Public Storage (NYSE: PSA) Q4 2020 earnings call dated Feb. 25, 2021
Corporate Participants:
Ryan Burke — Vice President of Investor Relations
Joseph D. Russell — President and Chief Executive Officer
Tom Boyle — Senior Vice President and Chief Financial Officer
Analysts:
Jeff Spector — Bank of America Merrill Lynch — Analyst
Juan Sanabria — BMO Capital Markets — Analyst
Todd Thomas — KeyBanc Capital Markets — Analyst
Steve Sakwa — Evercore ISI — Analyst
Smedes Rose — Citi — Analyst
Ki Bin Kim — Truist Securities — Analyst
Ronald Kamdem — Morgan Stanley — Analyst
Mike Mueller — JP Morgan — Analyst
Rick Skidmore — Goldman Sachs — Analyst
Todd Stender — Wells Fargo — Analyst
David Balaguer — Green Street — Analyst
Michael Bilerman — Citi — Analyst
Presentation:
Operator
Ladies and gentlemen, thank you for standing by, and welcome to the Public Storage Fourth Quarter and Full-Year 2020 Earnings Call. [Operator Instructions]
It is now my pleasure to turn the floor over to Ryan Burke, Vice President of Investor Relations. Ryan, you may begin.
Ryan Burke — Vice President of Investor Relations
Thank you, Erika. Hello everyone, thank you for joining us for our fourth quarter 2020 earnings call. I’m here with Joe Russell and Tom Boyle.
Before we begin, we want to remind you that aside from those of historical fact all statements on this call are forward-looking in nature and are subject to risks and uncertainties that could cause actual results to differ materially from those statements. These risks and other factors could adversely affect our business and future results are described in yesterday’s earnings release and in our reports filed with the SEC. All forward-looking statements speak only as of today, February 25th, 2021. We assume no obligation to update or revise any of the statements, whether as a result of new information, future events or otherwise. A reconciliation to GAAP of the non-GAAP measures we provide on this call is included in our earnings release you can find our earnings release, SEC reports, earnings supplement and an audio replay of this conference call on our website publicstorage.com.
With that, I’ll turn it over to Joe.
Joseph D. Russell — President and Chief Executive Officer
Thanks, Ryan. Good morning and thank you for joining us. Before we begin and on behalf of the entire Public Storage team, I hope you and your families are well, as we all navigate through this pandemic. Looking back at the full range of events in 2020, it was clearly a year of historic extremes. The year began with the predicted consequences from oversupply in several markets. In Q2 full focus shifted to managing a myriad of unknown issues tied to the virus. This included judging impacts on our employees, customers, operations, development approvals, acquisition volume and full company revenue. With an overarching effort to maintain a safe environment and key properties open.
By Q3, we saw a pronounced customer activity emerge as a result of both traditional and new drivers of demand. In the fourth quarter and into this year, we have seen sustained demand that has lifted the traditional seasonal slowdown in our business, resulting in historic occupancy and move-in rate growth. I commend the Public Storage team on the numerous successes we had in 2020 and their ability to be nimble and creative in an environment we have never faced before.
Now I would like to highlight eight specific areas of success, as I reflect on the full-year and on the fourth quarter. First, the integration of technology unlocked a new contactless leasing channel, which we call e-rental, which now accounts for nearly 50% of our move-ins, approximately 300,000 customers use this new offering in 2020. Second move-in rates grew by 12% in Q4, compared to negative 14% in Q2. Third, we reached fourth quarter occupancy of 95%, a record for this time of the year. Fourth, the robust lease up of our 32 million square foot non-same-store portfolio led to 26% NOI growth for both the quarter and the year. Fifth, after two full years, our third-party management business has expanded to 120 properties with a growing backlog as we enter 2021. Sixth, our industry-leading development platform has produced a current pipeline of $560 million as we deliver generation five assets across the United States. Seventh, the acquisition team sourced nearly $800 million of assets in 2020 with over $500 million in Q4. And we are entering 2021 with an equally vibrant pipeline of $580 million. And last, our focus on the continued optimization of our balance sheet with record low issuances of preferred equity and debt.
As we begin 2021, we are well equipped and focused on driving company performance on several fronts. Our advantages, include a well-prime capital structure; broad and growing benefits of the digitization of our business; record occupancy and of course the most commanding platform and brand in the self-storage industry. The Public Storage leadership team and I look forward to sharing more of these strategies in our upcoming Investor Day on May 3rd.
Now I’ll turn the call over to Tom.
Tom Boyle — Senior Vice President and Chief Financial Officer
Thanks, Joe. Financial performance improved steadily through the second half of 2020 with the return to positive same-store revenue, NOI and full company core FFO growth in the fourth quarter. Our same-store revenue increased 0.8%, compared to the fourth quarter of 2019, which represents a sequential improvement in growth of 3.5% from the third quarter.
There were two primary factors contributing to that improvement. First, and foremost move-in rates as Joe highlighted were up double digits, while move-out rates were roughly flat year-over-year, which led to improving in-place rents. To a lesser extent occupancy also increased with move-in volume down, but move-out volume down lower.
Now onto expenses. The team did a great job driving same-store cost of operations down in the fourth quarter. Lower expenses were driven by property payroll, taxes, utilities and marketing. The net result was a return to positive NOI growth of 1.3% in the fourth quarter. On the reporting front, we enhanced the presentation of same-store expenses this quarter. We broke expenses into two categories: first, direct cost of operations and second indirect cost of operations. This provides enhanced disclosure into property level profitability, which once again demonstrates our industry-leading operating margins. We also posted our first earning supplement on our website last night, which we hope you found helpful along with our 10-K.
Next, our balance sheet. It’s in great shape with two drivers of cash flow growth. First, as we have for the last five years, we have the capability to fund acquisitions and development activity with retained cash flow and unsecured debt at historically low financing costs. And second, we have the opportunity to redeem preferred stock as we move through the year. As we enter 2021, we’ve seen continued strength in customer demand with occupancies up 250 basis points and in-place contract rent per occupied square foot turning into positive year-over-year territory in January. The outlook for revenue growth is good with support from demand and moderating supply. That said, we do see risk to both move-outs, as well as lingering, state of emergency, pricing restrictions as we move through the year.
We expect continued strong expense control in 2021, we provide line by line commentary in our disclosure. Property tax, expense growth is expected to pickup with around a 5.5% increase for the year anticipated. But away from that better performance by utilizing technology to change operating processes and investing in energy efficiency, we anticipate continued savings on property, payroll and utilities and a better marketing expense environment as we’re operating with lower vacancies. In sum and improving revenue outlook and strong expense control, as we start 2021.
With that, I’ll turn it back to Ryan.
Ryan Burke — Vice President of Investor Relations
Thanks, Tom. We do ask that you initially limit yourself to two questions. Of course, feel free to jump back in queue for follow-up. With that Erica, let’s please open it up for Q&A.
Questions and Answers:
Operator
[Operator Instructions] Your first question comes from Jeff Spector with Bank of America.
Jeff Spector — Bank of America Merrill Lynch — Analyst
Great, thank you. Here with my colleague Alua Askarbek. And yes, thank you for the supplemental, we thought it was excellent, very helpful. Also appreciate the initial comments and ’21 outlook. So we take those comments very serious. I guess, can we just expand on that a little bit more, you know, I know, — we know there’s still risks out there, but it seems very clear that you’re optimistic on ’21 and that demand should remain stable, strong?
Joseph D. Russell — President and Chief Executive Officer
Yes, Jeff. One of the things that’s leading to a change in demand and consumer behavior to some degree is tied to the pandemic, we’re seeing some interesting and new areas of customer behavior surfacing, you could point to the work-from-home environment. So that’s pronounced widespread, we’re seeing it across literally all markets, it’s provided an additive driver to the amount of activity that we’re seeing. One of the things that we do want to regular basis is survey, new customers coming into properties, and in 2020 one of the areas that was more pronounced was customers needing more space at home. So clearly ties to the entire work-from-home environment, that’s new and different through 2020.
Likely to stay through a good chunk of 2021 and beyond, because frankly I think many components of work-from-home are here for a much longer period of time that we might have predicted. Another thing that’s been additive, home sales have been quite vibrant, even from a seasonality standpoint, we’re seeing much more activity this time of the year than we normally do. So that too is added to the amount of activity and the overall demand that we’re seeing across many markets. There’s really been no distinction from activity in suburban versus urban areas, frankly it’s highly consistent in both regard. So we’re keeping a close track on many different cross currents, but overall business as Tom noted is quite good.
Jeff Spector — Bank of America Merrill Lynch — Analyst
Thank you. That’s very helpful. And our second question is on acquisitions in your comment on the vibrant pipeline. To ask — are you getting more aggressive, is underwriting changed or do you focused on new markets or moving out, but were there just more sellers. What has changed on that — we’re excited, what’s changed on the acquisition pipeline?
Joseph D. Russell — President and Chief Executive Officer
Yes, Jeff. The acquisition environment, as I know there has been quite robust and if you step back even going into 2019 we started to see an increase of the amount of sellers that were coming to market. Many of whom had come into the self-storage industry over the last, say, four or five years. There is no question, there has been much more vibrant amount of new owners coming into the sector, some of whom weren’t intending to stay in the sector for a long period of time. So you’ve got some churn tied to that. You’ve also got a number of assets that have been built at historic volume levels over the last three or four years, many of which have not hit either occupancy or revenue pro forma expectations that too is motivated a number of sellers to bring assets to market.
We’ve been controlling the markets as we typically do very actively and in 2020, we saw a sizable uptick in opportunities, many of which that fit the explanation, I just described on the types of sellers that are coming to market. The other thing that we’ve found an interesting opportunity to expand into a buying assets that may not be highly stabilized or looking for a different level of value creation. So in 2020 the average occupancy of the assets we bought was approximately 65%, that speaks to the fact that these are newer assets they haven’t gone through a full lease up cycle and sellers have been frustrated in many cases and not patient enough to want — to take them through that full cycle. So we’ve been able to open up some very interesting opportunities tied to that. And the $580 million that we have either closed or are in contract for 2021 is a reflection of all those issues. The average occupancy of those assets is about the same, which is in the mid-60% range. Combination of one-off and some smaller portfolios nothing has large as beyond portfolio that we closed in the fourth quarter.
But our acquisition team continues to troll markets and they’re very well known. We’ve got deep relationships, we’re seeing a combination of both marketed and off-market opportunities and we’re looked upon as a preferred buyer. So Tom spoke to the fact that the capital structure as well primes and we’re frankly just seeing a much larger set of opportunities.
Jeff Spector — Bank of America Merrill Lynch — Analyst
Thank you.
Operator
Your next question is from Juan Sanabria with BMO Capital Markets.
Juan Sanabria — BMO Capital Markets — Analyst
Hi, good morning. And I’d like to echo Jeff’s comments. Thank you and kudos to the improved disclosure. I guess so — one question for me would be on the balance sheet, which you just referenced Joe. And how are you thinking about the firepower there? And are you wedded to the A rated balance sheet or is that not necessarily something that your wedding or over to keep at this point?
Joseph D. Russell — President and Chief Executive Officer
Sure, Juan. Maybe I’ll start first and then Tom can give you some more color. The — we have a clear advantage, because we do have an A credit rating. And with that, as we’ve been able to do in many different issuances whether through the preferred or institutional bond market, we’re able to tap into a pool of investors, who love the credit rating that are very attracted to the company as a whole and we enjoy very strong both demand, and we’ve been able to issue record low rates and yields on these instruments.
Now the other thing is we’ve got a lot of capacity in our current structure, Tom can give you more color on that. So we’re not concerned about tipping into something less than — an A credit rating. But we’ll give you little perspective on that.
Tom Boyle — Senior Vice President and Chief Financial Officer
Yes, sure. Thanks, Joe. I think looking back over the last five years, you can see that we have financed our external growth both acquisitions and developments really with retained cash flow, which we have about $200 million to $300 million a year, as well as unsecured debt, and that gives us a good amount of capacity and firepower each and every year to grow the business and accretively drive external growth performance without needing to raise equity and that’s a good long-term sustainable FFO growth engine. So we think we do have a good amount of capacity there. As Joe said, we have very good access across the capital markets and we demonstrated that again in January with a five-year bond offering sub-1% on the coupon. So good access in cost and we look forward to utilizing it to finance the external growth that Joe mentioned.
Juan Sanabria — BMO Capital Markets — Analyst
Excellent, and one quick follow-up for me, in the disclosure you talked about G&A increasing year-over-year and adding some headcount. So just curious on what areas of the enterprise you’re adding people too? And what’s the focus of that? What are you looking to build out?
Joseph D. Russell — President and Chief Executive Officer
Sure. I think in particular, I think you might be highlighting the centralized management costs and the comment that we increased head count there. That is just deepening the bench across many of our centralized management functions, be it, information technology, human resources, pricing and marketing, data analytics really on down the list, folks that really are responsible for centrally managing and supporting our field teams. So just deepening of the bench and overall those teams are really important to the success of the organization.
Juan Sanabria — BMO Capital Markets — Analyst
Thank you.
Joseph D. Russell — President and Chief Executive Officer
Great. Thanks.
Operator
Your next question is from Todd Thomas with Keybanc Capital Markets.
Todd Thomas — KeyBanc Capital Markets — Analyst
Hi, thanks. Good morning, also appreciate the increased disclosure this quarter. First question, just looking at the core FFO that you reported in the quarter $2.93. What headwinds should we be thinking about moving into the first quarter and throughout the year, just given the lack of seasonality experienced in the fourth quarter and so far early in ’21 that you discussed that would detract from, sort of, core FFO going forward here in terms of the run rate? Is there anything specific that we should be thinking about?
Tom Boyle — Senior Vice President and Chief Financial Officer
Sure, this is Tom. Thanks, Todd. I think there is really a couple of things as we look out over the horizon into 2021 that we view as potential headwinds. I mentioned them briefly; one of them is move-outs. As we move through 2020 it was really a unique environment that we’ve spoken about on previous calls, where the customer behavior shifted as we moved into April and May and really persist through the year across customer vintages, geographies, customer segments, where length of stays went longer and move-outs declined and you can see that in our disclosures. That’s a one area that we do anticipate is likely to moderate as we move through 2021 maybe it’s in 2022. I mean, it’s uncertain as to when we do see that moderation. So far to start this year, we’ve continued to see very strong existing customer performance and lower move-outs. But we would anticipate that at some point customer behavior returns to pre-pandemic levels and we see move-outs start to accelerate, so that’s number one.
The second one is the lingering impact of state of emergency pricing restrictions, and those impact our ability to increase moving rents, as well as existing tenant price increases over time. And as those linger and we navigate through the dynamic healthcare environment that we have for the past year, that’s a risk. We’ll have to see there’s a myriad of different regulations across different states. Probably, most notably here in the State of California of which is a good portion of our portfolio and we’ll — that’s an unpredictable element of rate restriction.
Todd Thomas — KeyBanc Capital Markets — Analyst
Okay. And then I wanted to see if you could comment on capex spend, looks like it’s expected to ramp up to about $250 million in ’21, which is up from 2020 levels, but still well below peers as sort of a percent of NOI or a percent of EBITDA. How do you think about capex spend and is there an opportunity to increase that further? And I guess, sort of, what’s the governor on capex spend that — is there anything preventing you from, sort of, touching more stores more quickly?
Joseph D. Russell — President and Chief Executive Officer
So yes, Todd, I’ll speak to a component of that and then Tom, can you give me more color as well. But our property of tomorrow program is part of that increased spend in 2020 for a number of reasons, particularly tied to slower permitting process, availability of city officials that, due to the overall improvement or the types of changes that we’re making through the POT program. We were unable to tap as much volume and to pull or cover that program is full force and is into many markets as we expected at the beginning of 2020. We’ve regrouped, we have a much more clear runway in 2021, we’re going to be touching many more assets through the year and we may actually find ways to accelerate it as we go deeper into the year, but at the moment that’s the major component of the increase in spend.
Tom Boyle — Senior Vice President and Chief Financial Officer
Yes, and if you break down the $250 million that we anticipate about $130 million of that we anticipate to be the property of tomorrow’s spend that Joe highlighted around $75 million of your regular maintenance capex and another $40 million, $50 million of energy efficiency driven, capital expenditures. And I would highlight we do break out the maintenance capex and provide some disclosure on that in the 10-K even away from the development and acquisition capex on the cash flow statement.
Todd Thomas — KeyBanc Capital Markets — Analyst
Okay, thank you.
Joseph D. Russell — President and Chief Executive Officer
Thank you.
Operator
Your next question is from Steve Sakwa with Evercore ISI.
Steve Sakwa — Evercore ISI — Analyst
Thanks, good morning. Tom, I was wondering if you could spend a little bit more time on the balance sheet and just kind of following up on Juan’s question. You have a lot of preferreds that have call dates coming up in the next, I think it’s maybe 18-months. And I’m just curious, your thoughts on your willingness to use more long-term unsecured debt to maybe take out some of those higher cost preferreds?
Tom Boyle — Senior Vice President and Chief Financial Officer
Sure, you’re right, Steve to highlight the fact that one of the great features of preferred stock is that it’s both perpetual, as well as has a five-year call. And so a lot of the preferreds that were issued back in 2016 are now coming up for potential redemption at the time they were issued, I think they were viewed as pretty darn attractive for handle preferreds. But in this environment, certainly a great opportunity to redeem that perpetual capital. And so we did a little bit of that in January, as you saw, we redeemed $300 million of a series that was at 5.4%. We did issue five-year bonds in January, as I’ve noted before we’ll monitor different markets and have the ability to use both new preferred stock at lower rates, as well as unsecured debt to finance the business, as well as the redemption activity going forward. But clearly the second prong of the balance sheet that I spoke about earlier, it will be a powerful one as we move through both ’21 and into the beginning of ’22.
Steve Sakwa — Evercore ISI — Analyst
And maybe just a follow-up on just kind of leverage overall, I might — you’re committed clearly to the A-rating. But where does that sort of leave you on a net debt — maybe net debt plus preferred to EBITDA, sort of, how high can that number go and theoretically still maintain the A rating?
Joseph D. Russell — President and Chief Executive Officer
Sure, I would highlight some disclosure we put in on leverage in the supplemental. On net debt plus preferred the different rating agencies use different metrics. But I would just to pick one, pick S&P, who looks at a net debt plus preferred of 4.5 times, which is over a turn higher than where we are now, as a guide post for a single A rating’s.
Steve Sakwa — Evercore ISI — Analyst
Okay, great. And then just maybe by market, you know, there were some interesting trends in Q4. Some of the markets that have been super weak in multifamily and we’ve seen some drawdowns in office. We’re reasonably strong for you, San Francisco, New York, Los Angeles and some of the markets that are benefiting down in the south were a bit weaker, maybe that supply, maybe there’s something else going on. Just any thoughts on maybe the coastal Gateway markets against, kind of, the Sunbelt markets?
Joseph D. Russell — President and Chief Executive Officer
Steve, as I mentioned earlier, we’re really not seeing a material change in urban versus suburban and even coastal versus midwest markets. The markets you spoke to specifically, we’re seeing overall very good demand literally every one of our markets improved in occupancy in the quarter. And we continue to see very good and sustained demand coming through not only our same-store portfolio, but the lease up of our non-same store is quite vibrant. The demand for self-storage has been very resilient through the — both the pandemic and I think it reaffirms the attractiveness of the product itself. Supply though is still a factor in a number of markets, there is no question. And it has and will continue to be a headwind in the name markets that we’ve spoken to for the last two or three years as many markets have been burdened by oversupply.
The Houston market for instance still is absorbing a lot of product, but we’re seeing good traction though. And to your point on the Southeast Atlanta’s got some headwinds around supply; Minneapolis, Florida parts of New York, etc, but at the same time demand is quite healthy. So we’re very pleased with the amount of lease-up that’s going on, and we’re very pleased with the acceleration and stabilization of our non-same-store portfolio.
Steve Sakwa — Evercore ISI — Analyst
Great, thank you.
Operator
Your next question is from Smedes Rose with Citi.
Smedes Rose — Citi — Analyst
Hi, thank you. I guess, I wanted to ask, it’s a little bit more around, sort of, pricing strategy, if patterns returned to more normal in the back half of the year. Do you think in terms of maximizing revenue with long-term. Would you be inclined to try to keep occupancies, kind of, more elevated with maybe less increases to existing customers? Or is there any sort of change around how you’re thinking about, sort of, capitalizing on this high occupancy levels that you have right now?
Joseph D. Russell — President and Chief Executive Officer
Sure, Smedes. I mean, I guess, I would — I wouldn’t highlight a particular occupancy or rate strategy for the back half of the year given it’s way too early to understand what the nature of the dynamics will be in the local submarkets with which we operate. I would highlight clearly through 2020, we have the opportunity to anticipate lower move-out volumes and lower inventory levels, which led to accelerating pricing really starting in the second quarter and then accelerating through the second half of the year. And now into the first quarter as well. So I think it’s really been a rate focused strategy at this point given the low inventory levels and that’s been combined with lower promotional discounts, which we disclosed as well as lower marketing expense.
As we move into the back half of 2021, the picture you are painting is one where occupancy starts to fall significantly, because of increased move-out activity that will definitely change the dynamics in the local market. But I think one of the key components that we’d have to understand is whether the durability of consumer demand that we’re seeing now persist, because that is really strong and powerful driver to revenue growth and overall move-in rates in accommodations to customers. So we’re ultimately looking to maximize revenues and would need to understand the nature of the move-ins and move-outs. But clearly, it’s a combination of both occupancy and rent and operating trends continue to be quite good as we start 2021.
Smedes Rose — Citi — Analyst
Okay, thanks. And then now I guess the — just also wondering if you have any sense — if there’s been any change in the customer base in terms of maybe first time users of storage are reaching a particularly demographic that hasn’t maybe use storage in the past in any sort of color there that you’ve seen?
Joseph D. Russell — President and Chief Executive Officer
There is no question, Smedes that, that’s happening as we speak. When you look at the sector as a whole and then more specifically what we’re seeing in our own portfolio. There has been more adoption by newer generations of users, many of whom have never used self-storage before. So it’s been a great way for them to use the product for the first time, we’re seeing continued repeat customers as well, but generationally there has been growing and deep adoption of the asset and we’re very encouraged by that.
Smedes Rose — Citi — Analyst
Okay. Thank you, guys.
Joseph D. Russell — President and Chief Executive Officer
Thank you.
Tom Boyle — Senior Vice President and Chief Financial Officer
Thanks.
Operator
Your next question is from Ki Bin Kim with Truist.
Ki Bin Kim — Truist Securities — Analyst
Thank you and good morning. So, in regards to some of the dialog you’ve had with [Indecipherable] investor. It seems like you are embracing some of those suggestions and, of course, you’ve made some Board changes and better disclosure, better commentary in this call. And I won’t rehash everything to be brought up, but the two big ones are capital deployment and balance sheet. I’m interested, if there’s been any type of kind of shift and mentality or business philosophy or how do you see the investment universe? And what are some of the changes that we can expect to see from PSA and the magnitude, because [Indecipherable]?
Joseph D. Russell — President and Chief Executive Officer
Well, Ki Bin to speak to just interaction with all shareholders, we have and will continue to be in active dialog with our entire shareholder base and we are continuing to drive the business on many different fronts as we’ve talked about, we’ve got very unique and commanding strategies and capabilities. We are clearly focused on tapping into many of those and we’ll give you the more perspective on that in our Investor Day on May 3rd.
This is not coming from one specific event or one and very distinct change in strategy, it’s something that we’re very focused on from an evolution, an opportunity standpoint and the management team and I are very focused on delivering strong shareholder returns through a variety of very commanding strategies that we’ve identified, some of which we spoken about today and more that will speak about in May. So we’ll continue to be as transparent as we can be, and we welcome and continue to have very active dialog with our shareholders.
Ki Bin Kim — Truist Securities — Analyst
Okay, thank you. And in regards to some of the Board changes. I’m just curious, if there is or what kind of dynamic there would be between the new Board members, the Chairman and the management team? And how this might compare to the past, if there is any difference?
Joseph D. Russell — President and Chief Executive Officer
Well, there is a difference because over the last two years, the Board has gone through a pretty strong level of refreshment, we’ve added seven new Trustees. The Board has and will continue to be very focused on good governance. I’m very happy with the new Trustees that have joined, the Public Storage Board of good strong collection of different backgrounds, different business perspectives and collectively, we’re working on many things together and we’ll continue to look to and seek very strong council from the Board as it evolves over time.
As I mentioned, we’ve added seven new Trustees, so prior to that the average tenure of the Board was 11 to 12 years now. It’s about four, so with that comes new ideas, new perspectives and I’m very pleased with the overall caliber and focus that the Board at large has on the company’s direction and all the strategic initiatives that we’re focused on.
Ki Bin Kim — Truist Securities — Analyst
Okay, thank you.
Joseph D. Russell — President and Chief Executive Officer
Thank you.
Operator
[Operator Instructions] Your next question is from Ronald Kamdem with Morgan Stanley.
Ronald Kamdem — Morgan Stanley — Analyst
Great. Echo the sentiment on the supplemental, very helpful. Just quick ones from me. Just going back to the slide question. Very helpful, calling on some of the markets, but maybe adding — asking in a different way. If we think about, sort of, the percent of the portfolio dealing with competitive new supply, maybe what is that number? And if not, just how do you expect that to trend this year and sort of in the out years going forward? Thanks.
Joseph D. Russell — President and Chief Executive Officer
Yes, sure, Ron. So obviously, we’ve talked about now for the last two to three years, we’ve been in a very strong delivery pattern of new assets, you know, if you go back to 2017 about $4 billion of new assets were added to the market nationally it ticked up in 2018 and ’19, which at the moment, feels like a peak that was about $5 billion of deliveries in 2020 as expected, we saw that taper down by about 10% to 12%. We’re now — we’re at 2021 and we’re thinking that there’s likely another 10% to 15% reduction in deliveries, it’s come to different markets, it’s had as I mentioned earlier, some pretty detrimental impacts were hit certain submarkets with an inordinate amount of over supply. Work encouraged however that it’s cyclically starting to taper down. But it’s still with us and even at a level this year that could be somewhere between $3.5 billion or so to may be $3.75 billion of deliveries, it’s — that’s still a fair amount of new assets being delivered in many markets.
As I mentioned, it has provided an opportunity for us to go out and acquire assets on one front. On our development platform, it’s also given us a pocket of opportunity that we haven’t seen until the last year or two where we’re actually not seeing as much competitive bidding on land sites. And it’s creating another different opportunity that we uniquely enjoy, because we do have a industry-leading development platform and or development teams out betting a higher level of land sites as we speak. So we’re hopeful that, that continued decline of deliveries play through. The counterbalance at the self-storage sector is doing quite well and fundings out there and developers are still going to be encouraged in some areas to continue to put new product into markets. So we’re tracking it actively and we’ll see how it plays through in the coming quarters.
Ronald Kamdem — Morgan Stanley — Analyst
Great, very helpful. My second question, we’re just looking internationally, obviously with the stake in Shurgard, they could be really helpful if you could just compare and contrast, sort of, the experience you’ve seen with the storage product in COVID maybe some in internationally and in some of the market you’re familiar with versus what the US went through? Thanks.
Joseph D. Russell — President and Chief Executive Officer
Yes, I think, I’d point you to Shurgard’s got vibrant disclosures and they can give you much more color on what’s going on the European markets. But knowing and understanding what’s been impacting their business, it has been similar in many ways to what we’ve seen here in the United States, which again is an elevated level of demand, New Year’s users coming into the product itself. And they too are seeing good business drivers many similarities between what we’re seeing here in the United States.
Ronald Kamdem — Morgan Stanley — Analyst
Thank you.
Joseph D. Russell — President and Chief Executive Officer
Thank you, Ron.
Operator
Your next question is from Mike Mueller with JP Morgan.
Mike Mueller — JP Morgan — Analyst
Yes. Hi, just wondering have you seen any significant benefits you out of having the third-party business, even though it’s been in fairly short time at this point?
Joseph D. Russell — President and Chief Executive Officer
Yes, Mike. Yes it’s definitely giving us a different lens on the industry. As I mentioned, currently, we’ve got the program up to 120 properties sizable percentage of the assets that are coming into our pipeline, our development assets. So it’s another view of how much of that activities on the front lines in many markets, that’s helpful. We’ve actually bought four assets thus far from the platform itself, so it can be many times a different relationship opportunity to identify and actually acquire assets. And it’s always helpful to get outside feedback on the different operational methodologies that we use, the reaction we’ve got from owners, the way that they’re looking at the performance of assets. So holistically, it’s been very additive and it’s given us yet again a different perspective on the industry in many different ways.
So we’re encouraged about our opportunities going into this year, the pipeline continues to grow. It is not fully weighted, but it is heavily weighted around continued construction activity or development activity, but we’re also finding a number of owners that have given us say one, two or three assets initially and now they’re giving us more. So it’s another way for us to continue to build relationships and we look forward to strengthening those relationships as we continue — as the program continues to expand.
Mike Mueller — JP Morgan — Analyst
Got it. Okay, that was it. Thank you.
Joseph D. Russell — President and Chief Executive Officer
Thank you, Mike.
Operator
Your next question is from Rick Skidmore with Goldman Sachs.
Rick Skidmore — Goldman Sachs — Analyst
Good morning, Joe. Just a follow-up on the supply question just a few minutes ago. As you think about the lease up of new and developed properties has been may be extended four to five years given the demand trends you’re seeing. Are you seeing that lease up pace accelerate such that it might be a little faster than you think or maybe reverting back to prior periods when supply growth wasn’t as rapid?
Joseph D. Russell — President and Chief Executive Officer
Yes, Rick. You’re right, it is accelerating. We’ve been very pleased with even more near-term, the assets that we delivered in 2019 and ’20 are seeing much stronger demand and lease-up activity than we anticipated. So that’s definitely encouraging and as I mentioned, even if we’re looking to some of the acquisitions that have lower levels of existing occupancy, we’re seeing once we put those assets into our platform really strong an acceleration from customer activity, lease-up and then ideally we’re stabilizing the assets in a shorter period of time, but frankly and Tom has talked about this in prior calls as well. It is a product type that does take time to season from a revenue stabilization standpoint, but the quicker we are able to fill assets up and start maturing that revenue stream, the better off we are and that’s happening as we speak.
Rick Skidmore — Goldman Sachs — Analyst
Got it. And then just on the demand side of the question, you mentioned some — the new millennial generation or younger generation utilizing storage a bit more, but you also — Tom also talked a bit about maybe move-outs reverting back to maybe a normal trend line. Maybe just frame how you think about demand as to whether it’s changed over the longer term or is it just too early to tell if there is some trend that — that’s coming out of COVID with regards to how demand might move going forward?
Tom Boyle — Senior Vice President and Chief Financial Officer
Sure. Something, Rick we’re watching very closely. Both the composition as Joe mentioned, based on survey data and customer activity as we move through 2020. The good thing is it’s been really durable and the momentum has continued. So looking at top of funnel demand trends web visits and sales calls are up 10% plus, and that’s against an inventory backdrop where occupancies are higher vacancies are lower and as Joe just mentioned lease-up assets are filling up faster, so a good environment to have strong top of funnel customer interest.
In terms of the — the types of customers or the use cases of storage, one of them that Joe highlighted that we saw really accelerate in the April-May time period was consumers that we’re not moving, but we’re looking to free up some space in their home. And that use cases continue to trend higher than prior years throughout the year. In other words, it wasn’t in April, May blip, but it has persisted throughout and those customers tend to be good storage customers as they utilize the storage space as an extension of their home and tend to have longer length of stays. So that’s a nice backdrop and characterization of the demand that we’ve seen to-date, and will support the occupancy and customer tenure here going forward.
How long that lasts? Is anybody’s guess, but we’ve been encouraged by how persistent it’s been through 2020 and into 2021 and as Joe mentioned, we do think some elements of the reaction to really individuals daily lives being disrupted through the pandemic will persist as we go forward be it with the ability to work-from-home for more days or we’re just generally spending more time at home. So we’re encouraged by that. But, no guide posts into the future as to what exactly or what day or time period those could shift.
Rick Skidmore — Goldman Sachs — Analyst
Great. Thanks, Tom. Thanks, Joe.
Tom Boyle — Senior Vice President and Chief Financial Officer
Thank you.
Joseph D. Russell — President and Chief Executive Officer
Thank you.
Operator
Your next question is from Todd Stender with Wells Fargo.
Todd Stender — Wells Fargo — Analyst
Hi, thanks. I heard some occupancy figures that I think may have been for the full-year 2020. But I want to ensure if you broke out the Q4 deals and then facilities already acquired here in Q1?
Joseph D. Russell — President and Chief Executive Officer
Todd are you specifically asking about acquisition deals or?
Todd Stender — Wells Fargo — Analyst
Yes, sorry, yes, I know it’s a pretty geographically diverse set, but maybe just speak to occupancies and any color on rents and maybe they’re below market or at market any color there?
Tom Boyle — Senior Vice President and Chief Financial Officer
Yes, I can maybe provide a little bit of color and Joe can chime in too. But the fourth quarter we did see some lower occupancy transactions, I think we had spoken in the past around how the beyond portfolio came in at lower occupancies in the overall average around 35%. Overall, the acquisitions in 2020 you’re right were higher around 65% and as we moved into 2021, we’re obviously only really talking about a quarter’s worth of activity, but that’s a similar around that 65% zip code. And then in terms of rate, clearly with many of the properties in earlier fill up stages rates will be lower and own the opportunity over time to increase those rates as we go.
Joseph D. Russell — President and Chief Executive Officer
Yes and maybe just to give you a little bit more color too Todd. As I mentioned, the occupancy on average speaks to the fact that many of these assets are relatively new. But overall, we’ve been very pleased with the quality level of the assets that we’ve been able to acquire over the last two years in particular. As I mentioned, many of these sellers are coming to market in a way that they have some level of reticence to stay in the sector, they’re not necessarily achieving either pro forma revenues or occupancies, but the overall quality of the assets that we continue to see an acquirer has been very good.
Todd Stender — Wells Fargo — Analyst
If they’re generally newer, does that suggest that you — the sellers do not need tax efficient currency like an OP unit and you’re just paying in cash?
Joseph D. Russell — President and Chief Executive Officer
Yes, many of them are looking for cash. It could be because it’s a single asset that they’ve developed or maybe they’ve got other asset types, they need to put more capital into and the rebalancing broader portfolio. So different circumstances, but many of these conversations have come over some period of time as we’ve built relationships with these owners and through our deep connections even through the brokerage community, too.
Todd Stender — Wells Fargo — Analyst
Great, thank you.
Joseph D. Russell — President and Chief Executive Officer
Thanks, Todd.
Operator
Your next question is from David Balaguer with Green Street.
David Balaguer — Green Street — Analyst
Good morning. Thank you. On the expense side, could you provide some additional color on the role of e-rental program and driving down payroll expenses? And are you expecting that e-rental utilization is going to remain elevated as we move toward a more normal environment?
Joseph D. Russell — President and Chief Executive Officer
So yes, David, the e-rental channel, as I mentioned has been quite vibrant, customers are really drawn to it. We think that the sustainability and the utility of that channel will definitely go beyond whatever pandemic environment driving or whatever pandemic related activity may be leading customers to use it, because frankly we designed it and tested it before the pandemic. It was built around a very efficient and time-sensitive customer, who wanted to be much more oriented toward a self service transaction. So we’ve really seen good adaptability and adoption by customers, it’s now approximately 50% of our move-in process. And to your point, it will likely have different kinds of beneficial impacts as we continue to study our operation — our operational model and the way that it too provides a different level of service to customers. We’ll talk more about this in our Investor Day in May, but we’re definitely very encouraged by the success of that channel so far and look forward to continue to optimize it.
David Balaguer — Green Street — Analyst
Great, thank you. Just a quick follow-up. Seems like work–rom home demand you’re expecting to be relatively sticky moving forward, as we think about potential move-outs. What are the particular areas where you’re concerned, is it especially small business demand moving out as we move towards a normal environment? Or are there other areas where we should be keeping [Indecipherable].
Joseph D. Russell — President and Chief Executive Officer
As I noted earlier, the change in move out ratio really was across customer segments, customer tenures, pre-pandemic, during pandemic customers, business, consumer and the like. So the shift was not isolated in one. And so as we think about consumer behavior moving back to historical norms or closer to historical norms. There is no question that, that could just as easily be across the full spectrum. But as we noted, we have not seen that to-date, and we’ll certainly update the investment community when we do start to see that, but we’ve been encouraged, we started 2021.
David Balaguer — Green Street — Analyst
Great, thank you.
Tom Boyle — Senior Vice President and Chief Financial Officer
Thanks.
Joseph D. Russell — President and Chief Executive Officer
Thank you.
Operator
Your final question is from Smedes Rose with Citi.
Michael Bilerman — Citi — Analyst
Michael Bilerman here with Smedes.
Joseph D. Russell — President and Chief Executive Officer
Hi, Michael.
Michael Bilerman — Citi — Analyst
Joe, I was wondering — I was wondering if you can talk a little bit about, sort of, the stakes in Shurgard and PSP and just as you’ve interacted with shareholders and analysts whether, sort of, any of that is on the table in terms of the distribution or sale. The combined stakes in those two companies today is almost $3.6 billion high -single digit of your gross asset value. I guess, how do you think about those stakes a longer-term?
Joseph D. Russell — President and Chief Executive Officer
Yes, Michael. I would step back and tell you that we are supporters of both platforms, we’re very pleased with the individual performance of each of those businesses. There are a variety of reasons why we have and do maintain our investment level in them and ultimately and to what degree that changes over time. I wouldn’t speak to directly, but we’re very pleased with our investment and the success of each of those entities.
Michael Bilerman — Citi — Analyst
But I guess does it — does that capital on your balance sheet makes sense? I think probably more so I can understand the Shurgard Europe side is a global business, but there is the PSV stake makes sense?
Joseph D. Russell — President and Chief Executive Officer
It’s — like I mentioned, Michael, I would just leave it at, it’s been, and we feel a good investment on our behalf and that’s as much color as I can give you at this point. It would be strategically as it would be in any different investment that we have something that we could continue to evaluate, and as any shift in focus or commitment takes place, we would certainly bring that forth, but at this point, I don’t have anything to share with you.
Michael Bilerman — Citi — Analyst
Okay and then just on the management program, do you have, sort of, maybe just some details around how many different owners you have in that group, maybe some — just clarity on what those represent out of those 120. What are sort of the top five in there or is it spread out amongst singles and doubles and triples?
Joseph D. Russell — President and Chief Executive Officer
Yes, it’s beginning with singles, doubles and triples, but as I mentioned as the business evolves, we’re actually starting to see a number of owners that have anywhere from, say, 10, 20 or 30 or more assets and they’re giving us the opportunity to basically display and show the kind of performance that those assets are able to attain under our own platform. We’ve seen good traction, and I think over time, that’s a different way for the program to continue to evolve. The business as a whole is very reference oriented, so that matters. And that’s something that over time as we show in display, the amount of performance of these assets are able to attain under our own platform, I think will be very additive. And we’re actually starting to see some of that as we speak.
Michael Bilerman — Citi — Analyst
Great and okay, I appreciate making opening comments on the call. Appreciate having a supplemental been sort of coming in line with the industry. It’s nice to see the company take action amongst the comments that have been provided by the investment community over time, and being a little bit more outward with some of that. So, definitely appreciate the change and a lot of things that you’re doing and implementing.
Joseph D. Russell — President and Chief Executive Officer
Great, thanks for the feedback. Appreciate it.
Operator
There are no further questions at this time. I will turn the call back over to Mr. Ryan Burke for additional or closing remarks.
Ryan Burke — Vice President of Investor Relations
Thank you, Erika. Thanks to all of you for joining us today. We appreciate your time. We appreciate your interest. We look forward to speaking with you again. Take care.
Operator
[Operator Closing Remarks]