Public Storage Management Discusses Q4 2013 Results - Earnings Call Transcript

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 |  About: Public Storage (PSA)
by: SA Transcripts

Public Storage (NYSE:PSA)

Q4 2013 Earnings Call

February 21, 2014 1:00 pm ET

Executives

Clemente Teng - Vice President of Investor Services

Ronald L. Havner - Chairman, Chief Executive Officer and President

Edward John Reyes - Chief Financial Officer, Principal Accounting Officer and Senior Vice President

Analysts

Ki Bin Kim - SunTrust Robinson Humphrey, Inc., Research Division

Todd M. Thomas - KeyBanc Capital Markets Inc., Research Division

Jana Galan - BofA Merrill Lynch, Research Division

Ross T. Nussbaum - UBS Investment Bank, Research Division

Christy McElroy - Citigroup Inc, Research Division

Landon Park - Morgan Stanley, Research Division

David Harris - Imperial Capital, LLC, Research Division

Michael W. Mueller - JP Morgan Chase & Co, Research Division

Steve Sakwa - ISI Group Inc., Research Division

Todd Stender - Wells Fargo Securities, LLC, Research Division

Michael J. Salinsky - RBC Capital Markets, LLC, Research Division

David Bragg - Green Street Advisors, Inc., Research Division

Thomas J. Lesnick - Robert W. Baird & Co. Incorporated, Research Division

Operator

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 Fourth Quarter 2013 Earnings Conference Call. [Operator Instructions]

I would now like to turn the conference over to Clem Teng. Please go ahead.

Clemente Teng

Good morning, and thank you for joining us for our fourth quarter earnings call. Here with me today are Ron Havner and John Reyes.

All statements, other than statements of historical facts, included in this conference call are forward-looking statements, subject to a number of risks and uncertainties that could cause actual results to differ materially from those projected in these statements. These risks and other factors that could adversely affect our business and future results are described in today's earnings press release and in our reports filed with the SEC. All forward-looking statements speak only as of today, February 21, 2014, 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 audio webcast replay of this conference call on our website at www.publicstorage.com.

Now I'll turn the call over to Ron.

Ronald L. Havner

Thanks, Clem. Once again, we had a pretty good quarter, pretty active on the acquisition front, good core growth in Same Store Facilities. So let's open it up for questions.

Question-and-Answer Session

Operator

[Operator Instructions] Our first question comes from the line of Ki Bin Kim with SunTrust.

Ki Bin Kim - SunTrust Robinson Humphrey, Inc., Research Division

While at the risk of wasting one of my questions, could you comment on the stabilized yield and whichever way you feel comfortable quoting that, whether it be kind of stabilized go-forward basis on the deals that you closed on this quarter?

Ronald L. Havner

Ki, I think I touched on that last quarter and you asked that, and we have properties that just are in fill-ups and properties that came out of -- are newly constructed. So today, they're somewhere between 0 and 8% cash-on-cash yield. Over the long term, and some of them will take 2 to 3 years to stabilize, somewhere between 6% and 8% would be my guess.

Ki Bin Kim - SunTrust Robinson Humphrey, Inc., Research Division

Okay. And the second question, could you comment on the Street rates you pushed in the fourth quarter year-over-year?

Ronald L. Havner

They're higher.

Ki Bin Kim - SunTrust Robinson Humphrey, Inc., Research Division

Any range?

Edward John Reyes

Yes. Ki, this is John. We have mentioned on our last conference call that one of the things we were going to attempt to do during 2014 to continue to grow our same-store revenue is to a push on Street rates. Last year, we got a lot of the growth mostly on increases to existing tenant base, as well as reduced discounts, promotional discounts given. We're going to continue to do those 2 things, but the other thing that we were going to attempt to do is push Street rates. So I think what you're seeing, if you follow what we're doing with our Street rates, either on our website or otherwise, is that our Street rates are up anywhere from 5% to 10% depending on what market you look at. So we're going to try to continue to do that throughout the year and see how that goes.

Operator

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

Todd M. Thomas - KeyBanc Capital Markets Inc., Research Division

In terms of acquisitions, I was just wondering if you would be able to characterize the pipeline today. You had a pretty strong year in 2013. Any thoughts around following that up with a similar year in 2014 based on what you're seeing?

Ronald L. Havner

Well, Todd, we're seeing more products come to market in general. Quite a bit, a fair more product coming to market but of lower quality than the stuff we saw last year, and that's lower than, certainly, '11, '12. In terms of our production in Q1, we've got a property under contract and we've got 3 developments opening. So we're looking at about close to 400,000 net rentable square feet, $50 million in Q1.

Todd M. Thomas - KeyBanc Capital Markets Inc., Research Division

Okay. And then just a follow-up, I guess, for John maybe on the balance sheet. In terms of funding additional deals throughout the year, how should we think about that, additional short-term debt and then utilizing free cash flow to make payments each quarter? Or what's sort of the preferred method to finance these transactions going forward?

Edward John Reyes

Yes. Todd, I mean, at the end of the year, we had borrowings of about $50 million on our line of credit. That has since been repaid. We have the $700 million of short-term borrowings. About $100 million of that has been repaid. And we used the funds that we received in January when our partner -- our 51% partner in Shurgard Europe purchased our -- a 51% interest in the loan that we had extended to Shurgard Europe. As we go forward, we're looking at a variety of alternatives, as we've talked about in the last call, which could include the retained cash flow that we generate. And we'll probably generate somewhere in the neighborhood of about $250 million this year, and that's after dividend requirements and maintenance CapEx. We -- the preferred market is starting to improve. The last time we talked, the preferred market was pretty much shut down for us. But it has improved quite a bit. It's not what it used to be a year ago, but it has improved. So we're eyeing -- we're keeping our eye on that. Things -- other things we could do, we can expand our line of credit. We have a $300 million line of credit that we will continue to use, but that's an option that we can seek to do, to seek to go to our lenders and see if we can expand that. So we are thinking about a variety of things, Todd. But it will be depend on how the acquisition flows throughout the year and what our capital needs; will be.

Operator

Our next question comes from the line of Jana Galan of Bank of America.

Jana Galan - BofA Merrill Lynch, Research Division

Can you comment on how the colder snowier than normal winter is impacting operations, if you're seeing significantly lower movements or -- and if that is potentially being offset by current customers staying put. And if you can provide current occupancy.

Edward John Reyes

Well, I can start and Ron, you can finish. In terms of move-in volume, during the fourth quarter, particularly in December, we didn't really see a dropoff in move-in activity as a result of the storms. We did, however, start seeing a dropoff in January. But our move-in volume, basically, year-to-date in 2014 is pretty much flat with last year. So other markets are picking up the slack that -- where we're seeing drop-offs in move-ins in cities like New York and Chicago and Boston and D.C., Baltimore areas. But you kind of mentioned about move-out activity, conversely, the move-out activity is also down, too. So people aren't moving in, but people aren't really moving out either. So on a net-net basis, it's kind of been a push, so to speak, on the occupancy levels.

Ronald L. Havner

At the -- in terms of where we are, at the end of January, our occupancy was 92.2% versus 91.6% at year-end.

Operator

Our next question comes from line...

Ronald L. Havner

Let me touch on -- let me just add one thing to that, the answer to the question. So snow in January was up, I think, about $1.5 million. We don't have the numbers yet for February, but I would assume that's going to be up at least $1 million in February year-over-year. So obviously, we don't know what March is going to be. So $2.5 million, at least, for Q1 in terms of snow removal costs versus last year.

Operator

Our next question comes from the line of Ross Nussbaum with UBS.

Ross T. Nussbaum - UBS Investment Bank, Research Division

I'm here with Jeremy Metz. Can you first talk about the Shurgard Europe loan? Why was it the right time to sell your stake in that one?

Ronald L. Havner

Ross, since we put the loan in place, New York Common has always -- who's our partner in Europe, just to refresh, they own 51% of Shurgard Europe, we own 49%. And they've had the right to purchase half that loan. We've given them that right since we put it in place. And the decision to do it was really on their part and the availability for them to obtain financing to purchase their half. So it wasn't a strategic decision John and I are making in terms of when they should do it. It's really them.

Ross T. Nussbaum - UBS Investment Bank, Research Division

So it was a contractual right in the partnership and you could just...

Ronald L. Havner

I don't believe it was contractual, but that's -- since they're our partner, we just offered them half the note at any time they wanted it.

Ross T. Nussbaum - UBS Investment Bank, Research Division

Got it, okay. The second question, John, this is probably for you or maybe not. When I saw you guys go down the debt path at the end of last year, I was convinced that either Armageddon was upon us or hell hath frozen over. And now I hear some dialogue about potentially expanding the line of credit. So I understand that's in response to the fact that the preferred market blew up at the end of the year and your yields went to over 7% from the low- to mid-5s. So I get that you had to do something other than preferreds. I guess the question I would have is now that you're pressed to trading back down toward, call it, 6.5%, what's the threshold at which you would view issuing preferreds to both pay down the term loan and fund acquisitions versus alternative capital sources?

Edward John Reyes

Ross, we've really -- I mean, obviously, if we hit a 5 handle loop, we'd probably be out there hand over fist trying to do some preferreds. But it's not just the yield threshold, Ross. I think the depth of the market is still somewhat suspect. So even though they have improved, it is not like we can go out and maybe issue a significant amount of capital to deal with the -- our acquisition activities that happened in the fourth quarter of last year or to, basically, finance the $700 million. So it's bigger than just what the yield would need to be because I don't think the size would be there even if the yield was there. So we are still evaluating other options, but we are looking -- we are really happy that the preferred market seems to be improving, the ice is thawing. Others have gone out and issued preferred, namely some of the banks. And so I don't want to tell you that there's a number because we don't really have a number in mind. We're just continuing to evaluate. We're not in a hurry. We think we have a lot of different avenues to take. And the loan to -- that we've borrowed from Wells Fargo isn't due until December, early December, so we have time. So we're not rushed to do anything at the moment.

Operator

Our next question comes from the line of Christy McElroy with Citigroup.

Christy McElroy - Citigroup Inc, Research Division

About a year ago, you had implemented the 50% off promotion to increase traffic during the seasonally slower time. I'm wondering if you employed that or any other promotions during this past quarter. And it looks like you had a little bit more of a sequential drop-off in occupancy of about 140 basis points from 3Q to 4Q in 2013 versus only about 90 basis points in 2012. Was that quarter-over-quarter change more reflective of what you would expect as a more normal seasonal trend going forward?

Edward John Reyes

Yes. Christy, we turn things on and off as we see fit depending on the market. I would tell you, you're correct, we did do a 50% off promotion, and we did one last -- in December of 2012. We did -- we also did one this December but not to the same extent just due to having higher occupancies. So we do various promotions throughout the year, whether it be 50% off or 25% off with the dollar, without the dollar, it really varies. I mean, at the end of the day, our strategy is to try consistently grow our revenue for the long term, not just for one particular quarter or for this -- the next 6 months. We're looking to try to continue to grow for the long term over a year, and we're looking out at least a year in advance in how we're monitoring our occupancies, our rental rates, our discounts and so on and so forth.

Christy McElroy - Citigroup Inc, Research Division

Okay. And then is there a way to quantify how you've sort of seen your mobile traffic change in recent years versus customers using a computer? I'm not sure how -- if you track that, how closely you track that. But as more people are using smartphones for web browsing, I'm interested to get your thoughts on sort of how you see that increasing trend impacting your business and competition, for new customers to your stores?

Edward John Reyes

Well, I will tell you that the mobile traffic has grown significantly. And looking at some of the projections that Google and Yahoo! have shown us, they projected to continue to grow significantly. So we are spending more money on the mobile devices in terms of the search, and we've invested and improved our mobile website. The traffic hasn't -- has increased quite a bit. You're correct, customers are using mobile. They're still using desktop, although I think the growth in desktop is slowing down. But mobile is going to be and is continuing to be a very important avenue for customers to seek us out. And we're going to be there, and we're going to spend money to continue to have high prominence in that area.

Christy McElroy - Citigroup Inc, Research Division

Do you see that dynamic changing sort of the competitive landscape between larger operators and smaller operators? Or is it sort of the same as online?

Edward John Reyes

Because of the mobile? Well, mobile, because the amount of real estate is a lot smaller on a mobile device than it is on a desktop, so I don't know how it's going to change it. I think it's going to change. I think it's going to make it tougher for the smaller guys to show up, depending on how the user uses the device, are they going to scroll further down to find a smaller operator when the bigger guys are going to be at the top and in the prominent roles. I don't know how that's going to play out, Christie. I don't know if it's still early in the game, but my guess is it could probably make it tougher on the smaller guys, but I really don't know that.

Operator

Our next question comes from line of Vikram Malhotra with Morgan Stanley.

Landon Park - Morgan Stanley, Research Division

This is Landon on for Vikram. Just had a quick question about your expenses. I noticed a pretty good decrease this quarter. Just wondering if you guys have more room in your advertising budget to see that change continue. And then if you could talk about any offsets on the payroll and property tax front, I'd appreciate that.

Ronald L. Havner

Sure. On the expenses, last year, we told you we were pulling out of the Yellow Pages. And that is the biggest component of the drop year-over-year in advertising and selling, and I think it's about $6 million. The total advertising and selling expense drop was about $11 million year-over-year. The other 2 components being television and we've gotten a lot more efficient and strategic in our Internet spending as well. So we're able to drop our Internet spend, the Yellow Pages and television due to good demand. Going into 2014, I would not expect those trends to continue. We've gotten the benefit of the Yellow pages. Television, maybe even a little more given the acquisitions that we've had. And Internet spend, as John just touched on, we're going to be more aggressive on mobile. And I think we've done a great job of optimizing that platform. Your other question was, what, payroll, property?

Landon Park - Morgan Stanley, Research Division

Yes. The offset -- I mean is -- how are you looking at payrolls in the coming year with any health care or anything like that? And what kind of property tax expense are you expecting?

Ronald L. Havner

Well, I'll let John touch on property taxes. On property payroll, we've got 2 things going on: increasing medical costs offset by a little more productivity enhancements at the store hour level. So we'll have fewer store hours because of some of the things we've done, offset in part by medical costs. So net-net, I would see property manager payroll up probably 1% to 2% in '14 versus '13. With respect to property taxes?

Edward John Reyes

Yes. On property taxes, I mean, internally, we're budgeting, like, 4.5% to 5% increase in the same-store pool of properties for 2014.

Landon Park - Morgan Stanley, Research Division

Great. And then just one other question. I was just wondering if you could maybe comment on the state of the supply that you guys are seeing come online. And your development pipeline, if you can see that growing significantly or what your plans are there.

Ronald L. Havner

Yes. Development is now in the lexicon of the trade association meetings and development seminars. We're hearing -- we've been hearing, for the last year, 1.5 years, more conversations about it. And so net-net, there's more product coming out of the ground today than there was a year or 2 years ago. Relative to the base of supply and what we've seen around the country, it's still very, very modest. The analysis that I've seen from the self-storage association and other groups is less than 100 properties. As you know, industry data is hard to come by in terms of exactly how much new supply, but it's pretty modest. And when you step back and think about U.S. population growth and kind of what I'll call the natural organic increase in demand each year, I'd say it's between 400 and 500 properties. And by everything we can tell, we're still way below that in terms of new product coming on. With respect to our development pipeline, we started 2012 with 19 properties, 1.4 million square feet, $133 million. And we ended the year at about 30 properties, 1.8 million square feet, close to $200 million. And that is growing each quarter, net of deliveries. As I touched on earlier, in Q1, we'll deliver about 300,000 square feet, $40 million in Q1 of that year-end pipeline, and we'll see what we add in Q1 in terms of net-net production. But we've got number of the key members of the team in place, and they are out there finding product to add to our development pipeline. So I'd expect it to grow, hopefully, another $100 million net over the course of 2014.

Operator

Our next question comes from the line of David Harris with Imperial Capital.

David Harris - Imperial Capital, LLC, Research Division

They're not handing out Olympic gold medals for brevity of prepared remarks yet, but I'm figuring gold medal slot when they do. All right. So my question is, you may have touched upon this, forgive me if I missed it, Europe is still turning in fairly weak operational performance. Is there any light at the end of the tunnel in sight here yet?

Ronald L. Havner

David, right, Europe, year-over-year, I think, we were down on same-store NOI about 2.4%, which is probably the worst we've delivered in quite a while. But I'll tell you things are starting to look pretty good -- or better, not pretty good, but I mean better. We ended the year, for the quarter, 82.8% occupied versus 82%. And if you took a sequential chart of kind of what happened to same-store occupancies, we bottomed in Q1 '13, on a year-over-year basis, down 3.9%. We improved in Q2, Q3 and went positive in Q4 at 1% year-over-year comp. Now obviously, when you reduce the occupancy in the portfolio, the comps get easier. But I think we stabilized, and the trend is positive in terms of year-over-year comps. We've also weathered the implementation of VAT in London, and so I'm hoping -- I'm anticipating that our 2014 comps versus '13 in our U.K. portfolio will be positive. And in fact, we saw that in Q4, where same-store U.K. was up 5.5% year-over-year. So...

David Harris - Imperial Capital, LLC, Research Division

Got problems in The Netherlands?

Ronald L. Havner

Netherlands, I think, is -- we're starting to stabilize there as well. Occupancy in Q4, we were up, 72.8% versus 71.7%, so we actually turned positive on occupancy in Holland in Q4, which has been a long time since that's happened.

David Harris - Imperial Capital, LLC, Research Division

Okay. Now second question is this and it relates to some of the earlier questions on expenses. I think on the last couple of quarters, you've talked about the reduction in expenses not being on a sustainable trajectory and that you would expect that, over time, you'd revert to a more normalized 2% to 3%. In the context of your comments earlier on advertising spend, which is obviously a big item that's likely to start now trending at least flat, if not quite at the same continued level of decline. Are we going to see a 2% or 3% expense growth reemerge with this year? Or is that more of a '15 phenomenon, you think?

Ronald L. Havner

We're not one to give forecasts, but I think John and I have consistently said over the years that when someone's evaluating this business that they should anticipate expense growth of 2% to 3%. We continually -- continue to be vigilant here on expenses. We will continue to be vigilant in 2014. We're constantly thinking of ways to improve the cost efficiency of our business. So what expenses actually turn out to be in '14, I can't tell you, but we'll remain vigilant. And ideally, we would have 0 expense growth, but I would tell you, long term, you should plan for 2% to 3%.

Operator

[Operator Instructions] Our next question comes from the line of Mike Mueller with JPMorgan.

Michael W. Mueller - JP Morgan Chase & Co, Research Division

I guess, as you're heading into the seasonally high period, how do you see the rent increase letters stacking up this year compared to last year when you think of the size of the increase going out, as well as the timing?

Edward John Reyes

Mike, this is John. I think, from my perspective, the timing will be very similar to last year. We start sending out the increases in February, and it continues on through, probably, August, when the bulk of them are finally done. And the bulk of the letters that do go out are really in the June, July, August kind of time frame. So I think we'll continue to follow the same pattern. I think in terms of percentage increases, we'll be very similar again to what we did in 2013, where we were giving increases anywhere between -- in the range of 9% to 10%. So I think we're going to continue to do that until we see evidence that suggest that we should do something different. So I don't think it's -- I guess, what I'm trying to tell you is we're not going to really change our strategy in 2014 from what we did in 2013.

Michael W. Mueller - JP Morgan Chase & Co, Research Division

Okay, got it. And second question, the non-same-store pool, what was the year-end occupancy level of that?

Edward John Reyes

Hang on, Mike. It was 85.4%, Mike.

Operator

Our next question comes from the line of Steve Sakwa with ISI.

Steve Sakwa - ISI Group Inc., Research Division

The one -- I guess one expense line item that did go up in the year and also for the quarter was G&A. And I'm just wondering if you can -- the kind of trends there. Was there any maybe allocation issues or things, John, that maybe kind of moved around between property and overhead, maybe like a reallocation? Or is there kind of onetime expenses in G&A this year? How do we think about that?

Edward John Reyes

Yes. Well, first off, we didn't reallocate expenses between G&A and cost of operations. We don't do that. What you're seeing, the increase, is, really, we're experiencing higher levels of acquisition and development-type overhead because of -- we're expanding our development activities and we're also -- we did a lot more acquisitions in Q4. So that helped drive up the G&A costs. The other thing that drove it up a little bit in the fourth quarter was increased stock-based compensation expense. So that drove it up. About $4 million of that change was about -- was from stock-based compensation expense.

Steve Sakwa - ISI Group Inc., Research Division

And John, how much of that would have been, I guess, transaction-related costs that were maybe...

Edward John Reyes

Yes. Well, transaction-related costs, last year, to put it in perspective, we incurred about $6.3 million, and this year, it's about $10.5 million -- I'm sorry, that was for the full year, though, Steve.

Steve Sakwa - ISI Group Inc., Research Division

No, I understand. So you're saying, inside the $66 million, about $10.5 million was kind of onetime transaction costs?

Edward John Reyes

Correct. Now going forward, depending on our acquisition and development activities, that could be higher or lower.

Operator

Our next question comes from the line of Todd Stender with Wells Fargo.

Todd Stender - Wells Fargo Securities, LLC, Research Division

Can we get your current thoughts on breaking ground on new development, what your return requirements are? And kind of do you look at that as a spread over your acquisition cap rates and how you're underwriting things now versus, say, this time last year?

Ronald L. Havner

Todd, this is Ron. Our development program is relatively new, so there's been no change in how we're underwriting things today versus a year or 18 months ago. And our development program is really structured and targeted around filling in markets where we don't have a presence. So certain parts of Phoenix that have grown a lot over the years where there's an absence of product, that's where we're targeting, same in Denver, same in Houston. In a variety of markets around the country, we're trying to build where there is relatively low per-capita self-storage, relatively good incomes and relatively high densities of people relative to that market. And where there's an absence of public storage property in that particular sub-market. Returns can range anywhere from, on a stabilized basis, 7% to 12%, depending on the product, the opportunity set of that particular property. Does that give you some color?

Todd Stender - Wells Fargo Securities, LLC, Research Division

It sure does. And how long would a period be for lease up, say, in a market like Phoenix?

Ronald L. Havner

Lease-up is really a function of the size of the facility. The typical self-storage facility that we're building is probably 75,000 square feet. So we should think -- generally, we're going to use about 3 years to stabilization. Something like Gerard that had 4,000 units built over a period of 6 months, we'll look at 4, 4.5 years for stabilization at our target rate.

Operator

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

Michael J. Salinsky - RBC Capital Markets, LLC, Research Division

You talked a little bit about acquisition opportunities just in terms of the market. Are you seeing more portfolio opportunities similar to last year early on at this point? And then as we think about Europe, I think you talked about it hitting an inflection point. At what point do you start to feel comfortable -- do you feel comfortable starting to invest incremental dollars either be it development or acquisitions?

Ronald L. Havner

Incremental dollars in Europe, Mike?

Michael J. Salinsky - RBC Capital Markets, LLC, Research Division

Yes.

Ronald L. Havner

Yes. We're looking at some stuff in Europe. We feel good about where our team is positioned, the portfolio. So we're looking at some things in Europe. Most of the opportunity set in Europe, as you would guess, is on the development front. So we're exploring that, although I would say it would be modest 2 to 4 properties. We're not talking 20 or 30, like here in the U.S. But we're feeling pretty good about that, and that's a function both of stabilization of operating -- operations, as well as the tenure of the team over there. With respect to the U.S. and acquisition opportunities, we are seeing more product come to market, more, I guess, you could call them portfolios. I don't know your definition of a portfolio, is that more than 2 properties in a package but -- versus a single property deal, so those will be portfolios. We're seeing more of those, but as I touched on earlier, of lower quality than we've seen in the past, which is kind of what you would expect given the robust activity of 2013. Everyone now looks at that and looks at the prices at which some of the stuff traded and said, "Well, I'll bring mine to market at that price." So it's kind of a natural phenomenon.

Operator

Our next question comes from the line of Dave Bragg with Green Street Advisors.

David Bragg - Green Street Advisors, Inc., Research Division

Another question on transactions. Given what you've pointed out as there being a lot more on the market, put this in perspective for us as it relates to 2013 transaction volume. As compared to the $1.2 billion that you completed in '13, what dollar volume of the deals that you underwrote ultimately transacted?

Ronald L. Havner

What percentage of the stuff that we underwrote in 2013 did we actually close?

David Bragg - Green Street Advisors, Inc., Research Division

Correct.

Ronald L. Havner

It be a pretty high percentage because several of our larger deals, the Stor-All transaction, the Southern, and -- we're not even on the market. And most of that, as you recall, was back-half-loaded. So if you -- I don't know where our transcript was first quarter of last year with respect to our outlook for acquisition volume for 2013, but I'm very confident it wasn't anything close to what actually transpired. And part of that was the people, at least on the larger transactions that we undertook, had not decided to sell their portfolios. So where we are today and kind of how the market evolves over 2014, I think can be very different than what people are looking at right now. But our percentage of underwritten was pretty high last year because of the large size of non-marketed transactions.

David Bragg - Green Street Advisors, Inc., Research Division

All right, understood. And do you have a figure that you can share with us that -- in terms of the total institutional-quality storage transaction dollar volume that did occur in '13? Just looking to understand your share of that.

Ronald L. Havner

No, I don't have that number.

Operator

Our next question comes from the line of Tom Lesnick with Robert W. Baird.

Thomas J. Lesnick - Robert W. Baird & Co. Incorporated, Research Division

I'm standing in for Paula today. Turning back to development and expansion projects for just a second. Can you talk at all about how much of that $196 million is expected to come online in 2014? And maybe in broad strokes, kind of the cadence quarter-to-quarter of how that's going to play out.

Ronald L. Havner

Sure. So let see, we got -- Q4, we had 3 properties that I touched on, 300,000 square feet, about $40 million. Q2 will be 8 projects, mainly redevelopments, $12 million. Q3 will be 4, 285,000 square feet at $23 million, and Q4 will be 9 transactions at $69 million. So about -- of the $190 million -- close to $200 million in the pipeline, close to $140 million will deliver this year at this time. And that can change on weather, and I'm sure some of the stuff we were planning is getting slightly delayed because of the weather right now. But that's kind of what we're looking at today.

Operator

Our next question comes from line of Ross Nussbaum with UBS.

Ross T. Nussbaum - UBS Investment Bank, Research Division

Ron, can you talk a little bit about the PS Business Parks from 2 perspectives. One is PSA made the decision to invest, I guess, another $75 million into PSB, when they did their last equity offering in the fourth quarter. Can you just remind me the governance around that? Do you recuse yourself from those kinds of decisions?

And number two, if you're implicitly putting more money into the PSB, does that not suggest that you see equal or better growth prospects in PSB than PSA, otherwise why not just keep the capital inside of PSA?

Ronald L. Havner

Why? I'm not going to get into a comparison of PSA and PSB, Ross. They're slightly different businesses, and they're susceptibility to the economy is different. I will tell you on PSB, Joe and his team have done an outstanding job, and they just had there conference call. But PSB has been in a down trend in terms of rates and occupancies for the last couple of years. They've made some great acquisitions that have not yet stabilized. And so we're at a part in kind of the economic cycle, where the trends are, I would say, quite favorable. In terms of our capital allocation decision to PSB, that is a decision made both by the Public Storage board and the PS Business Parks board, in terms of our continued investment and Public Storage deciding to actually continue to invest in PSB. It's been a wonderful investment, and I think we were buying, last year, at $72 a share, and so right now, it's turned out pretty good for us.

Ross T. Nussbaum - UBS Investment Bank, Research Division

And just to be clear, from a governance perspective, do you participate in any of those board discussions either at PSA or PSB?

Ronald L. Havner

Yes.

Ross T. Nussbaum - UBS Investment Bank, Research Division

There's no apparent conflict in wearing 2 hats and being on...

Ronald L. Havner

I already have the conflict.

Ross T. Nussbaum - UBS Investment Bank, Research Division

So there is no apparent conflict, there actually is a conflict?

Ronald L. Havner

There is a conflict.

Operator

Our final question comes from the line of Todd Thomas with KeyBanc Capital.

Todd M. Thomas - KeyBanc Capital Markets Inc., Research Division

Just 2 quick follow-ups. I was just wondering, you mentioned, Ron, the Street rates are 5% to 10% higher at this time. As you move through the more active months in terms of leasing, in the spring and the summer, where there's a lot more turnover, do you think -- is it your expectations that you'll be able to maintain that increase?

Edward John Reyes

I don't know the answer to that. I hope we can, but we'll have to find out together because my crystal ball is not that great. So we'll keep doing it, as I mentioned earlier, and when the volume -- move-in volumes indicate that we can either do something different or have to do something different, we will adjust accordingly. And that's how we always operate our business when it comes to pricing.

Todd M. Thomas - KeyBanc Capital Markets Inc., Research Division

Okay. And then the occupancy increase, it was up from the end of December to the end of January. Is that typical to see during the month of January?

Edward John Reyes

You mean the increase in the spread or the occupancy -- the absolute occupancy itself?

Todd M. Thomas - KeyBanc Capital Markets Inc., Research Division

Yes, the absolute occupancy. You ended the year at 91.6%, and at the end of January, I think you said 92.2%?

Edward John Reyes

Yes. I'm looking back about the past 4 years, and that has been typical in the past 4 years.

Operator

And that was our final question. I'd like to turn the floor back over to Clem for any additional or closing remarks.

Clemente Teng

I want to thank everybody for participating on our call this morning, and we'll talk to you next quarter. Have a good day.

Operator

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

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