Greetings and welcome to the Sovran Self Storage Second Quarter 2014 Earnings Release Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. (Operator Instructions) As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Ms. Diane Piegza, Vice President, Corporate Communications for Sovran Self Storage. Thank you, you may begin.

Thank you, Melissa and good morning everyone. Thank you and thank you for coming for the second quarter 2014 conference call. Leading today's call will be Dave Rogers, Sovran’s Chief Executive Officer. Also participating are Andy Gregoire, Chief Financial Officer; Paul Powell, Executive Vice President of Real Estate Investments and Ed Killeen, Executive Vice President of Real Estate Management. Our earnings release was issued yesterday aftermarket. If you did not receive a copy, please visit our website unclebobs.com. As a reminder, the following discussion and answers to your questions contains forward-looking statements. Sovran’s actual results may differ substantially from those projected due to risks and certainties with the company’s business. Additional information concerning these factors is included in the Company’s latest SEC filings. At this time, I’ll turn the call over to Dave Rogers.

Thank you, Diane and good morning everyone. Q2 was another really strong quarter surprising us a bit again to the upside which has always had a nice and as we said over and over, we really never know for sure how the year is going to go until we get a feel for call volume and rate push at the start of the busy season. Well, this year’s busy season is for real and it’s provided us with the opportunity to deliver higher occupancies and increasing rental rates. Andy will give the details, but this second quarter has positioned us to have far and away our best year ever. We are happy with our acquisition performance as well. Through June, we have acquired 23 stores for our own portfolio at a cost of $190 million and three for one of our joint ventures totaling $34 million. All of the stores are in markets we already play in and while they weren’t in expenses we love the fact that they all have great upside potential. We acquired one additional store after quarter’s end for about $12 million and our negotiations – are in negotiation for quite a few more as we speak. It’s a remarkably competitive environment with a lot of players willing and able to pay rates for quality properties in quality markets. At the risk of being a bit redundant, I’ll update our thoughts on the industry. Demand continues to trend up. New supply will be coming to some markets, but most of it appears to be demand-driven and pretty sensibly thought out. We expect the impact on us and the industry to be de minimis at least for the next couple of years. More than ever, we believe the bigger operators with a scale to afford and run an integrated set of marketing, RMS, the customer service platform should win an outside share of the market. I’ll say it again. Times are good, and we expect that to continue. And with that, I’ll let Andy takeover the details of the quarter.

Thanks, Dave. Last night we reported same-store revenues increased 8.6% over those of the second quarter of 2013. The growth was the result of a 270 basis points increase in average occupancy and a 4.4% increase in rental rates. Same-store occupancy increased as expected and it was 91.8% at June 30. Tenant insurance income for the same-store pool continued to show strong growth increasing almost $500,000 in the second quarter of 2014 as compared to the same period in 2013. Total property operating expenses on a same-store basis increased by 5.7% primarily as a result of the increased repairs and maintenance expenses that were delayed from Q1’s harsh weather. Also as expected property taxes showed a double-digit increase for the quarter. In regard to property taxes, we expect same-store growth in 3Q and 4Q of 2014 to be in the 5% to 6% range lower than the 11% to 12% experienced in the first half of 2014. This is due to the fact that in 3Q and 4Q of 2013, we’ve began to experience property tax increases and therefore the comparable results are a lower percentage increase. About dollars in Q3 and Q4 should be similar to what we saw in Q2. Thanks to our net operating income increased to 10% for the quarter. We again have included in our release some additional data on previous same-stores pools to give our investors more color as to the performance of our maturing fillers. G&A costs were $1.4 million higher this quarter over that of the previous year. Aside from an increase of a $161,000 in internet advertising, the main reasons for the increase were the fact that we operated 40 more stores at the end of this quarter compared to January 1, 2013, our continued investments in revenue management and incentive…

Thank you. (Operator Instructions) Our first question comes from the line of Christy McElroy with Citigroup. Please proceed with your question. Christy McElroy – Citigroup: Hi, good morning guys.

Hi, Christy good morning.

Good morning. Christy McElroy – Citigroup: In looking at your realized rent, realized rent – here 4.4% year-over-year today on a same-store basis, between existing customer rent growth, street rent growth and changes in discounting, can you sort of breakdown that number in terms of what has been the biggest drives behind the 4.4% and maybe in ease of those factors can you talk a little bit about what happened within during the quarter?

The street rate, Christy, were the biggest driver of that growth. Probably, 0.5% of that comes from in place customer increases we are very strategic and how we do that when we push that current customer, we think what we do works very well. The system that was built that our analysts work with to push those customer or those current customer increases is producing the results. We expect it to produce. So I’ll be a little more conservative than some others in the industry, but it’s a top. It’s all about maximizing revenues and we believe what we do does maximize revenue. But the street rate is really the story. At June 30, our street rates were up 9.3% over last June 30. So that’s where most of the growth is coming from. Yes, we would expect that to come down as occupancy comes down in this – where seasons of the year, but the street rate is really where it’s coming from. Christy McElroy – Citigroup: So when you are pushing street, by that much you are not seeing a consequential impact on moving at this point?

At this occupancy level, yes, it’s not, we turned away more people this quarter than we did last year for a couple of reasons. We didn’t have the space available for them and in sometimes they said our price was too high. But that’s okay when you have one left, we want to get that next call that’s going to pay us that extra 9% at the call that we cut away. So we are comfortable. It does cause some people to turn away to since the price is too high, but that’s by design and to maximize revenue we think it’s the right thing to do. Christy McElroy – Citigroup: Okay and then looking at occupancy, you are at 91.8% at quarter end, a record high for your company. Given that you, you probably have some visibility here for the rest of this time. Where do you think you could peak out in Q3? And in your sort of own philosophy and revenue management, where do you see that optimal level of occupancy for your portfolio as it stands today?

Christy, I don’t know, I don’t know, if we really look at an optimal occupancy level, it all depends on what the revenue management system will give to us and all the other metrics are probably the more important pieces whether the in place rents, the discounting, the asking rates, our guess is right now, we’ll probably land somewhere around end July. We are at 92.3. I don’t think we are going to grow that much more and that will taper down at the gap from last year is going to shrink a bit, but you don’t see shrinking too much. But I can’t see pushing 93%. I don’t think we are going to grow for the next three four weeks it will just taper down a little bit. Christy McElroy – Citigroup: Okay, and then just lastly, Andy, I think you talked a little bit about a sense of comps in the second half. You believe of the whole same-store revenue growth is fairly steady in the mid-8% range over the last few quarters that you are guidance is best with the grocery. Is it effectively just that decline and the year-over-year occupancy delta realized rent growth is expected to hold steady?

Yes, if rates can stick as high they are now, that maybe considered over it, but, yes, we are expecting that the delta gets very tough on the occupancy side,

Plus, Christy, we had last year’s Q3 over 2012’s Q3 was pretty remarkable and as I meant, we prefer tougher comps these times and the Q3 seems to be a real dull weather. Christy McElroy – Citigroup: Thank you, guys.

You are welcome.

Thank you. 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.

Hi Todd. Todd Thomas – KeyBanc Capital Markets: Hi, question about discounting in the quarter. I was just wondering if you can share with us the amount of free rent that was given during the quarter and then how much more you think you can dial back on free rent going forward maybe if you can give us annually year-over-year basis that would be helpful.

Well, we are down about $580,000 about 40% in discounts year-over-year and 46% from the previous year. I don’t know, as we said on our last meeting, I don’t know if we are going to burn off more than that. It might shrink to just a touch more. But being down 40% $580,000 and I think we are at what our discount was $850,000. It’s not going to shrink much more than that. Todd Thomas – KeyBanc Capital Markets: Okay, and then, as you talked about occupancy being sort of that peakish level during the peak leasing season. As the strong leasing season winds down, I was just curious if you could share with us how you are thinking about pricing and occupancy into the back half of the year. What’s the company’s strategy like with regard to pricing and rent increases given where occupancy is today?

Todd, I think it really comes down to maximizing revenue and I think the delta in occupancy will shrink them probably in the 150% to 200% range for the rest of the year. So, rates are the driver and we expect that will remain strong for the rest of the year. Todd Thomas – KeyBanc Capital Markets: Okay, and then just last question, on acquisitions, I know that you mentioned there is $50 million of additional acquisitions sort of embedded in guidance. And if you do that additional $50 million, $250 million for the year it’s a solid number obviously if you get those deals done. But, the pipeline appears to sort of descending of it, is that a fair assessment and maybe you could just talk a little bit about what you are seeing out there today?

Right now, our guide is showing $50 million for the second half of the year and currently under considerations about $63 million that we are looking at right now. The pipeline has been somewhat mainly due to the quality of properties we are seeing out there. I expect at the end of the summer, we’ll see some better quality and even maybe some bigger portfolios come into market, but – I expect we’ll do about $100 million more in the second quarter, if these that we are looking at now come to fruition. So, but it should pick up maybe or at least in the fourth quarter going into 2015 I would think.

It’s always hard to give guidance Todd, and we’ve always shied away from it certainly as we get deeper into the year and then stuff that we don’t even have under contract, yes, if we do, it’s going to have a de minimis effect on the – certainly the FFO for the year and so forth. But just to say we are guiding at $50 million doesn’t mean we are not looking at a whole bunch of offices that’s the number we are getting for the balance of the year. Todd Thomas – KeyBanc Capital Markets: Okay, so, $63 million is what you are sort of evaluating today, but, and you’ve assumed $50 million of that close as an obviously there is like a pipeline behind that they are looking at, is that right?

That’s correct. Todd Thomas – KeyBanc Capital Markets: Okay, all right. Great, thank you.

Thank you. Our next question comes from the line of Ki Bim Kim with Suntrust. Please proceed with your question. Ki Bim Kim – Suntrust Robinson Humphrey: Thank you. Just want to clarify one quick comment, when you say street rates were up 9.3%, was that a 2Q average number or end of 2Q or a July number?

That was end of June that 9.3%, our asking rate at the end of June. We’re at 9.3% over last year end June. Ki Bim Kim – Suntrust Robinson Humphrey: Okay, and I know, whenever at this comp question about, so your guidance was being to imply some sort of deceleration. Is that – how much of that has got a pure occupancy number that’s actually is that hard to get again versus you maybe – you guys being a little conservative on street rate growth for the second half?

I think, the occupancy growth Rob or Ki Bim, I am sorry, 150 basis points is the average delta we can maintain for the rest of the year. So that it’s just tough comps on the occupancy side. Rates are – allowed to fair –and surprises for the first half, we’ll see what happens in the second half. Ki Bim Kim – Suntrust Robinson Humphrey: I see, and it seems like, I am not sure if we guys have looked at some of the CMBS related self storage deals that are coming to maturity in 2015 and 2016 and it seems like it’s quite a bit maybe close to $5 billion. And it doesn’t necessarily comp sales, but have you guys track of the approach some of these maybe three four owners or just one of these properties?

There was a similar bubble, Ki Bim, about five years ago when we all thought it was going to be a great opportunity and some of them went down the pretended expand route and some of them just were able to – the quality properties were able to refi. So certainly, we know a lot of them, we keep in touch, both we and our folks at lots who keep in touch with a lot of dollars over the properties that were interested in. So, yes, certainly you don’t want to have those guys lock up on other 7 to 10 years if you are interested in the property, but it’s – I don’t think it’s going to be a great boon to get with acquisitions. We thought it would be five years ago it wasn’t and this is seller-by-seller. Ki Bim Kim – Suntrust Robinson Humphrey: Okay and I heard in Texas, there seems to be a lot of deals that people are talking about and maybe some are closer to as you are breaking ground on new supply and in Houston especially. I was wondering if you guys have an updated view that you can share with us.

Yes, Ki Bim, in our second quarter survey that we do by our area managers, there is only about 55 either recently opened or it’s some form was down in the process going on and actually the majority of our – excuse me- the most in the anyone stage in Texas than it is Houston. Houston, it’s easy built, it’s got a lot of land, lot of growth, the point out there are lot of the net migration to that state. So, yes, we are seeing a little bit of an uptick in development out there. We are still not that concerned at this point. We think going to the 2016 second half, we made the some of these deals that we are hearing about actually opened, but at this point, we are not too concerned. Ki Bim Kim – Suntrust Robinson Humphrey: So, and would that to be five under development, what was that number like last year, just as a point of reference

I don’t have in front me, but I believe it was between 35 and 40 if I remember correctly. Ki Bim Kim – Suntrust Robinson Humphrey: Okay and…

And this is all of our markets Ki Bim so that’s within the trade area of our stores nationally. Do you have the Houston’s number? We don’t have it broken out, we just show 11 in Texas, 11 in Texas, okay. Ki Bim Kim – Suntrust Robinson Humphrey: Okay. Thank you.

Thank you. Our next question comes from the line of Gaurav Mehta with Cantor Fitzgerald. Please proceed with your question. Gaurav Mehta – Cantor Fitzgerald: Thank you. Good morning. A couple of questions on the expenses. I think in your prepared remarks, you said that part of the uptick in G&A is driven by internet advertising and RMS. Could you provide any more details on that expanding and what kind of impact are you seeing on your operations as a result of that?

Do you have the number?

Gaurav, this Andy. Yes, the internet spend was up mostly in the first half of 2Q we could pull back as occupancies grew, so we could pull back some of that spend and you will see that spend become more in line in 3Q compared to last year. But it’s really, it’s just strategic where we place our ads.

Gaurav, most of that spend is in paid search and we are spending a lot more time and effort in optimizing that paid search. So that’s where you see the biggest difference. Gaurav Mehta – Cantor Fitzgerald: Great, and then on the operating expense growth by – as you think about the expenses over next few years…

Which we think this year it’s probably going to be the worst year for us from a same-store point of view and once those come back in line, a longer term range and it will be somewhere on a 5% then you’ll see our overall growth in total expenses be in that 3.5% to 4.5%. Gaurav Mehta – Cantor Fitzgerald: Okay, and last question I have is on transactions. Are you currently seeing any deals in the markets that are currently under construction or started to get occupancy deals and out of the 19 assets that you acquired in 2Q whether any assets that potential lease ups?

Yes, Gaurav, we did purchased in the second quarter one CO deal in Chicago, the $63 million that we are looking at right now, three of those are potential CO deals, one of them or actually two of them are actually – probably not open until 2015. Gaurav Mehta – Cantor Fitzgerald: Thanks. That’s all I had.

Thank you. (Operator Instructions) Our next question comes from the line of Jeremy Metz with UBS. Please proceed with your question. Ross Nussbaum – UBS: Hey guys, it’s actually Ross Nussbaum here with Jeremy.

Hey, Ross. Ross Nussbaum – UBS: Following just on that last question, what stabilized yields are you underwriting to on these CO development acquisition?

Ross, we are – we look at it at these – we are looking at lease up periods of anywhere from three or four years. At stabilizations we look for around nine which market we are looking in. We kind of based it on – if we were going to buy a property in that market today, let’s say it’s a 6% cap or a 6.5% cap, as stabilization we like to have a 3% spread there. So – our models are showing a 9% to 9.5% cap at stabilization. Ross Nussbaum – UBS: And same question on stabilized properties, where do you think the market, or let’s talk about what is the market in your view underwriting to on stabilized acquisitions at institutional quality properties and what are you guys targeting on the deals that you are winning?

Well, as an overall cap rate average for the 216 we bought in the second quarter, trailing cap rate was around 5.7 and we are expecting year one growth another 40 or 50 basis points to about a 6.3 or 6.4 cap. And then we expect the second year to be another 50 basis points. So, for core deals, and in core markets, that cap rate is going to be at six and possible that the low six. But we do hope to grow those things, 40, 50 basis points in the first year and then another 40, 50 in the second year. Ross Nussbaum – UBS: Are those stabilized from an occupancy perspective or these deals are at somewhere in the 80s?

Excluding the CO deals, these occupancies or the 16 we bought was about maybe 2%. So there was some upside, but that is kind of skewed by a portfolios that we bought that had a little occupancy. Ross Nussbaum – UBS: Okay, so you are really still shooting for, call it a stabilized deal that hopefully is close to 7% as you can get, is that a reasonable way to think about it?

That’s correct. Ross Nussbaum – UBS: Okay. The other question I had is, is a little more of a clarification on the asking rents. I believe you guys said you did 9.3% is where street rents were on June 30. I just want to make sure we are not getting, perhaps a little overly optimistic on that number, because if I go back to the second quarter of last year, and correct me if these numbers aren’t right. But I am showing that your street rents running up about 7.5% as of the end of the second quarter of 2013 and then by the end of third quarter of 2013, your street rents were only up 1.7%. So, I just want to sort of dive into say, is that 9.3% number you are doing at June 30. I mean is that a very sort of peak of the season, peak occupancy kinds of ambitious rent growth number and we should expect that asking street rate growth will diminish as we enter the back of the year?

Ross, we will see that diminish in the back half of the year and that is certainly peak, I mean we climb there from April when we are at 6.2% in asking and May it was at 8% and in June, it was 9.3%. So, yes, that is certainly a peak number. You are going to see that delta shrink as we climb in the middle of third quarter and fourth quarter. Ross Nussbaum – UBS: And based on, I know, June is ending today, have you already backed that number down into that?

It’s backed down to the touch for us. Ross Nussbaum – UBS: Okay, so to really ask you the summer swing that you start back in all time?

Absolutely, yes. Ross Nussbaum – UBS: Okay, I think, Jeremy Metz had a question as well. Jeremy Metz – UBS: Yes, hey guys. I was just wondering, can you just talk a little bit about your penetration rate on tenant insurance and just how much more room to go? Or how much more room you are ready to go there as you are obviously – it’s been benefiting your results?

Well, Jeremy, we were up a point in penetration rates for this quarter year-over-year. And we don’t know if there is that much more room. I mean, you’ve got to take in account the churn and delinquents and students and I think it’s a pretty good number where we are at right now 58.8% and we don’t see it going much higher than at this point. Jeremy Metz – UBS: All right, great.

Thank you. Mr. Rogers, at this time there are no further questions. I’d like to turn the floor back to you for any closing comments.

Thank you everyone for participating in our call. We look forward to talking to you again early November and then perhaps meeting many of you at NARIET. In the mean time, have a great summer. Thank you.

Thank you. This concludes today’s teleconference. You may disconnect your lines at this time and have a wonderful day. We thank you for your participation.