Public Storage (PSA) Q3 2011 Earnings Report, Transcript and Summary

John Reyes - Chief Financial Officer, Principal Accounting Officer and Senior Vice President Clemente Teng - Vice President of Investor Services David F. Doll - Senior Vice President and President of Real Estate Group Ronald L. Havner - Chairman, Chief Executive Officer and President

Christy McElroy - UBS Investment Bank, Research Division Eric Wolfe - Citigroup Inc, Research Division Jonathan Habermann - Goldman Sachs Group Inc., Research Division Michael W. Mueller - JP Morgan Chase & Co, Research Division Todd M. Thomas - KeyBanc Capital Markets Inc., Research Division Paula J. Poskon - Robert W. Baird & Co. Incorporated, Research Division Michael Bilerman - Citigroup Inc, Research Division Michael J. Salinsky - RBC Capital Markets, LLC, Research Division Ki Bin Kim - Macquarie Research Paul E. Adornato - BMO Capital Markets U.S. Michael Knott - Green Street Advisors, Inc., Research Division Omotayo T. Okusanya - Jefferies & Company, Inc., Research Division Swaroop Yalla - Morgan Stanley, Research Division

Good afternoon. My name is Jackie, and I will be your conference operator today. At this time, I would like to welcome everyone to the Public Storage Third Quarter 2011 Earnings Conference Call. [Operator Instructions] Thank you. Mr. Teng, you may begin your conference.

Good morning, and thank you for joining us for our third quarter earnings call. Here with me today are Ron Havner, CEO; and John Reyes, CFO. We'll follow the usual format, followed by a question-and-answer period. However, to allow for equal participation, we request that you ask only one question when your turn comes up, and then return to the queue for any follow-up questions. Before we start, I want to remind you that all statements other than statements of historical facts included in this conference call are forward-looking statements. These forward-looking statements are subject to a number of risk and uncertainties that could cause actual results to differ materially from those projected in these statements. These risk and other factors that could adversely affect our business and future results are described in today's earnings press release, as well as in our reports filed with the Securities and Exchange Commission. All forward-looking statements speak only as of today, November 4, 2011, and we assume no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. A reconciliation to GAAP of the non-GAAP financial measures we are providing on this call is included in our earnings press release. You can find our press release, SEC reports and an audio webcast replay of this conference call on our website at www.publicstorage.com. I'll turn the call over to John Reyes.

Thank you, Clem. As outlined in our press release, our third quarter core FFO per share was $1.56 compared to $1.35 last year, a 16% increase. Five items contributed to this growth: First, our same-store net operating income increased by 8.6%, adding $0.13 per share due to higher revenues of 5.8% and flat operating expenses; second, our investment in Shurgard Europe added $0.03 per share, driven primarily by Shurgard's first quarter acquisition of the remaining interest in 2 joint ventures. Non-same store properties added $0.03 per share, lower preferred dividends added $0.02 and higher ancillary income, $0.01 per share. These items were partially offset by higher G&A cost of $0.02 per share, due to increased incentive compensation. During the third quarter, we issued $488 million of 6.35% preferred stock and redeemed $525 million with a blended rate of 7.2%. In the fourth quarter, we will redeem an additional $105 million of preferred with a rate of 6.95%. It will be a charge associated with the redemption of about $3 million or $0.02 per share. As a result of these capital transactions completed in 2011, our quarterly preferred dividend is expected to be about $7 million lower in the fourth quarter as compared to the same period last year. With respect to Shurgard Europe, we expect to refinance the 2 joint venture loans into a single term loan of EUR 215 million and eliminate the underlying joint venture structures. The new loan will mature in November 2014, and will have a lower interest rate. We expect to extend the maturity of our loan to Shurgard Europe to the first quarter of 2015. Since June 30, we've acquired about $176 million of affiliated partnership interest, using $120 million in cash and issuing 478,000 shares of common stock. We incurred transaction costs of approximately $2 million, which were included in our G&A expenses. With that, I will now turn it over to Ron.

Thank you, John. We had a solid quarter, which reflected -- which benefited from higher occupancy and better pricing. Our same-store movements were up by 2% year-over-year, offset in part by higher moveouts of up 3%. We ended Q3 with same-store occupancy of 91.7%, up 1.3% from last year. Same-store revenue per available foot grew by 5.4%, up from 3.7% in Q2. At the end of October, occupancy, in-place rent and asking rents were all higher than the same period last year. In Q3, all of our top 20 markets achieved positive revenue growth. The Dallas and Minneapolis markets led the country, with revenue growth of 8.5%. Los Angeles, our largest market, grew revenues by 3.1%, compared to 1.5% in Q2. San Francisco, our second largest market, increased revenues by 5.8%, up from 3.6% in Q2. The Northeast markets had revenue growth of 7.1%, up from 5.9% in Q2. This growth was achieved despite a reduction in media expense. In Q4, our media expense is expected to increase by about $1 million. Moving to our European operations, rental revenues improved by 2.4% due to higher realized rents and higher occupancy. We ended Q3 occupancy at 86.3%, up 0.3% from last year. Operating expenses were higher by 2.3%, primarily from higher R&M, resulting in NOI growth of 2.5%. With respect to acquisitions, we've acquired 4 properties, 2 in California, one each in Florida and Maryland for about $38 million, with about 300,000 net rentable square feet. In summary, operating trends were positive across all our businesses, and we are well positioned going into 2012. With that, operator, let's open it up for questions.

[Operator Instructions] Your first question comes from the line of Swaroop Yalla with Morgan Stanley.

Can you talk a little bit about the new acquisitions, whether they're stabilized currently, and what is the yield, going in, cap rate?

Yes, Swaroop, the 4 acquisitions, most of them, in fact all of them are unstabilized. The yields range from 1% to probably 3%. So they're in some form of fill up that will happen over the next year or 2 years.

Great. And so could you quantify the asking rents or the street rents which you're seeing in your quarter rate, in your portfolio right now?

Well, our street rents are probably running about 4% to 5% higher than they were last year in terms of absolute numbers. I mean, it varies across the country. Did you want to know what they are on a per square foot basis?

Yes, sure. That'll be helpful.

Well, I look at it about -- it's running on a monthly basis at about, at the end of October we were at about $1.21 per square foot per month. That was compared to $1.14 last year at the end of October. And where they currently stand today, it's probably similar.

Great. And so just to be clear, this 4% to 5% is on a year-on-year basis, right?

That is correct.

Your next question comes from the line of Jay Habermann with Goldman Sachs.

Ron, you mentioned, I think as of end of October, you were still up year-over-year in terms of occupancy and rents. Can you give us some sense of where occupancy stands and maybe what your expectation is during this more seasonally slow period?

Yes, Jay, at the end of October, our occupancy was pretty close to 91%. I think, let's see, it's 90.9%, which is up from 89.6% last year at the end of October. And as we've done during the rental season, we're going to continue to be aggressive driving move-in volume and hope to maintain or actually expand our year-over-year spread in occupancy during Q4.

Okay, so you're not seeing actually with the sort of pace of rent increases thus far, that it's having any sort of negative impact in terms of occupancy? This is just normal seasonality?

Yes.

Your next question comes from the line of Ki Bin Kim with Macquarie.

I think Jay asked just a similar question, but could you give the occupancy trends going into September, especially because it seems like you had [indiscernible] saying that September's been pretty strong, unseasonally strong, and also have you commented on October and how that compares to year-over-year?

Well Ki, I just gave the October occupancy, 90.9% versus 89.6%. So that's up 1.3%, which is what it was at the end of September as well. For the quarter, and I don't have it by month, but for the quarter, we were essentially flat. We were up 5,000 customers on move-ins and 7,000 customers increase on move-outs. So we had a net change during the quarter of 2,000 customers on a 1 million-plus customer base.

And it seems like street rents are probably at the highest point from a year-over-year standpoint for you guys. How do you feel about keeping this pace going forward to next year?

Well, at these occupancy levels, we're feeling pretty good. So we're able to hold the occupancy and push the street rate, and we did that through Q3 and it looks like that trend is continuing into October.

And is there anything -- last question, was there anything unique about this quarter or this year, maybe from the dislocation of housing that you think might not be there next year?

I can't. I would just be guessing.

Your next question comes from the line of Christy McElroy with UBS.

I'm wondering if, do you think that the strength in street rents is coming from sort of overall market improvement or because you're at those high occupancy levels, you have more pricing power there?

Well at higher occupancies and good growth and movement volume or respectable growth in movement volume, you obviously feel more comfortable about pushing the rate. The other thing I would say in terms of our portfolio that you're seeing, which we've been seeing for the last 6 to 9 months, is the migration of growth from kind of the East Coast to the West Coast. And I touched on how San Francisco and Los Angeles continued to improve, and when those markets really hit their stride, I think you'll see even more acceleration or good, solid growth in our portfolio.

So effectively, in terms of the -- in terms of your ability to push those rents, do you think it's more a function of because you're running your portfolio at higher occupancy levels? Or well, I guess, what are you seeing in terms of asking rents from the properties that are around you, so your competition?

Christy, I would say that demand is pretty much stable year-over-year for the most part of what we're seeing. So the reason why we're able to push the rates is because of occupancy being much higher than last year. So we feel more comfortable, our tenant base is aging nicely. In other words, people are staying longer. And so we feel more comfortable raising some rates. We also, as Ron pointed out, scaled back advertising because we didn't need to do it, and we're still getting nice move-in volume.

Have you been reducing concessions as well?

We have not been doing that, though. We still maintain pretty much the dollar special out there.

Your next question comes from the line of Eric Wolfe with Citi.

Looking at your revenue growth this year, in this quarter, it really -- it stands out just, I think, given the macro backdrop. The economy's not that strong, housing market is very weak. Ron, I'm just wondering in your long career, have you ever seen a period like this where you've had such strong growth in such a weak environment? Or do you not think the environment's weak?

Eric, we've come off '08, '09, which were pretty challenging years. So I think '11 versus '10, maybe it's a little easier comp. But as John just touched on, we're seeing good demand for the product. When I touched on the fact that all 20 of our top markets were up year-over-year in revenue growth, which is great and we have some of our larger markets. Well every market, except San Diego, accelerated during the Q3 versus Q2. So that's another good sign. And then the third item I'd kind of point out is the number of customers that have been here longer than a year continued to improve in Q3, up to 55.3% from 54.9% last year and up from 53.3% in 2009. So length of stay has improved. Demand is good. We're able to achieve pricing and it's strong across the entire platform.

Right. But there's not much, I mean it seems like everything is working. I mean, all the statistics you mentioned showed that they are, but I -- is there anything that you can point to in terms of just what's going on in the environment and what you're hearing from your customers, which sort of supports that? Any sort of fundamental demand drivers? And I'm just trying to think about how sustainable this is going to be going into next year. And if we can't explain it, then why should we assume that the growth is going to continue at the same rate?

Eric, all I can do is point you to the matrix in terms of higher occupancies, higher in-place rents, higher asking rents and longer length of stay. And as we've said numerous times before, in terms of what are the demand drivers for our business, it's people's life events: death, divorce, disaster, relocation and those things continue to happen each and every day.

Your next question comes from the line of Todd Thomas with KeyBanc Capital.

Just a quick follow-up, I guess, on that line of questioning with regard to asking rents. Is that a function of you being able to actually raise asking rents to new customers, or is it more function of holding asking rates steady versus last year where you were perhaps a little more aggressive to build occupancy, and you mentioned that you have a longer length of stay in the customer base that's been getting rent increases. So I was just wondering, are asking rates to new customers actually what you're increasing?

Todd, that's correct. When I was referring to the rates, I was referring to the 4% to 6% increase year-over-year. That's with respect to new, incoming tenants, not our existing tenant base.

Okay, got you. And then, I was just wondering, last year during the off-peak season, you tested some markets with rent increases to existing customers, and you sounded pleased with the results. I was just wondering what your plans are this year to roll that out more broadly.

Todd, we pretty much pushed those. We accelerated those and pushed them in to the third quarter as opposed to what we did last year, which we did some in the fourth quarter. So we're doing very little fourth quarter increases to existing tenants because we accelerated it and put them in the third quarter of this year.

Your next question comes from the line of Paula Poskon with Robert W. Baird. Paula J. Poskon - Robert W. Baird & Co. Incorporated, Research Division: Just a follow-up on the demand trends. Do you think that -- how much do you think your favorable demand trends are attributable to just overall market demand? And how much is really you and perhaps the other public REITs taking market share from your private competition?

Well, Paula, as I said earlier, you can kind of see demand across the portfolio pretty solid. The delta, if you had all the markets in front of you, the delta in occupancies between the strongest and the weakest is maybe 300 basis points. So it's not like there's one dominant markets that are very highly occupied and pockets of markets that are low occupancy. It's the demand and that the growth is solid across the portfolio. So I can attribute it to just say there's one particular thing, because we're seeing solid growth across the entire U.S. As I touched on earlier, we have seen stronger growth, though, move shift from the Midwest, and now it's kind of moving more towards the West Coast. I don't know, does that touch on your question? Paula J. Poskon - Robert W. Baird & Co. Incorporated, Research Division: Yes. I was just trying to get a sense of -- if the -- to try and put some perspective around your ability to continue taking market share from the private players, just sort of the discussion in the industry at recent conferences, et cetera are around sort of the widening gap between the haves and have-nots, whether that be on access to and cost of capital, on technology, sophistication, et cetera.

Well, Paula, I'll tell you this. We don't really keep track of what the -- other than our public competitors, we really don't keep track of what maybe the other industry players are -- or how they're performing, whether the public guys are stealing market share or not from them. I presume that we are because all the public guys seem to be performing very well. But with that said, I have no idea and I don't know that Ron has any feel for how the nonpublic guys out there are performing.

Generally, when we do acquisitions, Paula, when we look at stabilized properties similar to what you see in the public marketplace, there's between a 500 and 1,000 point, 10% occupancy gap between what we typically operate at versus what we'll look at or -- and see historically in terms of a third-party operated property. Paula J. Poskon - Robert W. Baird & Co. Incorporated, Research Division: I appreciate that additional color. And then Ron, I just wanted to clarify something you said in your prepared marks that you expect 4Q media spend to be up by $1 million. Is that correct?

Yes. Paula J. Poskon - Robert W. Baird & Co. Incorporated, Research Division: And is that over 2Q or over last 4Q?

Over last year Q4. Paula J. Poskon - Robert W. Baird & Co. Incorporated, Research Division: And then just finally, I'm just curious, what initiatives or what's the main focus that your new COO is working on?

Right now, he's on the field training.

Your next question comes from the line of Tayo Okusanya with Jefferies & Company. Omotayo T. Okusanya - Jefferies & Company, Inc., Research Division: A couple of questions. The Shurgard loan, when they do get that new financing in place, how much of your loan do you expect to get paid down?

We will -- the existing joint ventures, in aggregate, are about $188 million. So we're borrowing $215 million, the differential roughly almost $30 million, $20 million, $30 million is going to be used to pay down the Public Storage loan. Omotayo T. Okusanya - Jefferies & Company, Inc., Research Division: Okay, that's helpful. And then, on a going forward basis, why I think about other opportunities to generate revenue growth, when I start to think about concessions, do you think you may get to a point where you can start to reduce concessions and drive rent growth even further? Or do you just feel like that's a staple of the industry that's just going to stay no matter what?

You know what, I'd love to reduce concessions. But it seems to be a staple of the industry, as you've kind of pointed out. Every time we've tried to reduce concessions, the adverse impact to our move-in volume is just too great to bear. So, we've struggled with that, and I don't know that it's going to go away anytime soon. Omotayo T. Okusanya - Jefferies & Company, Inc., Research Division: Got it. And then one of your peers mentioned that, systematically, they're trying to move more towards online reservations or online as a source of advertising versus the yellow pages, and it's cheaper to do things that way. Is that something that we could expect to hear come out of your operations as well?

Yes, well, we kind of did that 2 years ago. So if you -- we unbundled our -- in the press release, we unbundled our advertising, and you can see that, and I think I've touched on before, the Internet spend has been -- has accelerated while the Yellow Pages have dropped. And I think we're down, I don't know, $4 million or $5 million over where we were a couple years ago. So that process, like I said, we did it a couple years ago, and that will continue.

Your next question comes from the line of Michael Knott with Green Street Advisors.

Curious if you'd still kind of classify the current environment as lower move-in demand and lower move-outs compared to historical patterns. And if that's still the case, I'm curious how -- what lessons you can draw from that, and which environment you think is more conducive to better performance.

Well, Michael, let me see if I understand your question. You said lower move-ins and lower move-outs? Because we had about the -- our move-ins for the quarter were up about 2%. Our move-outs were slightly higher, up 3%. So we had a 2,000 customer change in the Q3. If we go back to '08, '09, we had to dramatically reduce prices to hold move-in volume, or accelerate it while we had a huge increase in move-out volume, 10% to 12%, year-over-year in the quarter. And that was tied in to the dramatic changes in the economy, Q4 '08, first half '09. Is that...

Yes, I guess kind of what I was saying was occupancy gains over the past year I think -- or maybe not as much for you guys, but for some of your competitors, would be that, that was achieved through not as many move-ins as compared to just much fewer move-outs compared to normal.

Yes, Michael, I think in large part, I think we're all benefiting from the lack of supply in the industry that has come on over the past couple years. So yes, probably demand has been slower than in the past, but since there isn't as much new supply coming on, we've all been able to just continue to drive occupancy higher. Now is that better than a lot of demand with more supply coming online? I don't know.

[Operator Instructions] Your next question comes from the line of Michael Mueller with JPMorgan. Michael W. Mueller - JP Morgan Chase & Co, Research Division: I guess going to capital deployment, it's been a pretty active year in the acquisitions side between, I guess third-party stuff and partnership buyout. Can you talk a little bit about what you're seeing today versus say, the beginning of the year?

Well, you got Dave Doll here, who runs acquisitions. I'd like to get realtime information here.

Clearly, Mike, as the year's gone down, there's been a reduction in number of deals out on the street. And so there has been some slowdown in new portfolios or properties coming to the marketplace. Michael W. Mueller - JP Morgan Chase & Co, Research Division: Okay. And is there anything left on the partnership side that could be bought out?

There's some single property partnerships, Mike, but nothing of material size, no.

Your next question comes from the line of Michael Salinsky with RBC Capital.

You guys have done a very, very good job on expenses the last couple quarters. I mean, are you starting to see any pressure on those? And do you think that the current expense level is -- you can keep the current expense level going forward?

Well, Mike, do you mean flat year-over-year?

It's not just flat, but you've limited property tax to 1%. You've limited -- you've had negative payroll. I mean it, should we expect, as we look forward, more kind of in the normalized 2% to 3% range, or is there additional cost opportunities where you can reduce?

I would say longer term, in terms of modeling and figuring out what the cost structure should be, in terms of cost -- expense growth, I would use yes, 2% to 3%. Are there going to be each quarter, each year things that we can do to drive expenses out of our operating structure? Yes, we're constantly working on things. I touched on the Yellow Pages that we started a couple years ago. We've got some initiatives going on in the phone center. We've got some initiatives going on in field management. But those are going to happen each and every year. We've got a variety of things. But if I were to sit down and say what is the long-term expense growth in our business, I'd say somewhere between 2% and 3%.

Okay, and then just a follow-up, why the increase in advertising costs for the fourth quarter? I mean if you look at your -- you ended the quarter up 140 basis points. It sounds like the October trends were very good.

The October trends were good. There's a seasonality to the business. So even though we're up year-over-year, our occupancy is down from where it was in the summer. So we're going to try and step in, and hold, or even push that spread, year-over-year spread in Q4, and there's some markets where we think we can do that with advertising.

So it's more selective advertising in markets, as opposed to kind of a blanket effort?

Very, very selective, yes, Mike.

Your next question comes from the line of Jay Habermann with Goldman Sachs.

Just a follow-up. Ron, you gave some color, I guess, on the acquisitions market. Can you give us a sense if you're looking to raise your returns thresholds, I guess, given the sort of the more recent uncertainty in the capital markets? I mean, do you sort of sense with higher marginal cost of capital that you need higher returns to buy assets today?

I would say probably we're about the same where we were last quarter. Actually, in terms of our cost of capital, I think our preferreds have come down in yield, and our ability to issue that has probably improved by 25 to 35 basis points.

Okay, and then finding assets below replacement costs, is that still a possibility?

It is, it's certainly challenging, but it -- yes.

Your next question comes from the line of Eric Wolfe with Citi.

Yes, Michael Bilerman, I just had a follow-up on Shurgard Europe. You talked about in the press release, the flexibility of this loan to simplify the ownership structure and then to also eliminate the costs. Can you just expand a little bit, as to what sort of the plan is, from an ownership structure perspective going forward, and how much cost you're going to take out of the business from doing this?

Yes, Michael, the loan that we're getting is -- depends on when it funds and what the coverage ratio is, but probably 100 to 125 basis points lower than the existing in-place loans. There's 2 -- recall there was 2 joint ventures. So there's 2 different bank syndicates, one led by Lloyds, one won by Saijin [ph], and so we're going to consolidate that, eliminate the mortgages on the properties, eliminate the JV structures and so that the interest rate on the financing, as I said, is 100 to 150 basis points lower, it will also save us the cost next year of renewing joint venture 1, which is maturing, which would've been probably well over EUR 1 million. So interest rate-wise we'll save money. The second thing is the elimination of the joint venture structures which will: a, cost money to do; but b, take time, will save us somewhere between EUR 1.5 million and EUR 3 million so, $3 million to $5 million. And that benefit will start to flow in to 2012. The second part, the other thing to consider is that the cash flow post refinancing, most of the cash flow in Shurgard Europe will be amortizing that new loan.

And how do you think about the ownership between you and the initial investor in terms of go forward? Does it -- I guess does this refinancing push us towards the simplification or taking it public or merging it into an existing public company, I guess? What is it that you should've referenced this simplified ownership structure in the press release?

Well, I think what you should take away is that when we first acquired Shurgard Europe, we had, I think a EUR 350 million mortgage debt on all the wholly-owned properties, and the joint venture properties were encumbered by these 2 syndicated credit facilities and debt was north of EUR 600 million. And in the period of the last 4 years, we're down to EUR 200 million third-party debt, which was -- will be amortized rapidly ,and we simplified the ownership structure to where now Shurgard Europe owns 100% of its properties with no mortgages on them.

And so you made it more so from equity in the assets rather than a corporate-type transaction?

Yes, well, we've greatly simplified the structure. Going forward, the overhead associated with operating that structure, and certainly position the -- whether we decide to go public or whatever we decide to do, it's a much, much cleaner structure, a much more simplified and much less leveraged structure going forward than it was 4 years ago.

And just one last one. Just on the dividend, where are you relative to the $0.95 dividend in terms of ratcheting up from a taxable net income perspective, especially with the redemption of the preferreds coming in the fourth quarter?

Michael, this is John. Certainly it puts pressure on our dividend because you know us. We generally, our policy has been to distribute the minimum amount required to maintain our REIT status. Taking out these preferreds puts pressure on it -- on us as well as improved property operations continue to put pressure on it. But at the end of the day, our Board of Directors makes the decision as to what our dividend is going to be, predicated upon what we have to do to maintain our REIT status. So, we'll see what happens next year.

Your next question comes from the line of Michael Knott with Green Street Advisors.

Sounded like Ron, you and Dave kind of talked about the current outlook for the acquisition market being slower. Just curious if you look ahead, do you feel like it's going to remain slow for a while, or do you feel like it will pick up, do you feel like you'll continue to find more opportunities on kind of a value add lease upside than buying stabilized properties?

I think we'll -- there's still a lot of CMBS and mortgage debt maturing over the next couple of years. One of our great sources of acquisitions for the last couple years has been foreclosures, and I think given where pricing is in the marketplace, I think we'll continue to see good flow into 2012. David, would you add anything different to that?

No, I wouldn't.

Your next question comes from the line of Ki Bin Kim with Macquarie.

Actually, I just wanted to ask a similar question. Are there any specific portfolios of size that you see coming down the pipeline the next couple years, kind of like a simply self storage type of deal? Or AA America [ph]? Tied to the CMBS market, I guess not AA America, in that example, but maybe some underwater portfolios coming due?

Well, you got to keep in mind, Ki, if the property value is materially lower than the mortgage, it's really the bank's decision as to what to do and when to do it. If there's equity in the portfolio, then it's really the owner's decision when to do it. And we know all the large regional operators across the country. We're in dialogue with them. They know us. So when they decide to sell or think about selling, I'm sure they will -- we'll be in contact with them.

And then did you have a chance to look at that acquisition in New York Metro area that you did?

Did we look at it in detail? No.

Or, I mean, have a chance to bid on it, I guess, is what I'm getting to.

No.

Your final question comes from the line of Paul Adornato with BMO Capital Markets.

Sorry if I missed this. Did you mention where street rates are versus in-place rents and what trends to expect?

Paul, we had mentioned earlier that street rates are about 4% to 6% higher on a year-over-year basis at the end of October. Street rates, as compared to in-place rents at the end of October, our street rates were about 3% higher than in-place, and that compares to last year, where it was about flat.

Okay, and then just one more. Do you still spend on Yellow Pages and what are your thoughts on Yellow Page spend?

Paul, you ought to go back because I kind of touched on that twice in previous questions on Yellow Pages.

That was our final question. I'd now like to turn the floor back over for any closing remarks.

Okay, I want to thank everybody for attending our conference this afternoon. We look forward to talking to you next quarter, and for some of you, we'll see you in a couple weeks in Dallas at the NAREIT Conference. Until then, we'll talk to you next quarter.

Thank you. This concludes today's conference call. You may now disconnect.