Ladies and gentlemen, thank you for standing by, and welcome to the Public Storage Fourth Quarter and Full Year 2020 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 Ryan Burke, Vice President of Investor Relations. Ryan, you may begin.

Thank you, Erica. Hello, everyone. Thank you for joining us for our fourth quarter 2020 earnings call. I'm here with Joe Russell and Tom Boyle. Before we begin, we want to remind you that aside from those of historical fact, all statements on this call are forward-looking in nature and are subject to risks and uncertainties that could cause actual results to differ materially from those statements. These risks and other factors could adversely affect our business and future results as described in yesterday's earnings release and our reports filed with the SEC. All forward-looking statements speak only as of today, February 25, 2021. We assume no obligation to update or revise any of these statements, whether as a result of new information, future events or otherwise. A reconciliation to GAAP of the non-GAAP financial measures we provide on this call is included in our earnings release. You can find our earnings release, SEC reports, earnings supplement and an audio replay of this conference call on our website, publicstorage.com. With that, I'll turn it over to Joe.

Thanks, Ryan. Good morning and thank you for joining us. Before we begin, and on behalf of the entire Public Storage team, I hope you and your families are well as we all navigate through this pandemic. Looking back at the full range of events in 2020, it was clearly a year of historic extremes. The year began with the predicted consequences from oversupply in several markets. In Q2, full focus shifted to managing a myriad of unknown issues tied to the virus. This included assessing impacts on our employees, customers, operations, development approvals, acquisition volume and full company revenue, with an overarching effort to maintain a safe environment and keep properties open. By Q3, we saw pronounced customer activity emerge as a result of both traditional and new drivers of demand. In the fourth quarter and into this year, we have seen sustained demand that has lifted the traditional seasonal slowdown in our business, resulting in historic occupancy and move-in rate growth. I commend the Public Storage team on the numerous successes we had in 2020 and their ability to be nimble and creative in an environment we have never faced before. Now I would like to highlight eight specific areas of success as I reflect on the full year and on the fourth quarter. First, the integration of technology unlocked a new contactless leasing channel, which we call e-rental, which now accounts for nearly 50% of our move-ins. Approximately 300,000 customers used this new offering in 2020. Second, move-in rates grew by 12% in Q4 compared to negative 14% in Q2. Third, we reached fourth quarter occupancy of 95.2%, a record for this time of the year. Fourth, the robust lease-up of our 32 million square foot non-same-store portfolio led to 26% NOI growth for both the quarter and the year. Fifth, after two full years, our third-party management business has expanded to 120 properties with a growing backlog as we enter 2021. Sixth, our industry-leading development platform has produced a current pipeline of $560 million as we deliver generation five assets across the United States. Seventh, the acquisition team sourced nearly $800 million of assets in 2020, with over $500 million in Q4, and we are entering 2021 with an equally vibrant pipeline of $580 million. And last, our focus on the continued optimization of our balance sheet, with record low issuances of preferred equity and debt. As we begin 2021, we are well equipped and focused on driving company performance on several fronts. Our advantages include a well-primed capital structure, broad and growing benefits of the digitization of our business, record occupancy and, of course, the most commanding platform and brand in the self-storage industry. The Public Storage leadership team and I look forward to sharing more of these strategies in our upcoming Investor Day on May 3. Now I'll turn the call over to Tom.

Thanks, Joe. Financial performance improved steadily through the second half of 2020, with a return to positive same-store revenue, NOI and full company core FFO growth in the fourth quarter. Our same-store revenue increased 0.8% compared to the fourth quarter of 2019, which represents a sequential improvement in growth of 3.5% from the third quarter. There were two primary factors contributing to that improvement. First and foremost, move-in rates, as Joe highlighted, were up double digits, while move-out rates were roughly flat year-over-year, which led to improving in-place rents. To a lesser extent, occupancy also increased with move-in volume down, move-out volume down. Now on to expenses. The team did a great job driving same-store cost of operations down in the fourth quarter. Lower expenses were driven by property payroll, taxes, utilities and marketing. The net result was a return to positive NOI growth of 1.3% in the fourth quarter. On the reporting front, we enhanced the presentation of same-store expenses this quarter. We broke expenses into two categories: first, direct cost of operations; and second, indirect cost of operations. This provides enhanced disclosure into property level profitability which once again demonstrates our industry-leading operating margins. We also posted our first earnings supplement on our website last night, which we hope you found helpful along with our 10-K. Next, our balance sheet. It's in great shape with two drivers of cash flow growth. First, as we have for the last five years, we have the capability to fund acquisitions and development activity with retained cash flow and unsecured debt at historically low financing costs. And second, we have the opportunity to redeem preferred stock as we move through the year. As we enter 2021, we've seen continued strength in customer demand, with occupancies up 250 basis points and in-place contract rent per occupied square foot turning into positive year-over-year territory in January. The outlook for revenue growth is good with support from demand and moderating supply. That said, we do see risk to both move-outs as well as lingering state of emergency pricing restrictions as we move through the year. We expect continued strong expense control in 2021. We provide line-by-line commentary on our disclosure. Property tax expense growth is expected to pick up with around a 5.5% increase for the year anticipated. But away from that, better performance by utilizing technology to change operating processes, and investing in energy efficiency, we anticipate continued savings on property, payroll and utilities and a better marketing expense environment as we're operating with lower vacancies. In sum, improving revenue outlook and strong expense control as we start 2021. With that, I'll turn it back to Ryan.

Thanks, Tom. We do ask that you initially limit yourself to two questions. Of course, feel free to jump back in queue for follow-up. With that, Erica, let's please open it up for Q&A.

[Operator Instructions] Your first question comes from Jeff Spector with Bank of America.

Great, I'm here with my colleague, and yes, thank you for the supplemental. We thought it was excellent, very helpful. Also appreciate the initial comments and the '21 outlook. And we take those comments very seriously. I guess, can we just expand on that a little bit more? I know we know there's still risks out there, but it seems very clear that you're optimistic on '21 and that demand should remain stable, strong.

Yes, Jeff, one of the things that's leading to a change in demand and consumer behavior to some degree is tied to the pandemic. We're seeing some interesting and new areas of customer behavior surfacing. You could point to the work from home environment. So that's pronounced widespread. We're seeing it across literally all markets. It's provided an additive driver to the amount of activity that we're seeing. One of the things that we do on a regular basis to survey new customers coming into properties, and in 2020, one of the areas that was more pronounced was customers needing more space at home. So clearly ties to the entire work from home environment that's new and different through 2020. Likely to stay through a good chunk of 2021 and beyond because, frankly, I think many components of work from home are here for a much longer period of time than we might have predicted. Another thing that's been additive, home sales have been quite vibrant, even from a seasonality standpoint, we're seeing much more activity this time of the year than we normally do. So that too is added to the amount of activity and the overall demand that we're seeing across many markets. There's really been no distinction from activity in suburban versus urban areas. Frankly, it's highly consistent in both regards. So we're keeping a close track on many different cross currents. But overall business, as Tom noted, is quite good.

That's very helpful. And our second question is on acquisitions and your comment on the vibrant pipeline. To ask, are you getting more aggressive? Is underwriting changed? Are you focused on new markets or moving out, like there's just more sellers? What has changed on that? We're excited? What's changed on the acquisition pipeline?

Yes, Jeff. The acquisition environment, as I know, has been quite robust. And if you step back, even going to 2019, we started to see an increase in the amount of sellers that were coming to market many of whom had come into the self-storage industry over the last, say, four or five years. There's no question there's been a much more vibrant amount of new owners coming into the sector. Some of whom weren't intending to stay in the sector for a long period of time. So you've got some churn tied to that. You've also got a number of assets that have been built at historic volume levels over the last three or four years, many of which have not hit either occupancy or revenue pro forma expectations, that too has motivated a number of sellers to bring assets to market. We've been controlling the markets as we typically do very actively. And then in 2020, we saw a sizable uptick in opportunities, many of which fitted the description I just outlined on the types of sellers that are coming to market. The other thing that we've found is an interesting opportunity to expand into buying assets that may not be highly stabilized or looking for a different level of value creation. So in 2020, the average occupancy of the assets we bought was approximately 65%. That speaks to the fact that these are newer assets. They haven't gone through a full lease-up cycle and sellers have been frustrated in many cases and not patient enough to want to take them through that full cycle. So we've been able to open up some very interesting opportunities tied to that. And the $580 million that we have either closed or are in contract for 2021 is a reflection of all those issues. The average occupancy of those assets is about the same, which is in the mid-60% range. A combination of one-off and some smaller portfolios, nothing as large as beyond portfolio that we closed in the fourth quarter, but our acquisition team continues to control markets, and they're very well known. We've got deep relationships. We're seeing a combination of both marketed and off-market opportunities. And we're looked upon as a preferred buyer. So Tom spoke to the fact that the capital structure is well primed, and we're frankly just seeing a much larger set of opportunities.

Your next question is from Juan Sanabria with BMO Capital Markets.

To echo Jeff's comments, thank you and kudos to the improved disclosure. I guess one question for me would be on the balance sheet which you just referenced, Joe. And how are you thinking about the firepower there? And are you committed to the A-rated balance sheet? Or is that not necessarily something that you're committed to at this point?

Sure. Maybe I'll start from, then Tom can give you some more color. We have a clear advantage because we do have an A credit rating. And with that, as we've been able to do in many different issuances, whether through the preferred or institutional bond market, we're able to tap into a pool of investors who love the credit rating, they're very attracted to the company as a whole. And we enjoy very strong both demand and we've been able to issue record low rates and yields on these instruments. Now the other thing is we've got a lot of capacity in our current structure. Tom can give you more color on that. So we're not concerned about tipping into something less than an A credit rating, but we'll give you a little perspective on that.

Yes, sure. Thanks, Joe. I think looking back over the last five years, you can see that we have financed our external growth, both acquisitions and developments, really with retained cash flow. We have about $200 million to $300 million a year as well as unsecured debt. And that gives us a good amount of capacity and firepower each and every year to grow the business and accretively drive external growth performance without needing to raise equity. And that's a good long-term sustainable FFO growth engine. So we think we do have a good amount of capacity there. And as Joe said, we have very good access across the capital markets, and we demonstrated that again in January with a five-year bond offering, sub-1% on the coupon. So, good access and cost, and we look forward to utilizing it to finance the external growth that Joe mentioned.

And one quick follow-up for me, in the disclosure, you talked about G&A increasing year-over-year adding some headcount. So just curious on what areas of the enterprise you're adding people to? And what's the focus of that? What are you looking to build out?

Sure. I think, in particular, I think you might be highlighting the centralized management costs and the comment that we increased headcount there. That is just deepening the bench across many of our centralized management functions, be it information technology, human resources, pricing and marketing, data analytics, really down the list. Folks really are responsible for centrally managing and supporting our field teams. So just deepening of the bench and overall those teams are really important to the success of the organization.

Your next question is from Todd Thomas with KeyBanc Capital Markets.

I also appreciate the increased disclosure this quarter. First question. Just looking at the core FFO that you reported in the quarter, 293, what headwinds should we be thinking about moving into the first quarter and throughout the year, just given the lack of seasonality experienced in the fourth quarter and so far early in '21 that you discussed that would detract from sort of core FFO going forward here in terms of the run rate. Is there anything specific that we should be thinking about?

Sure. This is Tom. Thanks, Todd. I think there's really a couple of things as we look out over the horizon into 2021 that we view as potential headwinds, I mentioned them briefly. One of them is move-outs. As we move through 2020, it was really a unique environment that we've spoken about on previous calls, where the customer behavior shifted as we moved into April and May and really persist through the year, across customer vintages, geographies, customer segments, where length of stays went longer and move-outs declined. And you can see that in our disclosures. That's one area that we do anticipate is likely to moderate as we move through 2021. Maybe it's into 2022. I mean it's uncertain as to when we do see that moderation. So far to start this year, we've continued to see very strong existing customer performance and lower move-outs. But we would anticipate that at some point, customer behavior returns to pre-pandemic levels. And we see move-outs start to accelerate. So that's number one. The second one is the lingering impact of state of emergency pricing restrictions. And those impact our ability to increase move-in rents as well as existing tenant price increases over time. And as those linger and we navigate through the dynamic healthcare environment that we have for the past year, that's a risk. We'll have to see. There's a myriad of different regulations across different states. Probably most notably here in the state of California, which is a good portion of our portfolio, and we'll -- that's an unpredictable element of rate restriction.

Okay. And then I wanted to see if you could comment on CapEx spend. It looks like it's expected to ramp up to about $250 million in '21, which is up from 2020 levels, but still well below peers as sort of a percent of NOI or a percent of EBITDA. How do you think about CapEx spend? And is there an opportunity to increase that further? And I guess sort of what's the governor on CapEx spend that -- is there anything preventing you from sort of touching more stores more quickly?

So yes, Todd, I'll speak to a component of that, and then Tom can give you more color as well. But our property of tomorrow program is part of that increased spend in 2020 for a number of reasons, particularly tied to slower permitting process, availability of officials that do the overall improvements of the types of changes that we're making through the program. We were unable to tap as much volume and to pull or cover that program as full force is into many markets as we expected at the beginning of 2020. We've regrouped, we have a much more clear runway in 2021, we're going to be touching many more assets through the year. And we may actually find ways to accelerate it as we go deeper into the year. But at the moment, that's a major component of the increase in spending.

Yes. And if you break down the $250 million that we anticipate, about $130 million of that, we anticipate to be the property of tomorrow spend that Joe highlighted, around $75 million of your regular maintenance CapEx and another $40 million to $50 million of energy efficiency driven capital expenditures. And I would highlight, we do break out the maintenance CapEx and provide some disclosure on that in the 10-K, even away from the development and acquisition CapEx on the cash flow statement.

Your next question is from Steve Sakwa with Evercore ISI.

Tom, I was wondering if you could spend a little bit more time on the balance sheet and just kind of following up on Juan's question. You have a lot of preferreds that have call dates coming up in the next, I think it's maybe 18 months. And I'm just curious your thoughts on your willingness to use more long-term unsecured debt to maybe take out some of those higher-cost preferreds?

Sure. You're right, Steve, to highlight the fact that one of the great features of preferred stock is that it's both perpetual as well as has a five-year call. And so a lot of the preferreds that were issued back in 2016 are now coming up for potential redemption. At the time they were issued, I think they were viewed as pretty darn attractive for handled preferreds, but in this environment, certainly a great opportunity to redeem that perpetual capital. And so we did a little bit of that in January, as you saw, we redeemed $300 million of a series that was at 5.4%. We did issue five-year bonds in January. As I've noted before, we'll monitor different markets and have the ability to use both a new preferred stock at lower rates as well as unsecured debt to finance the business as well as the redemption activity going forward. But clearly, the second prong of the balance sheet that I spoke about earlier, it will be a powerful one as we move through both '21 and into the beginning of '22.

And maybe just a follow-up on just kind of leverage overall. I mean you're committed clearly to the A rating, but where does that sort of leave you on a net debt to maybe net debt plus preferred to EBITDA, sort of how high can that number go? And theoretically, still maintain the A rating?

Sure. I would highlight some disclosure we put in on leverage in the supplemental on net debt plus preferred. The different rating agencies use different metrics, but I would -- just to pick one, pick S&P who looks at a net debt plus preferred of 4.5x, which is over a turn higher than where we are now as a guidepost for single A ratings.

Okay. Great. And then just maybe by market, there were some interesting trends in Q4. Some of them that have been super weak in multifamily, and we've seen some drawdowns in office. We're reasonably strong for you, San Francisco, New York, Los Angeles and some of the markets that are benefitting down in the south were a bit weaker. Maybe that's supply, maybe there's something else going on. Just any thoughts on maybe the coastal gateway markets against kind of the Sunbelt markets?

Steve, as I mentioned earlier, we're really not seeing a material change in urban versus suburban and even coastal versus Midwest markets, the markets you spoke to, specifically, we're seeing overall very good demand. Literally, every one of our markets improved in occupancy in the quarter. And we continue to see very good and sustained demand coming through not only our same-store portfolio, but the lease-up of our non-same-store is quite vibrant. The demand for self-storage has been very resilient through both the pandemic, and I think it reaffirms the attractiveness of the product itself. Supply though is still a factor in a number of markets. There's no question. And it has and will continue to be a headwind in the name markets that we've spoken to for the last two or three years as many markets have been burdened by oversupply. The Houston market, for instance, still is absorbing a lot of product, but we're seeing good traction though. And to your point on the Southeast Atlanta has got some headwinds around supply. Minneapolis, Florida, parts of New York, etc. But at the same time, demand is quite healthy. So we're very pleased with the amount of lease-up that's going on. And we're very pleased with the acceleration and stabilization of our non-same-store portfolio.

Your next question is from Smedes Rose with Citi.

I guess, I wanted to ask just a little bit more around sort of pricing strategy if patterns return to more normal -- more normal in the back half of the year. Do you think in terms of maximizing revenues long term, would you be inclined to try to keep occupancies kind of more elevated with maybe less increases to existing customers? Or is there any sort of change around how you're thinking about sort of capitalizing on these high occupancy levels that you have right now?

Sure, Smedes. I mean, I guess I wouldn't highlight a particular occupancy or rate strategy for the back half of the year, given it's way too early to understand what the nature of the dynamics will be in the local submarkets with which we operate. I would highlight, clearly through 2020, we had the opportunity to anticipate lower move-out volumes and lower inventory levels, which led to accelerating pricing, really starting in the second quarter and then accelerating through the second half of the year and now into the first quarter as well. So I think it's really been a rate-focused strategy at this point given the low inventory levels, and that's been combined with lower promotional discounts, which we disclosed as well as lower marketing expense. As we move into the back half of 2021, if the picture you're painting is one where occupancy starts to fall significantly because of increased move-out activity that will definitely change the dynamics in the local market. But I think one of the key components that we'd have to understand is whether the durability of consumer demand that we're seeing now persists because that is a really strong and powerful driver to revenue growth and overall move-in rates and accommodations to customers. So we're ultimately looking to maximize revenues, and we need to understand the nature of the move-ins and move-outs. But clearly, it's a combination of both occupancy and rent and operating trends continue to be quite good as we start 2021.

Okay. And then I guess we were just also wondering if you have any sense of if there's been any change in the customer base in terms of maybe first-time users of storage or reaching a particular demographic that hasn't maybe used storage in the past? Any sort of color there that you've seen?

There's no question, Smedes, that's happening as we speak. When you look at the sector as a whole and then more specifically, what we're seeing in our own portfolio, there's been more adoption by newer generations of users, many of whom have never used self-storage before. So it's been a great way for them to use the product for the first time. We're seeing continued repeat customers as well. But generationally, there's been growing and deep adoption of the asset, and we're very encouraged by that.

Your next question is from Ki Bin Kim with Truist.

So in regards to some of the dialogue you've had with investors, it seems like you're embracing some of those suggestions. And of course, you've made some board changes and better disclosure, better commentary on this call. And I won't rehash everything that they brought up, but the two big ones are capital deployment and balance sheet. I'm interested if there's been any type of kind of shift in mentality or business philosophy or how you see the investment universe? And what are some of the changes that we can expect to see from PSA and the magnitude because that's important.

Well, Ki Bin to speak to just interaction with all shareholders, we have and will continue to be in active dialogue with our entire shareholder base. And we are continuing to drive the business on many different fronts. As we've talked about, we've got very unique and commanding strategies and capabilities. We are clearly focused on tapping into many of those, and we'll give you even more perspective on that in our Investor Day on May 3. This is not coming from one specific event or one distinct change in strategy. It's something that we're very focused on from an evolution and opportunity standpoint. And the management team and I are very focused on delivering strong shareholder returns through a variety of very commanding strategies that we've identified, some of which we've spoken about today and more that we'll speak about in May. So we'll continue to be as transparent as we can be, and we welcome and continue to have very active dialogue with our shareholders.

Okay. And in regards to some of the Board changes, I'm just curious if there is -- or what kind of dynamic there would be between the new Board members, the Chairman and the management team and how this might compare to the past, if there is any difference?

Well, there is a difference because over the last two years, the Board has gone through a pretty strong level of refreshment. We've added seven new trustees. The Board has and will continue to be very focused on good governance. I'm very happy with the new trustees that have joined the Public Storage board, a good strong collection of different backgrounds, different business perspectives. And collectively, we're working on many things together. And we'll continue to look to and seek very strong counsel from the Board as it evolves over time. As I mentioned, we've added seven new trustees. So prior to that, the average tenure of the Board was 11 to 12 years. Now, it's about four. So with that comes new ideas, new perspectives, and I'm very pleased with the overall caliber and focus that the Board at large has on the Company's direction and all the strategic initiatives that we're focused on.

[Operator Instructions] Your next question is from Ronald Kamdem with Morgan Stanley.

Great. I echo the sentiment on the supplemental, very helpful. Just a quick one from me. Just going back to the supply question, very helpful calling out some of the markets. But maybe as asking in a different way, if we think about sort of the percentage of the portfolio dealing with competitive new supply, maybe what is that number? And if not, just how do you expect that to trend this year and sort of in the out years going forward?

Yes, sure, Ron. So obviously, we've talked about now for the last two to three years. We've been in a very strong delivery pattern of new assets. You go back to 2017, about $4 billion of new assets were added to the market nationally. It ticked up in 2018 and '19, which, at the moment, feels like a peak, that was about $5 billion of deliveries. In 2020, as expected, we saw that taper down by about 10% to 12%, where now we're at 2021, and we're thinking that there's likely another 10% to 15% reduction in deliveries. It's come to different markets. It's had, as I mentioned earlier, some pretty detrimental impacts where it hit certain submarkets with an inordinate amount of oversupply. We're encouraged, however, that it's cyclically starting to taper down, but it's still with us. And even at a level this year, that could be somewhere between $3.5 or so billion to maybe $3.75 billion of deliveries, it's -- that's still a fair amount of new assets being delivered in many markets. As I mentioned, it has provided an opportunity for us to go out and acquire assets on one front. On our development platform, it's also given us a pocket of opportunity that we haven't seen until the last year or two, where we're actually not seeing as much competitive bidding on land sites. And it's creating another different opportunity that we uniquely enjoy because we do have an industry-leading development platform and our development team is out bidding a higher level of land sites as we speak. So we're hopeful that, that continued decline of deliveries plays through to counterbalance that. The self-storage sector is doing quite well. And funding is out there, and developers are still going to be encouraged in some areas to continue to put new product into markets. So we're tracking it actively. And we'll see how it plays through in the coming quarters.

Great. Very helpful. My second question was just looking internationally, obviously with the stake in Shurgard, it could be really helpful if you could just compare and contrast sort of the experience you've seen with the storage product and COVID, maybe someone internationally in some of the markets you're familiar with versus what the U.S. went through?

Yes, I think I'd point you to, Shurgard has got vibrant disclosures, and they can give you much more color on what's going on in the European markets. But knowing and understanding what's been impacting their business, it has been similar in many ways to what we've seen here in the United States, which, again, is an elevated level of demand, new users coming into the product itself. And they, too, are seeing good business drivers, with many similarities between what we're seeing here in the United States.

Your next question is from Mike Mueller with JPMorgan.

Just wondering, have you seen any significant benefits yet of having the third-party business, even though you've been for a fairly short time at this point?

Yes, Mike. Yes, it's definitely giving us a different lens on the industry. As I mentioned, currently, we've got the program up to 120 properties, a sizable percentage of the assets that are coming into our pipeline are development assets. So it's another view of how much of that activity is on the front lines in many markets. That's helpful. We've actually bought four assets thus far from the platform itself. So it can be many times a different relationship opportunity to identify and actually acquire assets. And it's always helpful to get outside feedback on the different operational methodologies that we use, the reaction we've got from owners, the way that they're looking at the performance of assets. So holistically, it's been very additive, and it's given us yet again a different perspective on the industry in many different ways. So we're encouraged about our opportunities going into this year. The pipeline continues to grow. It is not fully weighted, but it is heavily weighted around continued construction activity or development activity, but we're also finding a number of owners that have given us, say, one, two or three assets initially, and now they're giving us more. So it's another way for us to continue to build relationships, and we look forward to strengthening those relationships as the program continues to expand.

Your next question is from Rick Skidmore with Goldman Sachs.

Just a follow-up on the supply question just a few minutes ago. As you think about the lease-up of new and developed properties, has it maybe been extended four to five years and given the demand trends you're seeing, are you seeing that lease-up pace accelerate such that it might be a little faster than you think or maybe reverting back to prior periods where growth wasn't as rapid?

Yes, Rick, you're right. It is accelerating. We've been very pleased with even more near term, the assets that we delivered in 2019 and '20 are seeing much stronger demand and lease-up activity than we anticipated. So that's definitely encouraging. And as I mentioned, even if we're looking to some of the acquisitions that have lower levels of existing occupancy, we're seeing -- once we put those assets into our platform, really strong and acceleration from customer activity, lease-up, and then we're stabilizing the asset in a shorter period of time. But frankly, and Tom's talked about this in prior calls as well. It is a product type that does take time to season from a revenue stabilization standpoint. But the quicker we are able to fill assets up and start maturing that revenue stream, the better off we are and putting, as we speak.

Got it. And then just on the demand side of the question, you mentioned some new millennial generation or younger generation utilizing storage a bit more, but you also -- Tom also talked a bit about move-outs reverting back to maybe a normal trend line. Maybe just frame how you think about demand as to whether it's changed over the longer term? Or is it just too early to tell if there's some trend that's coming out of COVID with regards to how demand might move going forward?

Sure. It's something, Rick, that we're watching very closely, both the composition, as Joe mentioned, based on survey data and customer activity. As we move through 2020. The good thing is it's been really durable, and the momentum has continued. So looking at top-of-funnel demand trends, web visits and sales calls are up 10% plus, and that's against an inventory backdrop, where occupancies are higher, and vacancies are lower. And as Joe just mentioned, lease-up assets are filling up faster. So, a good environment to have strong top-of-funnel customer interest. IN terms of the types of customers or the use cases of storage, one of them that Joe highlighted that we saw really accelerate in the April and May time period was consumers that were not moving but were looking to free up some space in their home. And that use case has continued to trend higher than prior years throughout the year. In other words, it wasn't an April, May, but it has persisted throughout. And those customers tend to be good storage customers as they utilize the storage space as an extension of their home and tend to have longer lengths of stay. So that's a nice backdrop and characterization of the demand that we've seen to date, and will support the occupancy and customer tenure here going forward. How long that lasts is anybody's guess. But we've been encouraged by how persistent it's been through 2020 and into 2021. And as Joe mentioned, we do think some elements of the reaction to really individuals' daily lives being disrupted through the pandemic will persist as we go forward, be it with the ability to work from home for more days or just generally spending more time at home. So we're encouraged by that, but no guidepost into the future as to what exactly or what day or time period those could shift.

Your next question is from Todd Stender with Wells Fargo.

I heard some occupancy figures that I think may have been for the full year 2020, but I wanted to make sure if you broke out the Q4 deals and then facilities already acquired here in Q1.

Todd, are you specifically asking about acquisition deals or...

Sorry. Yes. I know it's a pretty geographically diverse set, but maybe just speak to occupancies and any color on rents maybe they're below market or at market? Any color there?

Yes. I can maybe provide a little bit of color and then Joe can chime in too. But the fourth quarter, we did see some lower occupancy transactions. I think we had spoken in the past around how the portfolio came in at lower occupancies than the overall average, around 35%. And overall, the acquisitions in 2020, you're right, we're higher, around 65%. And as we moved into 2021, we're obviously only really talking about a quarter's worth of activity, but that's similar around that 65%. And then in terms of rate, clearly, with many of the properties in earlier fill-up stages, rates will be lower, and we'll have the opportunity over time to increase those rates as we go.

Yes. And maybe just to give you a little bit more color to, Todd, as I mentioned, the occupancy on average, speaks to the fact that many of these assets are relatively new. But overall, we've been very pleased with the quality level of the assets that we've been able to acquire over the last two years in particular, as I mentioned, many of these sellers are coming to market in a way that they have some level of reticence to stay in the sector, they're not necessarily achieving either pro forma revenues or occupancies, but the overall quality of the assets that we continue to see and acquire has been very good.

If they're generally new or does that suggest that the sellers do not need tax-efficient currency like an OP unit and you're just paying in cash?

Yes. Many of them are looking for cash. It could be because it's a single asset that they developed or maybe they've got other asset types that they need to put more capital into and the rebalancing a broader portfolio. So different circumstances, but many of these conversations have come over some period of time as we built relationships with these owners and through our deep connections even through the brokerage community, too.

Your next question is from David Bragg with Green Street.

On the expense side, could you provide some additional color on the role of the rental program in driving down payroll expenses? And are you expecting that rental utilization is going to remain elevated as we move toward a more normal environment?

So yes, David, the e-rental channel, as I mentioned, has been quite vibrant. Customers are really drawn to it. We think that the sustainability and the utility of that channel will definitely go beyond whatever pandemic environment driving our whatever pandemic-related activity may be leading customers to use it because, frankly, we designed it and tested it before the pandemic. It was built around a very efficient and time-sensitive customer who wanted to be much more oriented toward a self-service transaction. So we've really seen good adaptability and adoption by customers. It's now approximately 50% of our move-in process. And to your point, it will likely have different kinds of beneficial impacts as we continue to study our operational model and the way that it too provides a different level of service to customers. We'll talk more about this in our Investor Day in May, but we're definitely very encouraged by the success of that channel so far and look forward to continue to optimize it.

Great. Just a quick follow-up. It seems like work from home demand, you're expecting to be relatively sticky moving forward. As we think about potential move-outs, what are particular areas where you're concerned? Is it potentially small business demand moving out as we move towards a normal environment? Or are there other areas where we should be keeping in mind?

As I noted earlier, the change in move-out ratio really was across customer segments, customer tenures, pre-pandemic, and during pandemic customers, business, consumer and the like. So the shift was not isolated in one. And so as we think about consumer behavior, moving back to historical norms or closer to historical norms, there's no question that that could just as easily be across the full spectrum. But as we noted, we have not seen that to date. And we'll certainly update the investment community when we do start to see that, but we've been encouraged starting 2021.

Your final question is from Smedes Rose with Citi.

Michael Bilerman here with Smedes. Joe, I was wondering if you can talk a little bit about sort of the stakes in Shurgard and PSB. And just as you've interacted with shareholders and analysts, whether sort of any of that is on the table in terms of distribution or a sale, the combined stakes in those two companies today is almost $3.6 billion, high single-digit of your gross asset value. I guess, how do you think about those stakes longer term?

Yes, Michael, I would step back and tell you that we are supporters of both platforms. We're very pleased with the individual performance of each of those businesses. There are a variety of reasons why we have and do maintain our investment level in them. And ultimately, and to what degree that changes over time, I wouldn't speak to directly, but we're very pleased with our investment and the success of each of those entities.

But I guess does that capital on your balance sheet makes sense. I think probably more so, I can understand the Shurgard, Europe side is a global business, but does the PSD stake makes sense?

It's -- like I mentioned, Michael, I would just leave it as it's been, and we feel a good investment on our behalf. And that's as much color as I can give at this point. It would be strategically as it would be in any different investment that we have, something that we could continue to evaluate. And as any shift in focus or commitment takes place, we would certainly bring that forth. But at this point, I don't have anything to share with you.

Okay. And then just on the management program, do you have sort of maybe just some details around how many different owners you have in that group, maybe some clarity on what those represent out of the 120, more sort of the top five in there? Or is it spread out amongst singles and doubles and triples?

Yes. It's beginning with singles, doubles and triples. But as I mentioned, as the business evolves, we're actually starting to see a number of owners that have anywhere from, say, 10, 20, or 30 or more assets. And they're giving us the opportunity to basically display and show the kind of performance that those assets are able to attain under our own platform. We've seen good traction, and I think over time, that's a different way for the program to continue to evolve. The business as a whole is very reference-oriented. So that matters. And that's something that, over time, as we show and display the amount of performance of these assets are able to attain under our own platform, I think will be very additive, and we're actually starting to see some of that as we speak.

Great. And I appreciate making opening comments on the call. I appreciate having a supplemental and sort of coming in line with the industry. It's nice to see the Company take action amongst the comments that have been provided by the investment community time and being a little bit more outward with some of that. So definitely appreciate the change in a lot of things that you're doing and implementing.

Thank you, Erica. Thanks to all of you for joining us today. We appreciate your time. We appreciate your interest. We look forward to speaking with you again soon. Take care.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.