Clem Teng - VP of Investor Services Ron Havner - Chairman and Chief Executive Officer John Reyes - Senior Vice President and Chief Financial Officer.

Michael Mueller - JPMorgan Robert Simone - Evercore ISI Juan Sanabria - Bank of America Merrill Lynch George Hoglund - Jefferies Todd Thomas - KeyBanc Capital Markets Vikram Malhotra - Morgan Stanley David Corak - B.

Riley FBR Jeremy Metz - BMO Capital Markets Ki Bin Kim - SunTrust Smedes Rose - Citi Todd Stender - Wells Fargo Michael Rierbrock - Citigroup.

Ladies and gentlemen, thank you for standing by. And welcome to the Public Storage Q4 2017 Earnings Call. At this time, all participants have been placed in a listen-only mode and the floor will be open for your questions following the presentation. [Operator Instructions] It is now my pleasure to turn the floor over to Clem Teng to begin..

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

Before we begin, I want to remind you, those on the call that 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, 2018, 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..

Thank you, Clem. We had a good quarter, good Q4 and a good 2017. So operator, let's open it up for questions..

[Operator Instructions] Your first question comes from the line of Michael Mueller of JPMorgan..

Yes hi, just couple of questions on rate increases, we're heading into the period of time over the next few months where you're going to start heading up the rate increases to existing clients.

So, I'm wondering can you give us color in terms of what you are thinking off in terms of increases this year versus last year and just any other commentary around that?.

Yes Mike, this is John. I think what we'll be doing at the, what the game plan right now is we're going to continue to send out increases similar to how we've done over the past couple of years.

The increases will probably be in the range of 8% to 10% will target our longer term tenants that generally have been here longer than a year that's very similar to what we've done in the past. And what we've noticed so far is that the long-term tenant continues to accept the rate increases and so far they are still very sticky.

We haven't seen any determent over the past year in terms of their stickiness as we continue to push, the 8% to 10% increases. So, we're going to continue to do that in still such time we soon, some pushback by means of them vacating more rapidly. But, we haven't seen that yet..

Got it. And for follow-up, in terms of you gave us the spot January 31, occupancy rate.

I was wondering, can you tell us what you've seen so far to September, I mean into February?.

Well we gave you the year-end occupancy spot rate at 91.2% which was down about 1.4%. I will tell you that year-to-date our average occupancy spread is down about 80 basis points. So, it's better, it's inside of the 1.4% that we reported at, right at the end of the year..

Got it. Okay, thank you..

You're welcome..

Your next question comes from the line of Robert Simone of Evercore ISI..

Hey guys, thanks a lot for taking the question. Just a quick question on Q4 just trying to dig into that a 140 basis drop a little bit, its way more than anything you guys have experienced in recent years.

So, I was wondering if you could just comment a little on how much of that is pure occupancy drop and how much could be attributed maybe to you guys more aggressively revenue managing?.

You know what we've, and again this is John. What we've been seeing is that our occupancy has been dropping more rapidly towards the end of the month.

So that, the month end periods that we reported on Tuesday at the year-end number, the 140 basis points drop is somewhat misleading and that's why when Mike Mueller asked the question, I gave him the average occupancy.

So, I think as we move forward we will probably change that metric that disclosure to try to provide a more average occupancy as of, as supposed to reporting a single day in the month.

So, I think it's a little misleading and it's different than what you've seen in the past and we have seen more of our tenants vacate towards the end of the month now as oppose to kind of little more spread out through the month.

And so to little misleading now, I think for folks when they just kind of look at that and then think about revenue growth for the next quarter. Hence again that's why I gave you the average occupancy that we're seeing year-to-date at being down 80 basis points as oppose to the 140 basis points..

Okay, great. Yes. That's helpful. And just a quick follow-up obviously the big announcement last night, one portion of that release caught a lot of people by surprise and that was the internal promotion to really promote the third-party managed business.

So, I guess just it's, new for a lot of investors that would follow PSA for a while, so could you just kind of talk broadly around the strategic plan there?.

Yes. We've actually been doing third-party management for 40 years. Not promoting it and to what I think we got 30, 35 properties.

So, we think actually we know how to do it, but it's really, the other guys have been doing it a while, they've established that is a business, I didn't really think it would ever take off as a business, but it seems to taken off. And so, we're going to kind of wait in here.

Our business approach to at those going to be a little different, I don't think it's going to be a big profit generator for us, because we plan to pass through most of the benefits to the operators for which we'll be providing the service.

So, I like and it's a kind of an Amazon strategy, where in, we're going to pass the - most of the benefits from the tenant insurance and the benefits of operating our platform on to the owners for which we provide the service..

Okay. Okay, great.

And just that one last question from me on that last point, like what been is the - the ideal or the intended benefit to you guys, just to create an acquisition pipeline long-term or what's kind of the thinking there?.

I'm sure there would be some acquisition benefits associated to it, some scale benefits in terms of our platform. Some marketing benefits, similar benefits to what the other guys are achieving other than again we're going to pass most of the profits on to the owners..

Okay. Great. Thanks guys. I appreciate it..

Your next question comes from the line of Juan Sanabria of Bank of America Merrill Lynch.

Hi, thanks for the time. Just with regards to same-store revenues.

How are you guys thinking about how that moves going forward, are we approaching a trough any times of kind of stabilization from kind of current levels, it looks like you are rent per occupied square foot actually the delta of this quarter versus last year and if I compare that with our third quarter 2017 numbers actually improved.

So, if you could just give us a sense of kind of where you think we are in the cycle and approximately to the trough maybe?.

Well certainly we're later in the cycle, 2011 to 2015, 2016 we had above average trend, above trend line growth rates that is slowed down with the pick-up in new supply. The other two public companies that have reported have indicated in their guidance that they are going to have positive revenue growth that's our anticipation in 2018.

I think Q4 results for most people were better than the street expected. So, overall we're at the bottom, I don't know if we're at the bottom, I expect delivery this year to be comparable to last year to $3.5 billion to $4 billion. So, we still got headwinds in terms of new supply.

But, the business is really incredibly resilient, when you think back in 2013 there were about $500 million of deliveries and here in 2017 the best guess is about $3.5 billion. So, you've had a 7 fold increase in new supply in a period of four years and yet at least from the public companies reporting all reporting positive same-store growth.

So, I think the testament to the resilience of the business as well as the pent up demand for the product..

And just a follow-up from me, you guys split some occupancy throughout 2017, do you expect that to continue into 2018 or as a result I guess the new supply and kind of what are your latest thoughts, later to that on using concessions at this point, you kind of sound a little bit more skeptical in the second half last year that it wasn't getting the results you needed and how should we think about going forward?.

Certainly, we'd like to see the occupancy gap closed as much as possible and we're working towards that goal. We also mentioned that we weren't happy with our television marketing efforts and we're going to spend more time or more money and time with paid search and we started to do that and I expect this to continue to do that as we move forward.

We're trying to hold the line on discounts and rates, as best we can.

So, I don't know what the occupancy gap increases or decreases, but certainly we're working on trying to balance that with continued revenue growth, so get us not just about occupancy, although we think it's a big part of that obviously, but there is other factors that come into play off.

So, we're really focused on the revenue growth and trying to maintain positive revenue growth throughout the year..

Thank you..

Your next question comes from the line of George Hoglund of Jefferies..

Hi guys, I just wonder if you give your outlook on the acquisition and environment and what you are seeing from developers who have recently developed product if they are looking to exit early?.

We've, George we've actually seen an up tick in that both reverse enquires from people that have sites or thinking about sites calling us wondering if we wanted to purchase them, take over their entitlements.

There is a couple of portfolios on the market that are recently developed properties that are, at least the indications are selling on a pro forma basis, which to me indicates a little bit of skittishness in terms of develop, local developers in terms of their market outlook.

So, we're seeing more of that kind of product, in terms of stabilized properties not a lot to-date, its early first quarter. So, normally there is not a lot of product at this time of the year, but not a lot of the more stabilized properties.

There is a gap between private and public markets, the private markets are pricing ahead of what the public companies are trading for.

Couple of years ago, there was an arbitrage guys could sell stock and buy properties in the private marketplace that's flipped and the private market values there was a lot of capital chasing stuff and it's ahead of the public market..

Okay, and then give that those developers are kind of looking to exit earlier and getting little bit more nervous, do you think that and translates to new development start slowing?.

Well, you got to understand in terms of developments under the economics. So, for us we're building an anticipated 8% to 9% stabilized deals. And on our earlier developments, we've exceeded that.

And if you are able to market that portfolio, we're not in the business of building them and selling them, but if we were to market that portfolio as I indicated earlier it probably trade somewhere in the 5%, 5 cap rate zip code. So, that in terms of development that's a 60% to 80% margin on what we're doing.

And so, even if you are a local guy and you're only getting 30% or 40% margin meaning, you build it for a $1 and sell it for $1.30 you're going to keep developing, really to one or two things happens, either A), you can achieve the yield or the monetization rate, the 5 goes to a 6 or 7 and so there is basically no spread.

But, the economics of development have made a lot of sense and that's why you've seen a big up tick in new supply..

Okay, thanks for the color..

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

Hi thanks, good afternoon. Just Ron, first question just stalling up your comments about the third-party management platform that it won't be a big profit generator. So, you're going to pass along the tenant insurance revenue to the owner.

Can you just describe the price structure, a bit more will you be charging, management fees as a percent of revenue or is it going to be some sort of fixed cost or something else?.

Yes Todd, it will be a percentage of revenue, it's going to be very competitive. The expense pass through is going to be competitive and the tenant insurance participation is going to be very competitive.

And in fact from what I know is most of the others are not passing much of the tenant insurance through and we're going to pass a fair amount of it through..

Okay, and is do you have sort of a pipeline in place of, third-party management contracts today is it something that you've started working on already and how big of an opportunity do you think that there is?.

Well we made the management changes here recently putting a long time veteran here Pete Panos, in charge of the third-party program and I think you'll see in the coming months Pete rolling out our program and he is actually out today, soliciting some business.

So, how big is the opportunity, well as I said earlier, I think the, certainly Cube and Extra Space have demonstrated that it's a business much bigger than I ever thought it would and so the size the opportunity is probably quite significant..

Okay that's helpful.

And then just lastly, Ron it was just a couple of quarters ago, I think late last summer actually where, you talked about a lack of pricing power or weaker, consumer and some consumer credit metrics, the tone on this call and your comments about the resiliency of the business and the pent up demand for the product, the teams, a bit different, and I'm just trying to understand whether there has been a change to your market outlook, whether you're seeing an improvement in demand or weather conditions are firming up across the portfolio if that sort of the right read?.

Well I think a year ago, right we didn't have a big tax law change, the stock market was about 20% lower, unemployment was good, but still not at the 4.0%, 4.1% and animal spreads were a little less. So, I think there has been an overall change in the tone of the economy, how long it last I don't know.

But I think there has been a bit of a change in tone, certainly last year we were suffering pretty mildly in Houston with the decline oil, oils almost doubled year-over-year and the Houston market is actually up year-over-year in terms of occupancy. So, a number of things have changed..

Okay, thank you..

Thank you..

Your next question comes from the line of Vikram Malhotra of Morgan Stanley..

Thanks for taking the questions. One of your peers just commented that on the West Coast San Francisco seems to be accelerating and they've sort of baked that into their guidance.

Wondering if you could compare what you are seeing between San Francisco and LA and whether you are seeing some acceleration?.

Well I'll start and John can add. San Francisco and this will be in the 10-K. San Francisco square foot occupancy year-end was 95.4% versus 96% last year and for the year it was flat 96% versus 96%, which is basically you are full at 96. LA was 95.7% versus 96% and for the year LA went up 96% versus 95.6%.

Our revenue growth both in Q4 LA was 5.9%, San Francisco 4.7% and for the year LA was 7.2%, San Francisco 6.9%. So they are somewhat neck and neck..

And do you expect to see sort of acceleration into 2018?.

Well when your 96% occupied is not much to accelerate we may be a little more aggressive in the bay area depending on how we see demand flow with possibly rental rate increases and street pricing and reduced promotional discounts. But San Francisco and LA both been robust markets for last couple of years.

John do you have anything to add on that?.

No, they are great markets; both markets are great for us. The whole lot cost it's been very good for us..

Okay and then just one more if I may, your CapEx spend seem to pickup this year relative to the last two or three years.

Just wondering if, this is sort of a good run rate to you, are there any specific redevelopment projects that you are envisioning in any specific market?.

Well redevelopment that adds square footage does not go into maintenance CapEx it goes into the development numbers and redevelopment properties. Yes, well we've chased a couple of things in the CapEx arena; one, we're on a, we've moved to a quarterly process and budget versus an annual.

So that's accelerated spend meaning, we're getting more of our CapEx done faster. Two, we had the hurricanes last year which, caused a few million bucks.

Three, we've had some big projects in terms of LED lighting going on, some age back upgrades, you may cost written that not as a maintenance, because they are upgrades the lighting works, we just changed it out, but so we've got some upgrading in terms of equipment and features of the properties that we haven't had in prior years.

What the run rate is this year, I'm sure will be somewhere $90 million to $100 million would be my guess at this time. But, it's going to change..

Okay, thank you..

Your next question comes from the line of David Corak of B. Riley FBR..

Good morning out there, John just on the quarter ending occupancy commentary, why do you think more customers are vacating at quarter end than kind of you are seeing historically?.

I think one of the things that we've done internally is, we've somewhat encouraged them to, if they are going to vacate at the beginning of the month at the end of previous month, which helps us kind of factor the space quicker and so we've done some things internally to encourage that and so that's what accelerated, I think some of the vacate activity at the end of the month.

And we started that pipe mid-summer timeframe..

Okay and I apologize if I missed it, but what are your take rates year-to-date?.

Year-to-date 2018 or the fourth quarter?.

Both together..

Okay, I'll give it to you on a monthly basis, so let's start with the fourth quarter. The fourth quarter the average take rate monthly take rate was a $121.85 versus the same quarter last year at a $122.64. So it's down about 60 basis points.

Year-to-date 2018, the average take rates are $121.52 versus the $122.31 sort of down again about 60 basis points..

All right. Thanks guys..

[Operator Instructions] Your next question comes from the line of Jeremy Metz of BMO Capital Markets..

Hey John, just sticking with that, can you talk about how discounts trend in the quarter relative to last year and similarly so far this year?.

Yes I can, so discounting was last this year. So, we gave away close to $19 million this year the fourth quarter of 2017 versus about $20.8 million the same quarter last year. They are down a roughly about 8% on discounting..

And then on an effective discount to new customers is it down as well?.

Well the number of tenants, the percentage of tenants are getting discounts was actually, was up about 1.4%, so about 78% of our tenants were getting a discount versus last year at about 76%, 77%..

Okay, I appreciate that. And in terms of your advertising cost, you guys you were testing on TV earlier this year, John you had mentioned increasing paid search, but overall the spend was down again in the fourth quarter.

So, you're finding that these leverage just starting to make as much of a difference in when you ramp them up or down and is it really just coming down the cutting rates that driving the most traffic?.

No we didn't spend any money on television this year, last year for the fourth quarter we spent plenty in television, we talked about that in the last quarter that, the television is still effective it's not as effective as it once was.

So, we were going to spend more of our dollars or advertising dollars on paid search which we did during the fourth quarter.

And we, and I expect that we will continue to do that and probably not due to little to no TV as we move into 2018 and just spend our dollars on the internet on paid search, which we find more effective in paid search not only on, folks using their desktop, the mobile devices as you know as everyone has become much more important for our consumer and by most consumers device of preference that they are using.

So, we're definitely focused on lot more time, energy and money in those venues..

Jeremy to put some numbers on that, so Q1 2017 was been about $3.5 million on the internet and nearly $2 million on television in the first quarter of last year. This year we're not going to spend any million on television, but our internet spend is going to go up to around $5 million.

Now on internet spending that depends on, whole bunch of bidding on keywords, markets a whole variety of things, but that's kind of our current estimate. So, we're swapping as John just swapping the television for the internet, absolute level in 2018, my guess this will be comparable to what we spent in 2017..

I appreciate the time..

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

Thanks and good morning. So, few things seemed different than what we've been used to from PSA. One, you guys already talked about, little bit about the third-party management initiatives, your payroll; your property level increased which is unusual for you guys and then your CapEx increase.

So, just curious if you can add more color behind those things and then of course the management changes and congrats on that.

So, any more reasons behind all these changes and is there at all maybe some acknowledgment that you have to invest more in your properties or people to achieve better results?.

Well Ki, no there is, we don't have to invest more in our properties to achieve better results, I think our results are quite good. I mean I just went through San Francisco and LA occupancies for the year 96% and those are some of our older more mature, very mature properties. But they are in phenomenal locations and of course they have the brand.

With respect to property payroll, if you haven't seen there is a number of markets where we operate where there has been significant increases in the minimum wages due to statutory changes. And so that's made, we've been mandated to increase the wages in those markets.

And as you can imagine there is some spill on effect, so if you are, if you have properties in an adjacent market, even though that market may not, that city may not have mandated an increase, you're going to have spillover effects in terms of retaining employees in that that adjacent market, because of the increases in wages.

So it's just not the markets explicitly, where there is a minimum wage increase. And then third, in that line is medical insurance and that's also increased..

And maybe can you talk about the timing of the, your retirement and John's and, you know the timing of making a change and succession plans?.

Timing in terms of what?.

Timing, not the timing on the exact date, but, why is it, why is this the time to announce those things?.

Well Ki, we've actually been working on this since 2014. We identified Joe and Joe raised his hand some time in 2015. So, we had to affect our succession plan and pierce business parts first to free up Joe and that resulted in the promotion of Maria Hawthorne to be the CEO of PS Business Parks and she is a great CEO and she is doing a great job there.

She has been with us for 30 plus years. So, she knows the business. But, once we got Maria in place and then Joe was freed up to come here and start learning the self-storage business. And keep in mind, I've worked with Joe for 16 years, he knows the culture here, he is a great leader.

So, really we've been just giving him time to get up to speed on the business and he and Tom are doing that and we think by the end of the year they will be ready or more than ready..

Okay. Thank you and best wishes..

Thank you..

Your next question comes from the line of Smedes Rose of Citi..

Hello, thank you.

I wanted to circle back on your getting more active in the third-party management business, that's it's a pretty profitable business and as you've indicated its certainly there is a fair amount of demand for given that, PSA as such a brand premium and the space, I'm just wondering why is it the right decision to go into this, it sounds like sort of from a neutral basis to earnings versus the things like could even charge more relative to peers given what a dominant position you have in the industry?.

Well Smedes maybe once when we dominated then we'll change our pricing. But, we're getting started and we want to be very, very competitive and like I said, I liking it to the Amazon strategy, we want to take share we want to be very competitive and if we make modest profit for the first couple of years that's fine..

Okay, thank you..

Yet, but I do appreciate your comment that we do have a dominant brand, because yes we do have the dominant brand. We have the only brand by the way..

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

Hi. Thanks. And just going back the move you guys are making at the management level. It is a cleaner for both of you to leave at the same time. We just wanted to hear a little more color maybe even from John..

Is it cleaner for us? You know Ron and I talked about that a lot. And I guess the way I look at it is, is that I believe that we still both be active trustees in Public Storage. Ron and I invested most of our lives here. And we are basically wedded to this company.

So although we're retiring and I still view as this still being somewhat actively involved consulting with Joe and Tom and the rest of the team here. And even though we are retiring, we're not really going anywhere per se just not coming into the office every day. So I don't see a whole lot changing.

In fact, it's actually an upgrade Joe and Tom will be an upgrade from John and Ron but it's a good thing..

I will just add Todd. John's been the CFO here 22 years; I've been the CEO going on 16.

And we're both nearly, well, I'm 32 and John's 28 year company veterans as John said we've been here most of our working lives and we're still committed and we're going to be -- John said active trustees we both own a lot of stock -- our big chunk of our net worth tied up in the company so we have a very strong vested interest in Joe and Tom's success..

Great. Thanks for the color fellows. And just lastly maybe sticking back to you John. Did you do a line of credit balance at the end of Q4 and maybe what's your capital sourcing thoughts are over the near term. It's always preferred but now you guys also have an appetite for the unsecured debt market..

Well, we certainly can tap into the unsecured market. We've already done that and we've demonstrated Public Storage's ability to raise capital in that manner. We still like the preferred market although we may not like the current coupons are not as nice as they were a couple of months, years ago.

But nonetheless, they -- we're still interested in the preferred market. We'll retain -- we'll continue to retain cash within the company, we'll probably retain $200 million to $250 million a year. We're sitting at the end of the year; we were sitting on about $433 million of cash. So we have plenty of liquidity.

And so I'm not -- we're not too worried about our liquidity position. We have strong coverage ratios so we have the ability to continue to raise capital if need be.

Our needs right now are really funding our development pipeline, our redevelopment pipeline which for the most part are retained cash flow and the existing cash that we have on hand can do that. So we have no real stress on the company to have to raise capital at least within the next six to nine months..

Thank you..

You're welcome..

Your next question is a follow-up from the line of Smedes Rose of Citi..

Good morning out there. Ron I was wondering if you can comment a little bit on the Board -- the anticipated Board changes. So I think right now your Board is 9. Sounds like John and Joe are going to come onto the Board. So that would be 11.

Of those 11 between the three of you and then Wayne and Tamera that's 5 insiders and there was some comments in the release that you would look to add more independents but can you sort of go through the timing of that the anticipated size of the Board.

I know for the size of your company keeping a Board at nine members has been relatively small, so I don't know if that's going to change. Just give a little bit of color on that..

Is this Smedes or Michael?.

It's Michael..

Yes. Okay, Michael. Yes. It is noted by our lead director in the press release, we'll be adding some independent directors during the course of this year. John and Joe are not going to join the Board until January 1 of next year.

So the board's got 10 months to go find a couple of more directors and which we expect to have in place obviously by the fourth quarter. In terms of Board size, yes, with John and Joe coming on and myself being an insider and Hughes, we will have to enlarge the size of the Board to balance out independent versus insider directors..

And so you anticipate that you're going to be going up to like a 13 type member Board?.

Yes. Somewhere along that line and it may even get a little bigger because a couple of years down the road here we're going to have some director retirements though..

Right. I don't know maybe I can have a question -- couple of guys on from the mid to late 90s still on the board..

Yes. So that would be moving million on in the next couple of years..

How do you -- one of the things about the third party business that I think you've been critical of is that you have felt that it has stimulated a lot of development because a lot of mom and pops that haven't been able or developers that just can't get access to something all of a sudden can walk into a bank and say hey look I got an extra space managing my facility.

Hey look I got cube managing my facility and all of a sudden they're able to get their loan and go build. And we thought it's been a big detractor and one of the reasons potentially for increased supply during this most recent wave.

How do you sort of foresee yourselves playing in that? I mean do you -- will you do development sort of third party deals and that will contribute to this overall supply or do you view this business really as trying to take away managed assets from your peers or just growing it just by taking existing mom and pops?.

Well, I think you answered your own question. It's all three. We're going to hopefully take share away from our competitors. Yes. We will do some developments. Yes, we'll do some established facilities. We want to grow the business.

I think I have commented as you noted that I think has contributed to development because to a certain extent it takes away the operational risk but I also think the economics of the development which I went through earlier you build for a dollar and you can monetize it for a $1.50 or $1.60 or more determinative of whether someone is going to build rather than whether Public Storage or Extra Space or Cube are going to operate the property.

At the end of the day it's about the economics of building and selling versus just getting someone to operate it..

And then as you think maybe a couple of years down the road would you envision the potential for two companies Public Storage, the manager, the brand and a storage retailer that just owns the asset especially in light of tax reform that makes [Sea Corp] [ph] that much more profitable.

Is that part of this thinking of going down the road that there's something bigger at play here?.

No, not at this time..

Not at this time….

You had [indiscernible] with Michael. I mean today we're managing 30 properties. You're getting way ahead of -- we're not that smart. Okay. So you're way ahead down the road in terms of saying, okay, this is part of a eight year plan and we're going to have 3000 properties under management. No.

We've got to get going, we've got to get out of the blocks here and get some business..

Yes. I just started about taking your existing properties and rolling that into a management platform and leaving the REIT that owns the real estate aside..

What we call, we had that structure up until 1995. And yes, tax reform is made Sea Corp better in terms of tax rates 20% or 21% than 35%. But 20% leakage is a lot more than 0% leakage and we can put a third party business into a TRS it fits at today's size level and our business volume level. And so we prefer to have no leakage versus a 20% leakage..

Great. I appreciate the time..

Thanks Michael..

Congratulations..

Thank you..

Thank you. I will now turn the call to Clem Teng for additional or closing remarks..

Thank you for attending our conference today and we'll talk to you next quarter. Bye now..

Thank you. That does conclude the Public Storage Q4 2017 Earnings Conference Call. You may now disconnect..