Ryan Burke - IR, Green Street Advisor Joe Russell - President & CEO Tom Boyle - CFO.

Juan Sanabria - Bank of America Merrill Lynch Todd Thomas - KeyBanc Capital Markets Smedes Rose - Citi Ki Bin Kim - SunTrust Vikram Malhotra - Morgan Stanley Jeremy Metz - BMO Capital Markets George Hoglund - Jefferies Steve Sakwa - Evercore ISI Trent Trujillo - UBS Jason Belcher - Wells Fargo Eric Frankel - Green Street Advisor Mike Mueller - JPMorgan Michael Bilerman - Citi.

Ladies and gentlemen, thank you for standing by. And welcome to the Public Storage First Quarter 2018 Earnings Call. At this time, all participants have been placed in a listen-only mode and the floor will be opened for your questions following the speaker's remarks.

[Operator Instructions] It is now my pleasure to turn the floor over to Ryan Burke, the Vice President of Investor Relations. Please go ahead Sir..

Thank you, Laurie. Good morning, good afternoon, everyone. Thank you for joining us for the first quarter 2018 earnings call. I am here with Joe Russell and Tom Boyle.

Before we begin, we want to remind you that all statements other than statements of historical facts included on this call are forward-looking statements that are subject to a number of risks and uncertainties that could cause actual results to differ materially from those projected by the statements.

These risks and other factors that could adversely affect our business and future results that are described in yesterday's earnings release and in our reports filed with the SEC.

All forward-looking statements speak only as of today, April 26, 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 provide in this call is included in our earnings release.

You can find our press release, SEC reports and an audio webcast replay of this conference call on our website at www.publicstorage.com. With that, I'll turn the call over to Joe..

Great. Thank you, Ryan and good morning, everybody and thank you for joining us. We had a good quarter and I'd like to open the call for questions..

[Operator Instructions] Your first question comes from the line of Juan Sanabria of Bank of America Merrill Lynch..

Hi. Thanks for the time.

Just curious on how you see the forward trajectory of same-store revenue growth? What the kind of latest speed is on the spring leasing season? I know it's still early, but are you seeing any changes in your ability to price new tenants or is it still a heavy concessionary environment?.

Thanks Juan. This is Tom Boyle. In looking at performance on move-ins in the first quarter, what we saw I'm sure we'll get the question on street rates, street rates were down in the quarter.

Take rates, which we view as more meaningful of those that actually ramp with us were also down for the quarter and move in, that move in environment remains challenging. So while revenue deceleration has slowed as you can see in the report, we continue to have a tougher time on move ins.

The flipside is our existing tenant base remained stable and we're entering a period now where we're going to send out more existing tenant rate increases and that will be a nice component of revenue growth for the year. So we continue to see move-in challenges, but a stable existing tenant base..

And on top of that a reduction in move-outs as well that came through in the first quarter..

That's right..

Could you just put some numbers around the take rates and effective pay rates and any incremental details you can provide on rent bumps to existing kind of what you're going from into and-or if it's more often or quicker in sort of the length of lease up or that you’ve previously done..

Sure. The take rates were down about 4% in the quarter. As Joe mentioned, move-outs were down about 3%. Move-ins were down about 2%. So there is the net gain in occupancy differential that we saw in the quarter. In terms of promotions, a pretty consistent promotion strategy through the quarter.

In terms of our existing tenant rate plan, nothing changed there from prior years. So we'll plan to continue to send those out. As I mentioned the months of May, June and July that we're entering into are some of our larger months for existing tenant rate increases and our tenant base has been stable. So all systems are go from that standpoint..

Yeah and again on that note Juan, as Tom mentioned we're really seeing little change in tenant behavior, which is very encouraging to us. So that's been consistent now for the last several quarters and it continues to be a vibrant part of the way that we're able to manage revenue..

And then I was hoping, this is my last question if you can give us any sense of spot trends, you can of apply to last quarter that the period end numbers weren’t necessarily indicative of what you expected the fourth quarter to do.

Any color you can provide on the period end trends and if those are good read through the expectations for the second quarter or the spot numbers will give you a different viewpoint?.

Yeah I guess what I would say is that the period end numbers are one indicator and they're certainly a spot indicator and what you've seen over prior quarters is that some of the maybe historical relationship there has not held closely.

I am not sure that it ever was really close in the past either, but indicators there if you look at period end occupancy and contract rent, contract rent up 2.7% in the quarter, period end occupancy down 1.2%, would obviously point to 1.5% if you want to do that math. Using period average occupancy of negative 0.9%, that gets you to 1.8%.

So there is obviously a range there and we'll see what plays out. The spring quarter is obviously a meaningful quarter for move-in and move-in trends. So we'll need to monitor that as we go through the quarter..

Okay. So we shouldn’t read into period end being lower than the average versus kind of the historical first quarter numbers as down as a negative data point or….

Those indicators I clearly walked through..

Okay. Thank you..

Thank you..

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

Hi. Good morning. Just first question looking at the occupancy at the end of the quarter versus the occupancy during the quarter's average, historically since 2005 when the company first began publishing same-store data, the ending occupancy in the first quarter has always been higher than the average occupancy in the quarter.

Just from a seasonal standpoint, this was the first time I think it ever was lower on an absolute basis I'm just curious if you can comment on that and maybe you can share where occupancy is through this point in April?.

Sure. So I think John described a little bit of what we're seeing in move-out trends that are impacting occupancy on the last call.

We are seeing modestly more move-outs at the end of every month than what we've seen in prior years and so what that's doing is period end occupancy numbers are lower than what they are through the rest of the month, that's what driving the differential between weighted average and period end..

Okay.

So yes in terms of those comments, I guess about that month end decrease that you've been experiencing, can you just comment on that and maybe describe a little bit about what's happening there and what you're doing to sort of encourage that type of month end move out activity?.

Yeah, well I guess I would just say we're seeing customer trends move out more at the end of the month. We view that actually as a positive as we look at when we get our inventory back to release getting our inventory back at the end of the month before you see month end and then beginning of month move-in activity is a positive..

Okay.

Are you able to share where occupancy is today for the same store and what that is on a year-over-year basis?.

No..

Okay. And then just lastly I just had a question on construction cost, you guys are obviously in the market with -- you have a fairly sizable pipeline and processing, you’ve committed to maintaining few $100 million per year or so for the next years.

Can you just talk about what you're seeing in construction cost increases for materials and labor and is that having an impact on you know you're expected returns and if so, how are you mitigating those rising costs??.

Yeah Todd, not anything I can point to specifically relative to any meaningful inflation. We talked about it from quarter-to-quarter where in certain markets from time to time, you might have acceleration whether it's tied to labor or certain material costs like steel etcetera.

but at the moment we're not seeing any meaningful change in construction cost. So again we've got an active development pipeline. As you mentioned we're developing product in multiple markets and we're really not seeing any meaningful inflation at the moment..

Okay. Thank you..

Your next question comes from Smedes Rose of Citi..

Hi thanks. I wanted to ask on the cost side as well, the on-site property manager versus a supervisory payroll costs were going in different directions.

Is there anything specifically between the quarter or could you maybe just talk about those trends over the course of the year and why they were kind of in opposite directions?.

Yes Smedes, we've had the opportunity to continue to optimize our field leadership across the system. So with that, we've had the opportunity to again look for economies of scale and optimizing cost structure on that front.

At the property level we continue to see multitude of pressure that's tied not only to basically the impact from minimum wage increases market to market in some cases even city to city within markets, but there's growing pressure there that we continue to react to and does create headwinds relative to overall pay levels at the property level.

But we've got a strong D team out in our leadership ranks that again we're pleased by their ability to run properties efficiency.

We're continuing to look at any and all ways to magnify their own oversight, as we continue to actually even put additional properties in certain districts, whether it's through development or acquisitions, we continue find again good opportunities for economies of scale.

So we're going to use out as frequently as we can, but overall it's a tough job environment. Unemployment as a whole is very low and we're out there competing for talent.

So pleased again now by the level of commitment and lower turnover levels particularly in our management ranks and then again we're definitely seeing more pressure on property level employee wage and then to some degree turnover..

Okay. And then I know it's only been a couple of months since you at publicly announced your entrance into the third-party management platform, but maybe you could just talk about some of the initial reaction thus far and kind of where you are on launching that initiative..

Sure. So yeah we're obviously just no more than a couple months into our formal entrance into the business, but we've definitely been very pleased by the reaction that we've gotten.

We're in the early stages of rolling out not only our marketing plans, level contracts, materials, website etcetera, but we've been seeing a higher than we initially expected level of reverse inquiries.

Lots of discussions from a variety of different type of operators whether those that are actually delivering new product to market and/or those that have existing properties that are looking for a different type of third-party management.

So overall I'd tell you that we've been pleased by the fact that there's no question we have a commanding brand if you could even take that to another level, the only brand in the industry. So it's a strong draw. We've got good market knowledge, history and operating scale market to market. So the offering as a whole is getting very good reception.

Now again were early into it and it's likely to take some amount of time to see the actual transition to owners that are going to come into our third-party management program, but again early indications are rough to very good start..

All right. Thank you..

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

Thanks.

Is there any kind of visible relationships where properties have seen decreases in take rates? Is it just simple as more supply or are there other dynamics at play?.

They're certainly driven by the market environment around the individual properties. We operate a very local business where the customers of each individual property are around the three and five mile radius of that property. So it is pretty distinct.

In terms of market trends, there is no question that some of our market are performing better than others and one of the drivers of the market that are performing less well is certainly new supply as we're competing for move-ins with new product that's opening and those new properties take their three years or so of lease up before they're stabilized..

Okay.

And just quickly, did you mentioned the take rate for month of April?.

I did not..

All right.

Do you mind providing that?.

No..

Okay. So I guess my second question is really, your same-store revenue seems to have bottomed out. I know it's only one quarter and it can move around and you said a couple of interesting things. The take rate is about 4.5%. It sounds like you're still sticking with the same program in terms of existing customer rate increases.

Your same store revenues looks like it's bottomed.

So if I try to put everything together, does this mean even though take are down a little bit, but does this still mean that same store revenue shouldn’t be much lower than this kind of 1% to 2% range?.

Obviously as we look forward, lots of things will impact same-store revenue growth as we go through the year. As we look at rent roll down, I'll give you a little bit more information around what rent roll down in the quarter was versus prior quarters. So take rates for the quarter were $119 per unit.

That compared to $124 per unit in the first quarter of 2017. Move out rate in the first quarter of 2018 was a little over $137 and the move out rate in 2017 in the first quarter was $136.

So we've seen a gap between move-in rate and move out rate in the first quarter of around $18 that has deteriorated from last year's first quarter, but if you compare that to the fourth quarter of 2017, it's actually a modest sequential improvement, the fourth quarter of 2017 for context was around $19..

Okay. Thank you..

Tom Boyle:.

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

Thanks for taking the questions.

Could you maybe give us the same-store revenue growth across maybe your top five markets for the quarter?.

Sure. So looking at our top five markets, Los Angeles had same-store revenue growth of 4.5%, San Francisco had 3.4% revenue growth, New York 2.9%, Chicago negative 2.3% and Washington DC negative 0.1%..

Okay Thanks and just sort of maybe stepping back obviously supply has continued to be a big topic, was last year as well.

What sort of visibility do you have today into 2019 in terms of deliveries and potentially starts?.

Yeah Vikram. 2019 I would say still a bit cloudy. We've talked about the level of deliveries that we anticipated through this year, which is likely to hover somewhere around $4 billion. Now that's compared to the $3.5 billion or so that was delivered in 2017.

What's not unusual in our business and we're actually seeing this from time to time with some reverse inquiries that we're getting is sites might get entitled, a developer might have own a piece of property for a period of time and then has basically changed direction relative to their own development and intent to actually build a property.

So we are seeing a little bit of that coming to us and again I think there's an unknown impact relative to the amount of volume that we're likely to see you come into 2019.

The one thing that you would step back and you take a look at our business and there's no question that we've been pleasantly surprised with the amount of resiliency that we've see with the deliveries that have continued to take place not only in our own portfolio, but what we're seeing in a number of markets.

So in our case take your Jersey City, we talked about that development a number of times, but that's our largest property. We opened it just a little over a year ago, little over 4,000 units and we just hit another milestone where we've now got 2,000 units leased.

Now that's the equivalent of four properties where when we built the property we thought it was going to take us up to four years to stabilize it. We're only a year into it. We're beyond 50% and we've got very good traction and vibrancy. So we've also see again good absorption in a number of our other development.

We started our development program in 2013 and with that, we've delivered about 6.5 million square feet three quarter of million dollars of investment. We've seen very good traction and absorption.

So the development cycles here, it makes sense for us in many of our market to continue to source and look for development opportunities and our developers out there too that are going to continue to monetize opportunities.

Ron talked about it I think on the last call where again when you're able to build to an eight or nine return and monetize it for something like a five, that's 180% margin. So that's something that's going to continue to fuel the development business.

I wouldn't say we've seen anything that necessarily is going to change that, but this time back to the resiliency and the things that our business and our product type can create, it's an amazing opportunity for us to continue to see the benefits of doing development where we see it well-placed..

Great. Thank you very much..

You bet..

Your next question comes from the line of Jeremy Metz of BMO Capital Markets..

Hey guys. So Joe just to kind of stick with supply, just given the fundamentals you're saying revenue has grow high occupancy, the margins are still good, financing still available. There's really no reason that you could see right now out there that it would slow down from these levels.

Is that fair?.

Well again Jeremy as you know it's a market by market dynamic. On the West Coast for the most part outside of Portland, we're seeing very little dynamic or very little development and frankly we don't anticipate any. It's very tough to find land sites.

It's tough to get entitlements and again, we don't see that level of new product coming to our West Coast markets. It's going to be more prone to certain markets that we talk to over the last several quarters like Miami or Raleigh, Charlotte and Atlanta, New York's got its fair share.

So and then obviously Dallas and Houston, but again it's tough to peg and see what kind of discipline continues to play through relative to the amount of funding that comes from banks and other source of capital.

But again it goes right back to I think the barometer and the governor here is going to be the amount of development return that these developers are going to see with their own development. So we got to see how it plays out, but again to counterbalance all that particular our own portfolio we're seeing actually good traction.

So good traction relative to meeting or exceeding our lease up and rental assumptions and we continue to see good reasons to continue developing when we're finding the right land sites and we're finding the right economic returns..

Appreciate that and have you seen the supply though spread out into smaller markets at this point? I know you tend to focus on a lot of the bigger ones, but as I push on any of those smaller markets or even have you seen any pullback in the Certificate of Occupancy activity that's been out there?.

You know Jeremy at this point I really can't say there's been a shift there yet. So we'll continue to track it, but no I couldn’t tell you right now there's been any material shift yet..

Okay.

And then last one for me just in terms of transactions, are you seeing cap rates move it on the market whether due to higher capital cost or even just revised revenue expectations at this point?.

Well unfortunately not.

At some point you would think it would have that kind of an impact but again in the private markets, we're seeing a fair amount of again activity where again there is trading activity of cap rates that we in many cases can't make sense of and in the tertiary markets in particular right now we're seeing some valuations the again in our view make no sense.

So we're again not seeing any shift there at the moment..

Okay. Thanks for the time..

You bet..

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

Hi, just continuing along those lines of acquisition market what are you seeing in terms of the deal flow stuff out there like product is actually coming to market and are you seeing portfolios out there for sale and then also it's how much of stuff you are seeing is kind of recently developed product or stuff that's still in lease up..

Yeah George first quarter is typically not a busy quarter. So we bought three or two assets and then going this quarter we got our eyes on another three, but there is very little portfolio product out there. We've been focused more on one and two type opportunities and we're really not seeing anything pending coming into the market at the moment.

Now again it's not unusual that the first quarter in particular is slow. We'll see what play through relative to additional product coming into the market over the next quarter or two.

The theme over the last few quarters however has been that level of quality has been lower than we typically like to see and then coupled with the fact that Jeremy was just asking, just the valuations have been beyond ranges that we think are reasonable.

So again nothing really new to talk to relatively to the amount of product and/or volume coming in at the moment..

Okay.

Thanks and just next one for me, just could you provide an update on Shurgard's performance?.

Sure. So Shurgard overall had a good quarter. Revenue was up 3%, expenses flat; they had an NOI of 4.8% for the quarter. So overall very good quarter. Not unlike us. They’ve been continuing to put development and acquisitions in their non-same store pool.

At the moment they’ve got 50 properties again seeing good traction relative to lease up and overall activity and trend relative to again the stabilization of the 50 properties.

In the quarter they had a little bit of slippage in three other markets from an occupancy standpoint, very minor, but it was France, Sweden and the U.K., but overall they had a very good quarter..

Okay. Thanks..

You bet..

Your next question comes from the line of Steve Sakwa of Evercore ISI..

Hi. Good morning out there..

Good morning..

Just a couple quick questions, the non-same store pool I know it's not a huge component of the overall company, but it's still only about 82% leased.

Could you just maybe share some thoughts on the timing to maybe get that to a more stabilized level?.

So again Steve we've got to your point a growing and we think very opportunistic number of properties and opportunities in our non-same store pool, both through what we've developed and what we've acquired. So year-by-year on the development side, those properties that we develop back in 2013 to '15 cycle are relatively stable at this point.

We're seeing good returns in the range of say 8, 9 and 10 plus. So again those are trending well, now that they've had enough time to go through a completely lease-up cycle and then the generation of product that we delivered in '16 and '17 needs more time to mature.

All told, the pool of those assets, which again is about three quarters of a billion dollars and 6.5 million square feet is currently generating just north of a 4% return when we are relatively confident that we are going to continue to see opportunities to take it to that 8, 9 plus level.

So it's definitely something that is a vibrant part of our forward opportunity relative to revenue growth and not to state the obvious, but you we are the only company that has a development pipeline and we have a full and talented team out there looking for great properties not only on the development front, but again we've had good level of discipline in and out of cycles to go out and find good product that we can acquire as well.

So we're very confident about the forward view relative to the earnings power of this portfolio..

And not to get too specific on timeframe, but do you think that's a sort of 24 to 36 months sort of reasonable timeframe to be able to?.

Well if you kind of think about just again cyclically how it would typically work and again if you point to the 2015 and '16 pool or excuse me, the 2013 to '15 pool that I talked about, it has taken plus or minus about three years to get it up to that level. So that wouldn’t be unusual..

And this is Tim.

I would just add that we added some disclosure in the press release that we hope you find helpful in breaking out the development vintages into groups and you can see the performance of the 2013 to '15 vintage there certainly getting to stabilized occupancies as Joe highlighted but seeing strong rental rate growth in that group as well..

Yes I did. Thank you.

I guess just quickly switching back to the third-party business, I am just curious what you guys have done in terms of staffing, either internally or externally to either bring new people or transition people into that business and just kind could you give us a little more flavor for how that's unfolding?.

So Steve, yeah again I'd just point to, we're in the early stages, Pete Panos who has been with us for 20 plus years knows the operational side of the business cold. So he is leading the team. He is outsourcing a number of individuals who are enjoying his group relative to their focus on third-party management.

So he is actively working through that process to get the right sized team built. The great news as we speak as well is that he's got a lot of resources here in the company that he can key off as well.

So we've got a great operational team out there that can in the interim answer specific questions any particular owner might have about market rents or other things that they're going to want to have more clarity on coming into our system versus another.

So we're confident that the team will get well-rounded as we build that business, it's going to take as a bit of time just to get it completely staffed, but he has got good activity on that front as well..

Okay.

And I guess last question just any comments on Europe and just kind of the performance there and your expectations for deploying capital there?.

Well yeah I just went through how Shurgard did for the first quarter. So I don't know if you were able to hear that or not..

Okay. I'll circle back..

Okay. Perfect..

[Operator Instructions] Your next question comes from the line of Nick Yulico of UBS..

Hi this is Trent Trujillo on with Nick. Thanks for taking the time.

I appreciate the commentary that you had earlier on the call about move-in in that environment, but I'm curious if you could classify how you perceive the ability to attract new customers and which markets are seeing the most difficult time with absorption since it doesn't always just simply correlate to new supply..

Sure to just to give you a little bit of snapshot there is clearly market differential and move in, move-in rate and were dynamically adjusting both rental rates, promotions and advertising by market, by property, by unit size type etcetera. So certainly have tools in the toolkit for that.

To give you a sense of properties or rather markets that are seeing better trends versus weaker trends, Houston is a market where we've seen continued benefits from the hurricanes last fall where move-in trends there have been good. As an example, there are other markets as well even some smaller markets thinking of market like Boston.

The bottom performers on move-in tend to be the bottom performers on revenue growth. So some of the weaker markets there, Chicago, Denver, Dallas and some of the market that's highlighted..

Okay. Thank you. And I guess as a quick follow-up your advertising and selling expense was down year-over-year. So do you at any point anticipate spending more to attract customers and how effective has your marketing been in terms of customer acquisition cost, thank you..

Sure. So the marketing spend in aggregate was down for the quarter.

As we talked about in prior quarters, we did not advertise on television this quarter and we did last quarter, last in the prior comparable quarter such that television advertising expense was down, counterbalancing that was we did spend more on the Internet and so that was a meaningful increase in Internet spending.

To give you a sense our Internet spending was up about 40% in the quarter. So we are using that channel and that is a channel that we have advantages on given our brand name. So we get a lot of traction on that channel and it's working well for us in the first quarter into the second quarter..

Great. Thank you very much for the time..

Your next question comes from the line of Jason Belcher of Wells Fargo..

Yeah hi. Just a question on your customer mix. I know the business mix, business customer mix has been growing with some of your competitors over the past couple years.

Can you share with us where that business customer mix is for you all and how that's trending?.

Yeah Jason, we really don't track that specifically nor define it.

There is no question we have a sizable number of customers that are businesses of a whole variety that can property to property be different types of businesses whether it's somebody who might have a pharmaceutical rep business or construction firm that needs extra support storage or again there is a whole range of different types of businesses.

But frankly we just don't have data that we could share with you that would track and purport, put any kind of proportion. So there's really nothing I can guide you to there..

Sure.

No problem, Then one of the question back on marketing and sorry if I missed this, but can you just remind us what you're doing on TV ad spending?.

We did not advertise on television in the quarter and we haven't in the past several quarters either..

Yeah, I think this is the third quarter in a row we've had zero TV spend..

There is obviously transition going on in television in the way people watch TV so that's something that we're monitoring closely but we did not advertise on television in the quarter..

All right. Thanks a lot..

Thank you..

Your next question comes from the line of Eric Frankel of Green Street Advisor..

Thank you. I understand the sector, the definition of full occupancy is ahead of all the last few years with fairly strong fundamentals and I think quarter's occupancy is now down to a five-year low.

Can you comment on what you think stabilize occupancies for the portfolio and whether you would be more willing to take a lower moving rate to get a little more fuller occupancy..

Yeah so occupancy is clearly a component of revenue growth and we're constantly seeking to maximize revenue growth. So occupancy as well as rental rate. Different markets have different dynamics both from a demand nature of customer and nature of used case etcetera that drive different behaviors.

We generally think about stabilized occupancies as north of 90%. There are some same-store markets that are below 90% today, but generally think about circa 90% as a stabilized occupancy and we're looking at ways constantly of optimizing both occupancy and rental rate to maximize revenue. So I'm not focused purely on occupancy clearly at this point..

And Eric just to add to that, again if you look at our history over the last say four or five years, again the sector and ourselves we were able to generate occupancy levels that we have never seen before, meeting you could take certain markets and/or property specifically for 95, 96 or even higher seasonally that again prior to this cycle we hadn't seen before and as we speak we have both markets and properties to continue to operate in those occupancy ranges.

So again it goes back to part of the attraction into this business in general, because on a month to month lease basis I mean we're still able to capture and drive occupancies to level that until recently weren’t thought were possible.

So talks to again not only the benefits or the vibrancy of the vibrancy of the business but you some of our own capabilities role relative to the way work on attracting customers duration of customers stay and you know in many markets where we frankly don't have additional competition and we've got great opportunities keep our properties very full..

Okay. Appreciate the context, just one last question.

Joe obviously you have a fairly long career in the commercial real industry especially with PS business parks and more general in the office industrial sectors, obviously Public Storage is one of the founders in the self storage industry and is obviously probably has pretty good operating chops, but have you found from your past experience anyway that you think you could enhance value to the platform?.

Well again Eric I've been in the family Europe Public Storage we're not 16 years and you and I got to know each other in my prior role in PS Business Parks.

A lot of similarities culturally and then even the way we approach the business relative to the level of focus intensity and drive is necessary to run a business that does have a commanding level of day-to-day customer involvement in our case here Public Storage we got 1.5 million customers.

But we got a great strong team and there is a lot of our rigor that goes into keeping the portfolios optimize each and every day and you John and Ron have you crafted in put a lot of great metrics and techniques and processes in the business that frankly is led the industry to levels as I was just talking about that many thought weren’t possible.

So with Tom and I coming in now again it's not to come in and re-craft or reset that at all. It's really defined to continue to enhance all ways to continue to optimize the business. So lot of things that frankly we don't want to change. We have the best balance sheet in the industry.

We've got the only brand in the industry, Great scale out in our markets. We're the only public entity that's got a development program and its thriving. We're now entering third-party management. So we're going to continue to be creative and focused and Tom and I are excited about the future here..

Okay. Great. Thanks for the color..

Your next question comes from the line of Mike Mueller of JPMorgan..

Hi. I was wondering can you talk a little bit about some of the basics of on-boarding for the new third-party management business.

Specifically when you bring a property on board, to what extent do you reflag it, who bears those costs and basic stuff like that?.

So yeah Mike, those are good questions a little premature for us to actually talk to the specifics yet, but those are many of the elements that as we speak we are basically structuring the business around.

So not only taking a look at how the industry has done this, but what new and different elements will be part of our onboarding process you as we can look at either properties that come out into the portfolio in one offer portfolio basis. So those are all things that we're working through right now and give us a little bit more time.

We'll be able to go into those details in the future..

Great. Okay. Thank you..

You bet..

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

Hey it's Michael Bilerman with Smedes. I just had a couple of follow-up questions, Joe in terms of Ron and John's involvement through the retirement at the end of the year.

I take it public quarterly conference calls is out at this point?.

Well based on what's happening today, yes, but again the transition that has been evolving Michael over the last literally now almost a couple years, Tom and I came into Public Storage almost at the same time. So basically the midpoint of 2016. So Ron and John are here. They are highly engaged in the company.

They are great resources for both Tom and I to being and get advice and input and their retirement is that but it's also one where we clearly have no exposure relative to losing their institutional knowledge because they're going to be active trustees.

And Tom and I will be able to continue to rely on them for all kinds of things that we're excited to go and tackle..

And how are you thinking about investor communications and I don’t if Ryan has a different view on this as well and I take it there wasn't a lot of change this quarter with no opening comments, plus that I do appreciate breaking up the development and the like between the peers but really no added disclosure in your press release, the 10K includes a bunch of information, but clearly PSA is well behind its peer set from a disclosure perspectives.

Do you and/or Ryan have a different view going forward about disclosure and what you're going to give to the street?.

Yeah Michael we continue to solicit feedback and when and where we think additional disclosures are helpful and as Tom mentioned earlier, we did put additional information even into the press release. So we're going to be open and your fluid with any dialogue that we would like to hear from you and others.

So let us know but we'll see how things play for..

But I guess coming in you decided to go out and hire self side analysts that certainly has got a different viewpoint I would assume than prior leadership perhaps, do you have a desire mean you can print up everyone supplemental, there is volumes of detail that others put out that you don't..

Well I would just point to the fact that again we've -- even with disclosures over time those continue to change and we'll be receptive, but it's not and I wouldn't take Ryan to add to the team as you some new and very different strategy tied to again the way that we continue provide information we do definitely want to be as transparent as we have been historically and will continue to solicit feedback..

You mentioned on the development specifically three quarters to $1 billion of capital.

Can you break out if you are to look in your press release the NOI for the '18, '17, '16 acquisitions in then the two levels of development and then the other facilities which I think are the ones were you embarked on redevelopment, how much capital has been spent for each of those so that we can better understand in place yield and then how much NOI is on the comp, so that as we model, we can model that upturn over the next few years, you obviously don't give guidance.

So having that information would be helpful..

Again Michael we'll look to the level information that we think is appropriate and best suited to give you guys the amount of information you need. So I am not going to specifically answer those direct elements, but we'll take the feedback and see what we can do going forward..

Right, as you have the '16 and '17 details in your K, do I can pull those out, $280 million and $430 million, how much money have you spent on the 13 to 18 development that are currently producing the $3 million and $4.3 million of annualized -- of quarterly NOI should be an easy number to have..

Yeah and again I think some of that informational I'll play through in the 10Q as well. So 10Q is going to be out in the next week or so.

So I would look to that as well?.

Okay..

Your next question is a follow-up from Vikram Malhotra of Morgan Stanley..

Thanks. Just two quick questions.

One, as sort of the quarter progressed and particularly towards the end of the quarter, it seemed like sort of rate and occupancy decelerated, I'm wondering if tactically you drop created there try to get occupancy up and tied to that, you had I think it was an effort may be a couple of quarters ago to select certain markets and drop rate quite dramatically.

Anything like that on the cards for this year?.

Sure. So on your first question, we actually saw modestly better trends in March compared to February. So as I spoke about take rates being down 4%, take rates were down 5% in February down 4% in March and actually while I describe move-in being down, in aggregate for the quarter March was positive for move in.

So if anything trends, we're better in March than earlier in the quarter, which obviously is a good thing as we prep for the rental rates or the rental season here in the next several months.

Your next question was on whether we're doing anything specific market to market in terms of lowering rates dramatically and there's been no recent strategies to dramatically lower rates, although obviously we are dynamically changing rental rates as we go on a day-to-day basis..

Okay. And then just one last one, from a I think maybe a year ago, maybe a year and half ago, there was a view that stabilization would be sort of defined by in store revenue trending towards long-run average and we're certainly below that now.

I'm just wondering if you look out whether it's six months to 12 months, what is stabilization from here on and are there any -- is there a view that you could see some reacceleration towards the year-end?.

Look we have a busy season and rental season goes here and we can talk about that more as we go through 2018..

Okay. Thank you..

Your next question is a follow-up from Ki Bin Kim of SunTrust..

Thanks. Just wanted to clarify something, you guys said you're sending out more rent increase letters, did that means just seasonally that you're sending out more now, or are going to send out more or did you mean on a year-over-year basis….

I meant seasonally. So as we get into May, June and July, we send out more during that time period. Obviously rental rates are up and there is strong demand for backfilling any vacancy. So a good time to be sending out rental rate increases and those are our largest months..

Okay and just following up on that, do you expect percentage of customers that would receive one this year.

Would that look similar to what you've done historically or better or worse?.

Very consistent..

Okay. Thank you again..

Thank you..

At this time, there are no further questions. I'll now return the call to Ryan Burke for any additional or closing remarks..

Thank you, Laurie and thanks to all of you for joining us today. We'll look forward to catching up again on the next quarter call..

Thank you. That does conclude the Public Storage first quarter 2018 earnings conference call. You may now disconnect..