Greetings and welcome to the Sovran Self Storage Third Quarter 2015 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 Diane Piegza, Vice President of Investor Relations. Thank you, you may begin.

Thank you, Rob and good morning everyone. Welcome to our third quarter 2015 conference call. Leading today’s call will be Dave Rogers, our Chief Executive Officer. Also participating are Andy Gregoire, Chief Financial Officer; Paul Powell, Chief Investment Officer; and Ed Killeen, our Chief Operating Officer. As a reminder, the following discussion and answers to your questions contain forward-looking statements. Our actual results may differ from those projected due to risks and uncertainties with the Company’s business. Additional information concerning these factors is included in the Company’s latest SEC filings. At this time, I will first turn the call over to Dave Rogers.

Thanks, Diane. Good morning all. With regard to company’s performance this quarter, it was really good. Against last year’s tough Q3 comp, we again achieved our highest ever occupancies, our highest rates per square foot, our highest NOI. Andy will provide the details in a few minutes. We bought $65 million worth of property the way we like to buy it. Good stores and good markets where we have a strong presence with the ability to apply our technology and our management to drive big upsides of those purchases. We remain active in the acquisition early on with opportunities coming up to buy some high quality established stores as well as the number of great CO deals. With regard to the Self-Storage sector at large, a good analogy of the current conditions might be lights up once the song remains the same because the same unit supply exists at most markets, the same power and the scale in branding power of the large operators exists and the same continued steady uptick in demand continues. So fundamentals are strong, our company is in great shape and I think the rest of 2015 and 2016 are going to be great. Andy, why don’t you give us some details?

Thanks, Dave. . Last night we reported same store revenues increased 6.5% over those of the third quarter of 2014. This was a nice acceleration from the 5.1% Q1 and the 5.8% Q2 same-store revenue growth and shows the continued strength of our platforms and the sector. The drivers behind the revenue growth were an eight basis point increase in average occupancy and 5.1% increase in rental rates. Same store occupancy 91.4% at September 30. Tenant insurance income for the same store pool continued to show double digit growth, increasing 12.8% for third quarter of 2015 and compared to the same period in ‘14. Total property operating expenses continued to be well controlled, increasing only 2.6% on a same store basis, primarily as a result of increased payroll and related benefits, real estate taxes and internet marketing. Same store net operating income increased 8.4% for the quarter which was an acceleration from the 7.8% experienced in Q2. Our revenue growth, controlled expenses and the performance of our acquisitions led to a strong 12.8% increase in adjusted FFO per share. We have included some of the information for our same store pool by bulk market and they stay to provide additional color on not only their largest market Houston, but all of our major markets. In regards to Houston, as we stated over the past few quarters, we believe our scale and platforms will reduce any interest impact over oil prices on our properties there. Once again our results have formed itself with same store revenue and NOI experiencing increases of 6.9% and 9.2% respectively for the quarter compared to the same period in 2014. G&A costs were $656,000 higher this quarter over that of the previous year. The main reasons for the increase were higher taxes on our taxable REIT…

[Operator Instructions] Our first question comes from the line of Todd Thomas with KeyBanc Capital Markets. Please proceed with your question.

Hi, thanks. Good morning.

Hi, Todd.

Good morning. My first question Andy, regarding Houston, you talked about Houston a bit with revenue up 6.9%, but curious, occupancy was lower by a 180 basis points year-over-year. So higher rents and lower discounts for lower occupancy and that’s different than what you’re seeing in most markets right now. Has the demand profile in the Houston MSA changed at all on the margin and then as you think about maximizing revenue in Houston as the occupancy versus rates decision different in that market today.

I don’t think it’s any different. It is a store-by-store process with our revenue management system. I think we felt last year, we’re a little ahead of our self enhancement [ph], so we thought we it was a little bit too high, we’re pulling the rate level much harder in Houston right now in reducing that free rent. So I think it should - a way we’re maximizing revenue. In occupancy, we don’t shoot for an occupancy point, we’re trying that build that revenue, so it’s a combination of those different levels of street rates in place and the free rent that we’re pulling that lowered occupancy a little bit, but still very strong at 92 plus.

Todd, just something else with our rental rates being at 5.1%, in Houston our rates are actually 7.5%. So things are real strong and they continue to look strong in Houston.

Do you expect to see occupancy in the market recovering your portfolio into ‘16 and also with regard existing customers, are you increasing rents in that market at the same pace that you are elsewhere in the portfolio?

Yeah, we certainly are, as far as in place rate increases and Houston, they’re not lagging behind any other market just after the [indiscernible], as far as in place overall 8.3% of our customers received a rent increase versus 4.5% last year and - 6.8% the previous quarter. And those in place increases going in remain double digit and the customers are stickier than last quarter, so the rent increases that are going in are real strong and the same goes for Houston.

Okay and then a question on guidance just regarding the acquisitions, I think the $270 million of completed investments that’s included in the guidance for the full year. That does not include the impact from any properties under contract today, I know that the impact may be minimal throughout the balance of the year. I’m just trying to clarify although the guidance has just had 275 million that’s being completed, is that correct?

That is correct. What’s under contract and I think Paul’s going to add some color to this. This is expected to close in January, so we have a due diligent period here and in part to satisfy the current owners request the delay till January.

Yeah, right. We’ve got 67 million property - 67 million for nine properties under contract and some those are CO deals what will open up, one may open up at the end of this year, other in the first quarter of next year and then some of the more operating properties will close in the first quarter and then we have got a couple other COs that will go out into 2016.

Okay, great. And then just last question, Dave when you ran through some of the - the same conditions that you’re seeing today versus what you’ve seen over the last couple of years. You talked about an uptick in demand, what’s causing that increase in demand industry wide? Have the demand drivers of the industry changed in any way, any new sources of demand that you’re seeing or were your comments just about something more broad?

I think as population grows and most of our markets fortunately are experiencing population growth, that’s all it takes. I mean it’s such a generic and wide reaching industry that if population grows, we get our commandeered share. But also the usual suspects where we drive into are trying to encourage commercial use. We spread our tentacles into different areas of commercial customers and so forth, that helps too. It isn’t anything - to tonic shift here or anything, but the steady growth of population equates almost [indiscernible] to steady growth in stores demand.

Okay, has the commercial segment in your portfolio changed at all over the last several years?

It’s as we had new stores, those - the overall portfolio on a season basis, say a store or a group of stores that we’ve owned for five or six years, no. We’ve got a pretty good base in there but as when we add new stores we usually increase the commercial percentage in those stores.

Okay, great. Thank you.

Our next question is from Jeremy Metz with UBS. Please proceed with your question.

Hey, good morning guys, I’m Ahmad Feroz [ph]. Last quarter you talked a little - you talked about being a little slower to push rates going in, you were little nervous about the some of the rates you’ve been pushing, the past few years you took the foot off the gas a little bit, but then you noted seeing some solid acceleration at the end and setting into 3Q. So I’m just wondering how rates trended throughout the quarter, what rate today versus this time last year and do you think you pushed hard enough here.

Yeah, I think - sorry Jeremy, its Andy. The rates during the quarter I think, the asking rates range from being up plus 8% to - up 4%, it’s a pretty big range and we vary month-to- month. It’s really a lot of lavers [ph] were pulling in, it’s the pre-brands that we’ve really been brachiating back that we really didn’t think we had much more in that laver and we continue to brachia [ph] that back rates are strong when you look at the overall pushing in place stronger than we had in the past and pushing street rates and the free rent reduction continues, which was a big surprise to us.

And Jeremy, that really was - that’s been the trend for the last six, seven months when we had talked about sort of taken our foot of the gas a little bit. I had mentioned that that was actually late 2014, very early 2015 and at that point we recognized that we could continue to push, so that was very early on in the year that - where that was the decision that we were taking.

And you mentioned the discount in being a positive rate now, could you just kind of give us some details on where that was versus last year, is there more room to go here or are we kind of starting to peak out here in terms of limiting discounts?

Well, we think there’s more room to go and we’re down nearly 38% in discounting about $0.5 million as well smaller population of customers received free rent 40% versus 47% and really that fluctuates a little bit quarter-to-quarter, but we see that there’s room there, that will trend downward.

Yeah, I think we have a lot - there’s a lot of room left, Q4, Q1 of next year, of course we said the same thing last year and we didn’t think we’d get much out of it Q2 and Q3 this year, but we did. But Q1 and Q4 are the biggest ones, but Q2 and Q3 next year, there’s still some room. We gave roughly $828,000 for Q3 compared to $1.3 million last year, there’s still room that we reduce that 828,000.

Okay and then just one for Paul here. Just want to see if you can talk about the dynamics in the investment market today, how things change in terms of cap rates and competition and level of deal flow you’re seeing today.

Hey, Jeremy. Yeah, the third quarter, we’ve seen a pretty good uptick in deal flow. The brokers have brought a lot of one-off to the market and two or three larger portfolios that we’ve been looking at. So I’m comfortable with going into the Q1 next year, we’ll have enough deal flow to get some deals done. We’ve got quite a few deals we’re looking at right now that we’re negotiating contracts on, we’ve got some CO opportunities that we hope to bring or get under contract within this fourth quarter and it will be probably be end of next year or end of 2017 before they open. So I’m feeling pretty confident that going into 2016, we’ll have some decent deal flow.

Alright, thank you.

The next question comes from Gaurav Mehta with Cantor Fitzgerald. Please proceed with your question.

Yeah, thank you. Good morning.

Good morning.

I think you mentioned in your remarks that there’s not much supply in the sector overall, but if you look across your market, would you say there - would you say that there is more supply in some of the markets than others or it’s fair to say that there is no supply in any of your markets?

Yeah, I’ll start with just an overview. We’re still thinking that for 2015 that there are maybe 400 to 450 stores that came on line across the nation. We don’t see a major uptick from that into next year, surprisingly a lot of the markets where the on trades are coming are the three to four low barrier to entry - high barrier to entry markets. And how that impacts our own specific markets, I’ll let Paul, take a shot at here.

Yes Gaurav, we do a survey on a quarterly basis with our area managers and what we found in the third quarter of this year was that there were 139 projects either open or in construction or in the planning stage within our markets, of significance were 44 in Texas, 34 in North Carolina, which was surprisingly - didn’t expect to see that quite a big uptick in new development there, 10 in Phoenix and seven in Florida. So we’re seeing an uptick, every quarter we’re identifying few more but it’s still as Dave alluded to, we’re not too concerned, but there certainly is an uptick in new development.

Okay and second question on the occupancy side. Your portfolio was 93.1% occupied in July, so if you think about your portfolio overall, would you say that sort of maximum occupancy that you’re going to gain?

No, I think - we look at October Gaurav, then we were at 130 basis points ahead of last year’s October or at 91.1. We think we’ll pull out another 75 to 100 basis points next year we think. There’s more room in occupancy.

Okay, thank you. That’s all I had.

Our next question comes from Jana Galan with Bank of America Merrill Lynch. Please proceed with your question?

Thank you, good morning. I’m sorry if I missed this, but did you provide cap rates on the 11 stores you acquired this quarter?

Hi, Jana. It’s - yeah, on the 11, on a weighted average it was about 6.8 cap after year one operation.

Thank you and I guess overall in the market how are kind of cap rates trending?

Well, they certainly haven’t gone up. I would say for the Class A product or the portfolios you may even have a little further compression in cap rates 15 to 25 basis points. So it’s very aggressive out there but yeah, I thought they would may be level out after the second quarter but I think they are still compressing minimally but there is still a compression going on.

And are you seeing more competition in may be a little lower density markets following the pricing of this mark stop [ph] acquisition?

Yeah, I think in the secondary markets even the tertiary those cap rates are compressing as well again as I mentioned earlier, deal flows things were picked up and a lot of these are in the secondary and in the tertiary markets. We are not looking too hard at the tertiary markets, secondarily we looking at I mean, we are involved with them we are going to be very disciplined we are not going to over pay for them but I am seeing a compression in cap rates in those markets as well.

Thank You

Thanks

Our next question is coming from Ki Bin Kim with SunTrust. Please proceed with your question.

Thanks good morning, so it looks like you are end the year around 6.25%, same store revenue growth based on your guidance I am not asking for a guidance for next year but as we look forward you know what has to happen to keep things at that level versus maybe up a hundred basis points or conversing may be below hundred

Well I think you know we are entering into a pretty solid rate driven model right now. As Andy said that we have 75 to 100 basis points maybe for occupancy, have a little room especially in Q4 and Q1 for incentive erosion. So it’s mainly going to be a rate driven model and these are whole tide is lifting everybody, so the competition that people can shop is back in be as detrimental as it was say in 2011 and 2012 even. So I think it’s a torrential node, I think we are all well poised to do that the rates were pushing or sticking or becoming more aggressive both in place and with street rates especially as April and May coming, so I think its classic economics one on one, the supply is muted, the demand is there and we continue to return raise and tenants there. So I think it’s more likely than not that we have a year like this I am not sure we will guide there but I think we don’t see any reason not to be optimistic and bullish going into 2016 that’s for sure

That’s good to hear and what was your street rates this quarter year-over-year

Kim, they range from during the quarter they were 8 plus down to 4 plus, so there is a thing range there and we will play that month by month see how it falls and I think today there are three quarts percent but that varies month by month so kind of look at today they might be three plus in the beginning month they might change so there is some there is some variation there but we expect very similar next year in the slower time we will be able to pull back a little bit and push really hard as we get into the April, May in the summer time

Okay and the last question on taxes as I guess we are going to see a nice pop in taxes in the fourth quarter next year’s fourth quarters should we expect that - is that a volatile number or is that the back to the 2% to 3% historic norms or I am not sure what should we expect on that line item.

I think for the year you are still probably looking five plus in 2016 for property taxes you will see that big pop in 4Q this 4Q comes in there as we are expecting you won’t see, we won’t have an easy comparable so - or a tough comparable so it should show pretty flat throughout the year and next year if things end the year the way we are. Our concentration in Florida and Texas we haven’t received any Florida bills out yet, we received assessments and for those assessments we are waiting on the invoices from Florida, Texas it is coming and we are comfortable where we are at so fourth quarter still has some open there if it comes in like we expected it will be 14 to 15 but next year we will not expect that it would be just like the other quarter into the 5% range.

Okay thank you.

You are welcome

[Operator Instructions] Our next question is from John Pawlowski with Green Street Advisors. Please proceed with your question.

Thank you, could you share what MSAs going to say is the 9 stores under contract you are in

The stores that we have properties under contract are in Florida, mainly Orlando market, Phoenix some outside of Chicago and Miami

Okay, great thank you. The province on the secondary MSAs and little bit of cap rate compression could you mind me how you define the secondary MSAs, is that top 25 to 50 in terms of population density any color there?

Pretty much John, we look at markets million and up as secondary we find it somewhat amusing sometimes we research reports that consider Chicago or Houston are secondary market we would consider those primary, but I would say really the top twenty markets I guess would be primary and say is 60 65 after twenty one would be secondary.

Okay thank you.

There are no further questions at this time at this point I would like to turn the call back to management for any closing remarks. Excuse me we do have someone that just popped into the queue, George Hoglund with Jefferies. Please proceed with your question.

Yeah, sorry to [indiscernible] at the end I thought I was in the queue. I guess there’s two questions one on terms of the acquisition, the amount closed in 2Q was little bit what you have under contract like close in 3Q little less than what you had under contract at the end of 2Q. And I know you’d mentioned that some again pushed into 2016 then also some are CO deals that may take a little longer, but in generally do you seen any change in the time it is taking to close a deal once it’s under contract?

Hey George, this is Paul, yeah there are two stores in the second quarter that we missed them under contract there, CO deals that have not opened yet one is expected to open fourth quarter this year and the other is first quarter of next year. Yeah, it’s - doing the CO deals is a long process as far as finding the right deal making sure developers experience getting our specs in the hands of the developer and just going through the whole process just takes time. But in the end the developments stage it same to be protracted it’s some of the developers saying to be able to do it a lot quicker than others so we are doing some deals where they can get built in eight months others there are you know like fourteen months and again it’s also timing, from the north east you don’t really have a whole lot of - the weather is going to affect the development during in the north east. It’s been a worry having doing these deals that could change the timeline.

Okay and then just one last one in terms of the new occupants, sorry new developments as occurring in some of your markets, do you guys planned to be the third party manager venue those properties and you seeing any change in some of your view maybe expanding third party management business?

Yeah, we are certainly talking with the developers, they’re reaching out to us, we’re reaching out to them. Our UBM arm has been very active over the last quarter in discussions and some of these we have already signed contracts for. So yes, we will certainly be managing some of them, you can’t say all of them, but we are very active in trying to solicit that business.

And George that’s where the action is for our third party platform, it’s pretty much in new development and see our CO deals that we hope to buy - we’re not overly activating existing stores are just because in large part the type of stores that we would want to manage or being managed pretty much by the owner operators so we are comfortable in the CO deals and the new development and working with those folks as perhaps conduit to future acquisition.

Okay thanks guys.

There are no further questions at this time. At this point I would like to turn the call back over to management for any closing remarks.

We thank everyone for your time on this call and we will probably see most of you in the next few weeks out in Las Vega. Have a good couple of weeks everybody.

This concludes today’s teleconference thank you for your participation you may disconnect your lines at this time.