Public Storage (PSA) 2008 Q3 法說會逐字稿

Ladies and gentlemen, thank you for standing by, and welcome to the Public Storage third quarter earnings release conference call and webcast. All lines have been placed on mute to prevent background noise. After the speakers' remarks there will be a question-and-answer session. (OPERATOR INSTRUCTIONS) I would now like to turn the conference over to your host, Clem Teng, Director of Investor Relations. Sir, please go ahead.

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 will 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 get started I want to remind you that all statements other than statements of historical facts, including this conference call, are forward-looking statements. These forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond our control, that could cause actual results to differ materially from those projected in these statements. In addition to the risks and uncertainties of ordinary business operations, these forward-looking statements are subject to, among other factors, the affect of general and local economic and real estate conditions, risks related to acquisitions and joint ventures, and risks associated with international operations.

These and other factors that could adversely affect our business and future results are described in today's earnings press release, as well as in reports filed by Public Storage with the Securities and Exchange Commission including our 2007 annual report on form 10k and subsequent reports on form 10q and form 8k. All forward-looking statements speak only as of today, November 7, 2008. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future event or otherwise. During today's call, we will also provide certain non-GAAP financial measures. A reconciliation to GAAP of these non-GAAP financial measures 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 will turn it over to John Reyes.

Thank you, Clem. For the third quarter our funds from operations per share decreased to $1.09 compared top $1.43 last year. The reduction was primarily due to a currency exchange loss when converting our intercompany loan from Shurgard Europe from euros to dollars. The loss was approximately $0.31 per share for the quarter compared to a gain of $0.18 last year, or a difference of $0.49. We believe that it is highly likely we will incur additional currency loss in the fourth quarter as the dollar continues to strengthen relative to the euro. After adjusting for non-core items, our funds from operations per share was $1.37 in 2008 compared to $1.27 last year, representing a increase of $0.10 or 8%. This growth was primarily driven by improvements in net operating income generated from our self storage operations. The impact from hurricane Ike on our Houston market was minimal.

We have a total of 83 properties in this market and about half of these facilities were temporarily closed due to storm damage or loss of power. We were able to get a majority of these facilities back online and operational within seven days. By the end of September, all facilities were open for business. Losses from the hurricane damage totaled approximately $1 million. From a balance sheet perspective, we continue to have excellent flexibility and liquidity, with approximately $800 million of cash and access to an untapped $300 million blank line of credit. Further, our retained operating cash flow has and will continue to provide a significant source of capitol to fund our future activities. For the nine months ended September 30th, we've retained approximately $270 million of operating cash flow.

The commitments against our liquidity include approximately $600 million of debt, of which approximately $200 million matures in 2011 and $200 million matures in 2013. We have a development pipeline which will require approximately $56 million to complete and we will pay a special dividend to common shareholders of $0.60 per share or approximately $100 million. This dividend will be paid in December and it is associated primarily with the Shurgard Europe transaction. With respect to the Shurgard Europe JVs, we have not received a decision from the arbitration panel, but we expect one any day. If we decide to acquire the JVs, we have agreed to loan Shurgard Europe approximately $400 million. Cash returned to our shareholders this year increased by about $250 million in the form of $140 million in additional dividends and $100 million of share repurchases. With that I will now turn it over to Ron.

Thank you, John. Let me quickly summarize where we are and where I think the business is headed. Our operating performance was pretty good in the third quarter. Frankly, better than I expected. We generated 900 more net customers than last year, with a 50% reduction in media spend. Occupancies also ended the quarter higher than last year. We have now generated higher net move-ins ever quarter this year. Our operating people have done a good job and worked extra hard to sustain comparable activity levels. Unfortunately, activity for October is below last year. Move-ins are lower and move-outs are higher. The move-ins are down a couple of percent. But this is to be somewhat expected as we reduced media spend in September and October from 138 market weeks to 21 or an 85% reduction. Move-outs are a different issue and accelerated with the turmoil in the stock market. We will see how this pans out during the balance of the year.

Europe has gotten very soft very fast. While NOI growth was positive, occupancies and street rates are below last year. The days of big expense reductions are behind us. Three of our seven markets had negative NOI growth. Big picture, the operating environment is challenging and we don't see it getting better any time soon. With respect to our financial position and liquidity, there is only one thing to say, preferred stock. If you didn't understand why we've issued it all these years, now you do. With respect to our development pipeline, we really don't have one in the US. In Europe we terminated plans for future development and we will wind down the existing program as sites are completed in 2009. This will leave us with about 120 wholly owned properties and 70 plus properties in the joint ventures.

Regarding acquisition, pricing just keeps getting better. We are glad we didn't buy much over the last two years. While our crystal ball is no better than anyone else's, it's pretty obvious to us that the cost of capital, whether it is debt, preferred stock, or equity, will be significantly higher going forward. The securities markets are any indication, preferred and debt spreads are 200 to 300 basis points higher for the best companies. Weak or second tier companies simply cannot get public market capital. Risk as been repriced. This will have a direct impact on capital allocation opportunities. If we were to reflect back to the early '90s and the days of the Resolution Trust, or RTC, we purchased loans at discounts from distressed lenders and properties at double digit yields. We shut down our development program early. Why build when you can buy at 60% to 70% of replacement costs.

For some management teams, this will be a period of tremendous opportunity and significant value creation. For others, it will be a apocalyptic. Regardless of who wins or losses, the operating environment will be very challenging, for everyone. As customers, whether they are individuals or businesses, feel the affects from the repricing of risk. We couldn't be better positioned, not only with excellent financial strength and liquidity but in a great business, self storage, which I believe will once again weather the storm better than most forms of real estate. With that, operator, let's open it up for questions.

(OPERATOR INSTRUCTIONS) Your first question comes from the line of Mark Biffert with Oppenheimer & Company.

Question for you, how do you think about rate versus occupancy over the next 12 months as we head into this slowdown. And as part of that, what markets are you seeing the greatest strength versus weakness and how would you allocate your media dollars and your discounting dollars?

Mark, this is John. We generally try to target an occupancy before we target a rate, a specific rate. So what we will try to do is hold occupancy around the high 80s, to low 90s. And we will do that by adjusting our rates, as well as our promotions, and when needed we will also go on television advertising. We also do a lot of advertising on the internet. So we will adjust and turn the dials on every one of those items, as needed to maintain our occupancy levels. I guess I just tell you that it really varies quite a bit. It varies by market throughout the United States. In terms of stronger markets versus the weaker markets, I think the stronger markets where we are seeing some strength or some strength in the rates or -- generally have been Denver has been pretty strong, Sacramento has been strong, San Francisco, Houston and Chicago. And then the weaker markets are, obviously, the Florida markets, which we have been talking about for a number of quarters now.

Okay, thanks.

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

Good morning. Ron, you mentioned again that pricing seems to be getting better and you talked about, obviously, the pricing back ten plus years ago with the RTC and buying at $0.60 or $0.70 on the dollar. Do you expect to see that kind of pricing for the product that you will be looking at. And separately, maybe for John, can you comment on what the cost of issuing a preferred might be today?

Well, as I stated my crystal ball is no better than anyone else's. But that's a -- if someone were to kind of look back in history, I think that's somewhat of a relevant data point and when you look at the amount of financing, refinancing that's going to happen in the next four to five years, combined with the challenging operating environment, it's hard to understand how cap rates will not be moving up rather dramatically. As I touched on, if you look at the securities markets, spreads are up 200 to 300 basis points. Three weeks ago our preferreds were trading north of 11%. That's got to work its way into the kind of the private market pricing in terms of yields investors need for properties.

But just to be clear,you said pricing is getting better. It is nowhere near that at this point. You're talking about two to three years down the road?

I'm not smart enough to predict when that's going to happen. What we are seeing is, if I could segment into the buckets, the first six to nine months of this year, sellers were still reflecting back on 2007 pricing and quote waiting for the market to return. With the events we've had in the last 90 days, sellers are realizing that '07 pricing is a thing of the past and they are starting to come down and we are starting to see more and more revised pricing, price reduced, deals that didn't close, you gave us this bid six months ago, we went with this other guy, are you guys still interested at that price? You can characterize it as now sellers are starting to move down, say 5% to 10%. But in reality the markets down 10% to 15% and probably by the time they get down 10% to 15%, the market will be clearing at 20% to 25%. What you are not seeing is a lot of transaction volume, so the bid ask spread -- that's a indication the bid ask spread is still pretty wide.

Okay, very helpful, thank you.

Your next question comes from the line of Lou Taylor with Deutsche Bank.

Thanks, good morning. Ron, can you talk a little bit more about the media spend in terms of Q3 this year versus last year, how much of that was just kind of a normal or a reduction due to the ramp you had ongoing last year versus maybe just decision to just cut back this year?

Sure, Lou. If you looked at kind of by month, in July of this year our media spend was actually higher than last year. We had a couple of more markets. And if you recall through June 30th, our media spend was quite a bit higher than the first six months of 2007. So we were going pretty hard on the media spend, trying to drive those volumes, as John touched on earlier, higher than last year. I think we ended June at slightly higher occupancies than last year. We had a very good July. I think on the second quarter call I touched on what an exceptional July that we had. Net move-outs were much better than the previous year. We went into the back half of the summer, August, September, lot of good momentum, occupancies higher, so we start dialing back the television in August and in September. And we weren't smart enough to see what was going to happen there, in September and October. We made our media buy for October in early September, because you have got to buy about 30 days or decide which market about 30 days out. So September was -- August September was dialed down, October was dialed down, because we had really good momentum going into August and September. Then September started to get a little sloppy and October I already touched on. November's media spend will be comparable to last year, but October, as I touched on, is left. That's kind of the sequence of what was happening over the summer as we were deciding on media spend.

Great, thank you.

Your next question is from the line of Michael Bilerman with Citi.

David here with Michael. Just touching on the October trends that you mentioned, can you provide a little bit more color as to whether you think that's relative to just the shock or it is something that will stick and if you saw more of that response from your existing customer base in terms of move-outs or is it more price resistance and lack of stickiness from new customers?

I'm not sure. We saw the trend in October, is it correlated to the stock market, I don't know. But obviously there was a lot of turmoil. You've seen all the retail sales, consumer confidence, there is a whole bunch of bad things that happened in October. And our move-outs, our move-out trends during the year have been for the most part better than prior year. So October kind of stuck out in our minds, really stuck out in terms of, okay, for first time move-outs are up, vis-a-vis last year. So how long it will continue we don't know. Is it a one or two month thing? Three month thing? We don't know. We will kind of see how that plays out and we will let you know first part of next year. Move in volumes have been reasonably good, as I touched on in October, move-in volumes were down. But that is somewhat to be expected with a 85% reduction in media spend, you would expect reduction there. But demand seems to be pretty good, it is just a uptick in move-outs. I don't know if that answers your question or not.

Ron, I just had a question on the capital pricing environment. As you talked about the preferred and as you funded your business clearly a big driver that was the preferred has a maturity date of never and that's clearly benefiting you in this environment. But I think you've also talked about that the preferred was a good way to fund the business just from a cap rate perspective, that you can buy accretively. I am just wondering how you think the cost of that capital relative to cap rates is going to evolve as you move forward here?

Well, historically on the preferreds, and John, you chip in here, historically on the preferreds we really -- there has not been a lot of accretion on what we could issue preferreds at, the coupon on the preferreds, vis-a-vis the capitalization rate on the properties, at least in the one or two years of stabilization. As the properties grew, obviously, that created a positive spread. But the preferreds, historically, have been a pretty good indicator of what the cap rate is on stabilized properties. A couple years ago we were issuing at 6.5, 7's, and that's not far off of where some of the properties we were buying. Now that you have got preferreds north of ten, is it a temporary aberration in the capital markets because of all the things that have been going on and are preferreds going to stabilize at 8, 9, 10, I don't know. They have certainly gapped out and, as I said, three weeks ago they were trading at 11.

Historically, we have pretty much trended to preferreds equaling the nominal cap rate on properties. So you either need cap rates moving up or the preferred cost coming down for you to be, probably, pretty active in the transaction market?

No, we are sitting on $800 million of cash.

Some of that cash may be used up for Europe.

Yes. We got plenty of cash.

Okay. Thank you.

Your next question is from the line of Jordan Sadler with KeyBanc Capital Markets.

Hi, guys. I just wanted to, well just to clarify on that last question in Europe, you guys have to consent to that transaction?

Jordan, this is John, yes, we do. First a lot of things have to happen before the $400 million has to go out the door. One, we have to win the arbitration and two, we have to consent to buy the interest out. And at which case then it becomes a true commitment to us.

Time frame on that?

We don't know. Again, we are waiting any day now to hear what the resolution is. And hopefully we will know in the next week, two weeks from now.

And for Ron, Ron my question is just on using your capital. What would you sort of -- what are you waiting to see before you start deploying? There is opportunities even in some of your competitors stocks that are high quality that may be trading as high as a nine or ten cap. There's maybe some other distressed opportunities out there. What is it you're looking for. When do you think you will know that it's the right opportunity to act?

Well, my guess, Jordan, is at the end of the day we will act too soon, when we do act, because, as I touched on, someone else asked the question about where the pricing is going and sellers are pretty much getting into their head '07 pricing is gone, they are starting to come down 5% or 10%. The market is moving down 15%, 20%. Does the market move down 50%? I don't the know. But when you move from a, just take it from a 6 cap to a 9 cap, that's a pretty big change in valuation. So we are looking at a wide variety of things. But as I touched on pricing continues to get better and so we are going to be patient.

You still more of a replacement value type buyer today or yield, combination?

I think we are starting to move below replacement cost. As I said we -- .

But you're focused.

We are rocking our top. We are stopping develop in Europe. I don't think development makes any sense. So we are turning it off. I think in Europe, as well as the US, we will be able to buy at below replacement cost, so we are turning off development.

Thank you.

Your next question is from Christy McElroy from Banc of America.

Hi, good morning, guys. I am just following up on Jordan's question. How are you thinking about buying back your own stock today. The last time you repurchased was in the low 70s. With the stock back near those levels can you give us sense for how you are approaching that thought process?

Nothings changed,Christy. We look at what we possibly anticipate could happen, where things -- the things that we are seeing in the market versus repurchasing stock. As I touched on before, our preference is to really, whether it is buy loans or buy properties or shares or debt or whatever, our preference is to deploy the capital where we grow the business. But if those opportunities simply are not available and the stock is priced appropriately, then we will repurchase shares.

What do you consider a appropriately low level?

Oh, now, Christy.

(laughter) Had to try.

Your next question is from Michael Mueller from JPMorgan.

With respect to Europe and when you set up the operations and you kind of molded the operations around the US model. John, you were commenting about trying to keep occupancy high in the high 80s to low 90s. When we look at Europe, it looks a little different than the US. You got occupancy running below but your pricing -- the pricing has come down but it is still higher. So it looks like it's flip-flopped with what is happening in the US. Is that something that will probably change over the next year or two.

Mike, I think one thing you have to remember is in Europe they're just now learning the things that we, Public Storage, do here in the US. Part of what you're seeing going on in Europe is, I think, the learning curve that they are experiencing, so they are getting better and better at pricing. We, Public Storage, here in the US are not pricing the product for them. We have exported our kind of the tools that we use and our methodologies. But at the end of the day, Steven and his team are doing the pricing and they are learning as they are moving forward and sometimes they may have gotten a little agressive and now they are scaling back to try to recover from some of the losses in occupancy.

There is also in Europe, Mike, you have to keep in mind, there is not the product awareness, there is not the scale of business, we don't have a phone center in Europe. We've done some, I think we did some spot television a little bit this year in Europe, but don't really have the media horsepower in Europe. Internet is bigger over there than it is here, at least currently. So there is different channels and different levers that Steven and his team have to pull than we have to pull over here and that also impacts the way they price product.

Okay. Thank you.

Your next question is from Michael Salinsky of RBC Capital Markets.

Good afternoon. Ron can you just talk to about the decision to terminate development in Europe as opposed to just postponing it. I thought the market over there was -- there was pretty limited acquisition opportunities over in Europe.

There aren't a huge number of acquisition opportunities, but what there are, I think some will become available and again I think the continuing of development just simply doesn't make sense in this environment.

But will it make sense in a environment down the road?

I'm sure some point down the road development will make sense again and we are going to keep a couple of the key members of the team on the staff over there, post winding down of the development program, but I don't think in this environment it makes sense.

Your next question is from Michael Knott from Greenstreet Advisors.

John, when you think about your liquidity in '09 and '10, obviously the note receivable from Shurgard Europe would, if that were to be repaid, would substantially increase an already solid position. How do you think about that -- the likelihood of that getting repaid today, is that even possible to get that refinanced through third parties. How are you and your partners thinking about that liability?

We still, Michael, we still expect that it will be repaid. Remember it has a due date of March 31, 2009. It could be extended one additional year through 2010. Where we sit today, obviously, it's probably not -- we can't refinance it today because the credit markets if they are frozen here they are even more frozen in Europe. But we still, again, expect it to be repaid but it kind of remains to be seen. We think we have time. Our joint venture partner wants to make sure that we get repaid also. But there is nothing right now that we can do on that score, so it's really just a wait and see how the credit markets develop over the next year or two.

Thanks.

Your next question is from [Lindsey Jao] with Robert W. Baird.

Yes, I just wondering, do you have any color on some trends with small business and commercial tenants?

No, we really haven't seen a change in mix or unit sizes. We are not renting more 10 by 10s than 5 by 5's today or anything like that. So I would say that kind of the customer flows are about the same.

There has been no change in, say, length of stay then?

On customers coming in this year, there has been really no new customers really no length -- no change in the length of stay.

Okay. Thank you.

Okay.

Your next question is from Mark Biffert with Oppenheimer & Co.

Ron, I guess what I was trying to get at before was is there ever been a time over the last 20 to 30 years or in the time that you've been in self storage, where you have seen the -- you have done an increase in discounting and media spend, but it didn't have the impact whenever you increased and given the downturn that we have, if this turns into an extended downturn, how do you think about discounting through the cycle if it doesn't have the impact that you expect it to.

You got to make it simple. You have three levers, right? You have media spend, you have the asking rates, and you have the promotional discounts, to make it simple. So you pull one, you pull two, you pull three. I think what -- given the environment has certainly changed, but I think what you saw with the Shurgard portfolio, ones we acquired in August of '06, that we were able to reasonably successfully pull those levers and drive the occupancy and drive the rates in the Shurgard portfolio, which I think at the time of acquisition was 500 or 600 basis points below the Public Storage mature portfolio. So I'm reasonably confident that between those three levers we can hold occupancy and hold customer volumes. What that translates into rates and kind of the revenue growth line, you will see. As I touched on we're in a pretty challenging operating environment. Have I ever seen those three levers not work? No. Not in 20 years, okay. They work.

Okay.

Your next question is from Tayo Okusanya with UBS.

Good morning, gentlemen and congratulations on a strong quarter. Just a quick question, with the October trend starting to show some weakness and the last time we had a deep economic downturn you guys had negative same store to NOI for quite a while. Was there something unique back then that caused NOI, the same store NOI to go down even much further than some of your peers or do you kind of expect the world where you could experience the same thing again this time around if the economic -- if the recession ends up being that long, deep, and hard.

I think you're referring to in the early 2000, 2001 through 2003 we were experiencing negative NOI growth. Yes, that was part of the recession pressures that were going on during that time. Another big part of what happened back then that is not happening now is we changed the way we were marketing our product. We called it payment in arrears, some of you fondly remember PIA, I think is what we called it. It was a failed marketing program back then that caused us probably about, I don't know, three to four quarters to try to recover from that marketing effort. And that -- we kind of attribute that to be the biggest reason why we had negative NOI growth during that time frame. It doesn't mean to say that we wouldn't have been under pressure regardless of it, but I think that was the biggest reasons why we were experienced negative growth. We are not doing that, we abandoned that back during that time frame. I think we only had it going on for about nine months. But again, it took us about three to four quarters, if not a little bit longer than that, to recoup from it.

Okay. It is possible to break the affects of each factor from your numbers from back then?

No, not at all.

Okay. Thanks a lot, that's helpful.

(OPERATOR INSTRUCTIONS) Your next question is from Jay Habermann with Goldman Sachs.

Just a follow-up on Shurgard Europe. In the event that you did provide the additional loan, how would you arrive at the current rate, I guess, for that loan given that the credit markets are in disarray there, or far worse than the US. Would it be similar to the existing.

It's a tag along to the existing [Longere], so it would have the same terms and conditions. It would be at an interest rate of 7.5% per annum. Still have the same maturity dates as the existing loans.

So it is just an extension in terms of the amount?

That's correct.

Okay, thanks.

Your next question is from Lou Taylor of Deutsche Bank.

John, just staying in that European theme for a second. What are the signs that you've seen that suggest that you might hear as early as next week on the arbitration?

Just what the attorneys tell us.

Really. So the judge's about to rule, the arbitrator is about to rule relatively soon?

It goes to a -- it's a tribunal and then it goes to a commission, which reviews it to make sure of the wording and form and all of those things to that fits the standards over there for the arbitration, as its conducted in Europe. And then when that's done, they release it to us. I believe they have up until the end of the year to actually -- that's their formal deadline.

Okay. Thank you.

Your next question is from Chris Pike with Merrill Lynch.

Good morning, everybody. Ron, can you just talk about the move-outs again. I think you said you had some net move-outs. What are the seasoning of those move-outs? Are the net move-outs more seasoned customers or newer ones before you were able to push rate?

Chris, this is John. The unfortunate thing is that the move-outs that were -- that Ron is referring to that we saw in October, they appear to be more of our seasoned customers, our longer term customers, leaving at a higher rate than they had in the past. So that's a little disturbing to us. So hopefully that doesn't continue too much longer and starts stabilizing back to where we've experienced move-out ratios historically.

And then just real quick -- .

But Chris, that's not due to rate increase letters because we stopped sending those out in -- .

The last rate increase letter we've given out was back in August. We don't do rate increases to existing customers. We haven't done -- in the fourth quarter. And the last one that went out was back in August again. They are not moving out because we increased their rates.

Okay, And then just real quickly, I guess you touched on Europe and you also talked about the US in terms of replacement values and opportunities, where are replacement values in Europe where you believe deals are being priced on a per square foot basis today?

Europe you have huge discrepancies in price per foot in Europe. London, probably being the most expensive, central Paris being right up there with London, and then the markets kind of tier off of that to Brussels, Amsterdam, Denmark. Germany is probably the cheapest on a per foot basis. Transaction volume down here in the US is probably off 80%, 85%. In Europe it is probably down 90%, 95%. So there is not a lot of data points in terms of what is clearing the market. It goes to a little what I said earlier in terms of sellers are coming down in terms of pricing but they haven't come down enough to actually clear the market. So you have this large, perceived very large bid/ask spread.

Your next question is from Jordan Sadler with KeyBanc Capital Markets.

Hi, guys. Ron, I just wanted to come back to the stock repurchase thing. The last time you guys were in the market, Christy mentioned I think was in the low 70s. Right now there is a pretty significant dislocation depending on what kind of metric you use between you guys and your peers. What is your view of repurchasing your peer, purchasing your peer stock versus yours, sort of the significant dislocation.

Jordan, I really can't answer that question.

Can you tell us whether or not you purchased any or have any on the balance sheet?

Yes, I really can't go there. I'm sorry.

Your next question is from Michael Mueller of JPMorgan.

Hi. Can you give us a little more color on the magnitude of what you were talking about in terms of the occupancy decline in October and equally important, has it stabilized over the past couple of weeks or is it still trending down?

I think for October we -- move-ins were down 2% to 3% and move-outs were up 2% or 3%, something like that.. We are not talking 5% plus, but it is about 2% or 3% on one side and 2% or 3% on the other side. In terms of November, I don't know. It's been a couple days since I looked at it. But even if I were to tell you what I saw two days ago, we generally wait 'til about the 10th, the 12th of the month where you get a couple of weekends in to see kind of get a real picture of what is going on. What we think will probably happen for that month.

Okay, thanks.

Your next question is from Michael Knott with Greenstreet Advisors.

Hi, guys. Just curious how you thought about the opportunity to maybe buyback some preferreds to the extent you could back when it was 11 plus yields. Obviously liquidity is paramount and so it's understandable to, certainly to want to emphasis liquidity above anything else. I am just curious how you thought about the opportunity and the trade off that that presented.

Well, Michael, I think it's a interesting opportunity. I think you've seen a fair number of, fair amount of insider buying of the preferred stock. But that's something certainly on our radar at the company as well as the shares as well as investment opportunities. It's just one of the things that we look at. It's not off the table.

If I could just ask you to maybe quantify the net impact in the move-in and move-outs in October as they compare to the 930 occupancy rate?

Okay I'm not -- I want to answer your question but I'm not sure I understand what's your question?

Michael, I understood your question. We had a positive spread at the end of September. And at the end of October we were, I think, down a 10th of a point or so.

Okay. Thank you.

Versus last year, right?

Versus last year, yes.

Thank you.

At this time there are no further questions, I will now turn the conference back over to Mr Clem Teng for closing remarks. .

I want to thank everybody for attending our conference call today and appreciate all of your questions. We look forward to seeing many of you in the next couple weeks down in San Diego at the NAREIT conference. We will see you there, bye.

This concludes today's Public Storage third quarter earnings release conference call and webcast. You may now disconnect