able to do that anymore, because the debt that we disclosed on yesterday will run through that as well. That number will impacted next quarter by a partial quarter of interest expense. And then in the third quarter, it will be impacted by a full quarter of our share of the interest expense on the secured debt.

Starting next quarter, can you give a breakout of the reconciliation against that equity and income number?

I think we did it in the 10-Q. But yeah, I'll double-back for you, make sure that we'll be happy to give you enough information for you to get what you need for your model.

Next we have a follow-up from Ross Nussbaum from UBS.

Hi, it's Jeremy again. Just two quick ones. What are the renewal of rent increases you're sending out to in-place customers right now?

The rate increases, the general pattern has not changed in the past. We continue to average around a 9% increase to our existing customers. When you think about our pattern there, that's unchanged. We provide a notice of an increase will be effective in the sixth month and then every 12 months thereafter. So about 5% to 6% of our rent roll receives a rate increase each month.

And that's been pretty steady in terms of the amount of customers?

It has. Obviously we have more customers who are paying a higher rates than they were before, but the process has been the same and the average has been about the same.

Can you just remind us how you determine or decide when an asset is considered stabilized and therefore should be included in the same-store pool?

We look at an asset to see that it was stabilized in the entire year of both periods presented. We view stabilized to be a market stabilization. And I think the occupancy that defines stabilized is different per market and candidly is much different in today's environment than it was four years ago. So for us to pick a hard number for occupancy that dictates stabilization, we believe, is a little bit too stringent and doesn't allow us to appropriately set our same-store to have a comparable number than as stabilized performance in one year versus stabilized performance in another year. So there is some subjectivity to us to determine whether our property was stabilized in both periods presented.

And so that occupancy threshold has increased as a portfolio occupancy in the industry amongst the public REIT has increased?

Absolutely true, yeah.

Next we have Todd Thomas from KeyBanc Capital Markets.

Just one follow-up. When we think about rent growth and going back to your example about the New York properties, where there are very few 5x5 and 10x10 units available, I'm assuming you're offering very few discounts on those units. And so I was wondering what kind of rent growth are you seeing on those units specifically, so we can try and get a sense for once everything is kind of peeled back, how much demand there is and what kind of pricing power you have.

I think to just answer that question macro, not just in New York, but it applies there as well. You look across all of our markets and you look for what is an average at a store in terms of how high you can push asking rates, not see an impact on occupancy or customer behavior. And we have markets, Colorado, owned and managed, is a great example, wherein that 10% to 13% push on street rates to new customers. So it can get that high in a market. And I would say for the desirable cubes in New York, you can push along those lines and not miss a beat.

And just one more. Chris, I think you mentioned 1.5%, I guess, rent spread when someone moves out relative to a new customer coming in today. So just two things on that. Where was that over the last couple of quarters? I guess where is that coming from? And also, how quickly does that metric change sort of day-in and day-out or week-in, week-out, I guess?

Yeah, so if you look at that in the first quarter of last year was 0.3%. So it's gone from 0.3% to about 1.8%. And it can change in a day. But it obviously changes on both sides, right? If you have two 10x10 next to each other, you may be passing a rate increase to the person on the left and you're pushing street rate, the asking rent for the empty cube on the right. So they both move, but they can change daily.

So are those numbers 0.3% in the first quarter of '13 and 1.8% in the first quarter of '14? Are those averages for the quarter, or are they sort of spot numbers?

Averages for the quarter.

This concludes our question-and-answer session. I would like to turn the conference back over to Chris Marr for any closing remarks.

Okay. Well, thank you, all. Thank you for listening to my first quarter conference call as the Chief Executive Officer of CubeSmart. I'm extremely aware that you've invested in our company and we are focused on delivering and executing on our business plan for you. In keeping with the theme of being conservative, I did underestimate the percentage of our third-party stores that are branded CubeSmart. Paula, the answer to that is approximately 50% of our stores are branded CubeSmart. So I apologize for that. Thank you all for listening. Thank you for your interest in our company. And we look forward to talking to you again with our second quarter earnings release. Have a great day.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.