Q1 2023 Public Storage Earnings Call

Please standby your program is about to begin should you need audio assistant for today's program Chris.

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Ladies and gentlemen, thank you for standing by and welcome to the public storage first quarter 2023 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.

If you have any question at that time. Please press star one on your telephone keypad, if you wish to remove yourself from the queue. Please press star two.

It is now my pleasure to turn the floor over to Ryan Burke, Vice President of Investor Relations Ryan you may begin.

Thank you Brittany Hello, everyone. Thank you for joining us for our first quarter 2023 earnings call I'm here with Joe Russell and Tom Boyle before we begin we want to remind you that certain matters discussed during this call may constitute forward looking statements within the meaning of the federal Securities laws. These forward looking statements are subject to certain economic risks and uncertainties.

All forward looking statements speak only as of today may four 2023, and we assume no obligation to update revise or supplement statements that become untrue because of subsequent events a.

<unk> to GAAP of the non-GAAP financial measures. We provide on this call is included in our earnings release, you can find our press release supplement report SEC reports and an audio replay of this conference call on our website at public storage of Dot com.

We do ask that you initially keep your questions limited to two of course, if you have additional questions feel free to jump back in queue.

I'll turn the call over to Joe.

Thank you Ryan and thank you for joining us today.

Public storage had a very good start to 2023.

We remain focused on leading the self storage industry digital evolution, transforming our own operating model and enhancing and growing the portfolio.

In the quarter, we achieved new milestones on several of our key initiatives, which included.

Exceeding 60% of customers choosing to move in through our E rental online lease.

Eclipsing 2 million downloads of the public storage mobile app.

Reaching 400 properties on our customer demand driven digital operating platform.

Installing solar at more than 200 properties, putting us on track to complete at least 1000 property installations within the next three years.

Completion of over 70% of the property of Tomorrow enhancement program.

Growing NOI by 29% across our 529 acquisition and development properties in our non same store pool.

And driving the industry's largest development pipeline to in excess of $1 billion to be delivered over the next 24 months.

We had a strong operating performance in the first quarter, particularly with existing customers prefer performing well and same store move in volume up nearly 13%.

Length of stays are strong and same store revenues were up nearly 10% year over year.

Our exceptionally large non same store acquisition and development pool now nearly 25% of the overall portfolio continues to outperform as well.

Fundamentally self storage is a needs based business with demand drivers that are multi dimensional and fluid throughout economic cycles.

We also continue to benefit from people spending more time at home, which has increasing permanence with remote and hybrid work here to stay.

Additionally, with a return to more seasonal patterns of demand. We are currently also seeing an uptick in move in activity that has continued into the second quarter.

We also continue to find good opportunity in development and redevelopment as well with a vibrant pipeline poised to generate growth for years to come.

Our unique ability to weather economic cycles serves us well.

Particularly while other developers have slowed their activity due to higher interest rates cost pressures difficult municipal processes and concern over the near macro term landscape.

Now I'll turn the call over to Tom to discuss acquisition market and financial performance.

Thanks, Joe.

The transaction market has been relatively quiet to start the year as potential sellers feel out the macro environment higher interest rates and the spread between buyer and seller expectations.

That said, we have closed or under contract to acquire nearly $200 million right on track for our $750 million outlook for the year.

The vast majority of our acquisitions this year have been done off market quietly.

More recently, we've been encouraged by an increase in inbound which are primarily small to medium size portfolios.

We're in a great position to acquire today, given our cost and access to capital advantages paired with our industry, leading NOI margins.

Now onto the financial performance as Joe mentioned, we started the year strong reporting core F. F. L. A $4 eight turns for the quarter, representing 16, 2% growth over the first quarter of 'twenty two excluding the contribution from P. S. P.

Looking at the components in the same store revenue increased nine 8% compared to the first quarter of 'twenty two.

We drove strong move in volumes up 13% during the quarter heading into our peak leasing season and.

And the existing tenant base remains strong with length of stay is sitting at records.

Same store cost of operations were up five 6% leading to total net operating income for the same store pool of stabilized properties growing 11, 2% for the quarter.

In addition to the same store the lease up and performance of the recently acquired and developed facilities remained a standout in the quarter growing 29% compared to last year.

Shifting to the outlook, we lifted our outlook for the year driven by increasing our same store revenue assumptions, while the macro environment remains uncertain performance to date has been encouraging.

We're set up well heading into the second quarter.

Last but not least our capital and liquidity position remains rock solid.

Our net leverage of three three times combined with $700 million of cash on hand at quarter end puts us in a very strong position for capital allocation as we move through the year.

Now I'll turn it back to Joe.

Thanks, Tom.

Our people technologies platforms balance sheet and brand have and will be continually enhance to create and strengthened our competitive advantages we have across the entire public storage enterprise.

We see opportunity in the current environment and are poised to execute with focus on delivering growth and value for our shareholders.

Let's go ahead and open the call up for questions.

At this time, if you would like to ask a question. Please press the star and one on your Touchtone phone you may remove yourself from the queue at any time by pressing star and to once again start and wonder if you would like to ask a question and we'll take our first question from one Sip area with BMO capital markets.

Hi, Good morning, Joe.

Joe or Tom I was just hoping you could speak to it will trend and what you're seeing in terms of.

Demand into a price sensitivity.

Or is out there any some of your peers have talked to some softness in March or April .

Depending on their market exposure. So just curious what you guys are seeing across your platform.

Yeah. Thanks, Thanks for the question one.

As we moved through the quarter and you could hear it in the prepared remarks, we saw a continued strength in move in volumes and an interest into our system and so as we moved through March and into April that trend continued I Wouldnt characterize March is weak, but I would characterize April as strong and.

And so we've seen accelerating move in volume growth as we move through what was a strong march and into a stronger April .

The.

One of the things you highlighted there was existing customer sensitivity.

To price and I'd also note that we haven't seen anything concerning there are price sensitivity had been very in line with our expectations are and so against that backdrop are seeing good good move in volumes, which is encouraging and particular as we head into the next several months.

Thanks, and then just for my second question just on the <unk>.

Pretty up Tomorrow spend you guys have made excellent progress on deploying that capital just curious on the types of returns you're generating as you look at the Capex spent.

And how that's augmenting growth either in the same store and non same store pool.

So yeah the step back one.

The program spend you know quite well received by both customers or employees and.

Now that we're at a point, where we're actually getting to full market completion and several of our key markets. As we you know finish up and round out the program over the next couple of years, we're actually seeing very good response, and an overall lift just to the again the image and the power of the brand in particular.

We've got meaningful scale in many many markets. So we continue to track and see the benefits from that it's continuing to enhance our presence market to market and with that we can see it continuing to be very excited about getting the program completed the team has done a very nice job figuring out you know Indian.

All ways to optimize the amount of volume, we're actually going to pull it in plus or minus a year earlier than we intended to and with that we'll be in a very good position nationally to have elevated the crisp and enhance brand attributes that play well in many parts of our business.

I appreciate the time thank you.

Thanks, a lot.

We will take our next question from Michael Goldsmith with UBS.

Good afternoon. Thanks for taking my question. My first question is on the guidance you brought up the low end is that a reflection of.

Of the trends that you've already experienced in the first quarter or.

That guidance the low end of your range was based on a full recession scenario is the increasing guidance more reflective of that that outcome is less likely to occur and then within within this you've included this quote in your.

In your supplemental that suggests that the potential revenue growth rates as wide and including the potential for year over year declines in revenue in the second half of the year is there anything that you saw in the first quarter that changes your view on that.

Thanks.

Sure. Thanks for that question, Michael I would.

Or is the first quarter is a strong quarter and that is really what's leading to the lift in the low end of that revenue assumption component and so we've talked to the strength in the first quarter.

You're highlighting how we we are characterized the wide range of potential outcomes embedded within our outlook for the year are there's still certainly macro uncertainty in the back half of the year that that hasnt changed but performance to date has been quite.

Quite encouraging which is leading to the increase in the outlook for the year.

And my follow up question is about the strength and the sustainability of the L. A market same store NOI growth was up 20% in the quarter, which added 300 basis points to the overall number presumably this is reflecting the rate restrictions have been lifted in February .

2022, which you lapped during the quarter is there.

Is there kind of like a second is there a second year of growth coming from the L. A market or have we kind of have.

Are you kind of used up all of the game, there and and the gain should be more modest going forward. Thanks.

Yeah, Michael that you know first of all L. A being our largest market. We've been very pleased by the performance we've been able to achieve over the last year or so to your point, where you know the onerous restrictions have been lifted but it is also a market where we have a commanding presence. We've got very good inherent demand we've got very good occupancies.

And very little new competitive.

Product coming literally to any of the the submarkets that we're competing and so the inherent demand in the markets quite good we think we've got you know.

Against this with some some good traction ahead of US you know certainly going into the.

The rest of 2023, and we will continue to see where we go from there, but we've been very pleased by the performance of that portfolio. It is one of the markets that we you know to go back to my comment about property Tomorrow. We you know, we put about $75 million and of that portfolio to lift it from a brand awareness standpoint finished that you know a little over a year and a half ago and again.

Good good timing and tie to that being that much more prominent in the market and you know one of the ways. We measure the receptivity of that too is our net promoter scores again getting very good reaction from customers and the brand itself is playing through quite well so.

With that good demand and good.

Good continued performance.

Thank you very much.

Thank you.

We will take our next question from Smedes Rose with Citi. Your line is open.

Hi, Thank you and you mentioned the.

Almost 30 per cent move in volume across the first quarter, but move out volume was lower but kind of almost kept pace with the move in volume that just wondering if he saw similar.

Similar trends in April as well.

It's a great question Smedes, so what one of the things that took place during the quarter.

Was we did gain occupancy as you anticipate and so occupancy from the end of the year through March was up 50 basis points and in April we gained another 20 basis points.

So it's starting to see that seasonal uplift in the occupancy that will really continue here into may.

And I'd characterize the trajectories of year over year move in and move outgrowth as being favorable I E. As we moved through the quarter. The move out volume growth has a modestly lowered.

And the move in volume growth has modestly increased in the April I E. So April was actually our best month in terms of gaining occupancy.

And and closing the year over year occupancy gap on it.

Incremental basis so.

Again, encouraging trends here as we head into the peak leasing season.

Thanks, and then I just I noticed that the late charges the pace of growth picked up at a at a faster pace than rental income I'm. Just wondering if theres anything kind of to read into that and we've seen an uptick in kind of non payments or anything that would suggest some customers are under economic duress.

Sure Yeah, there's two components to that line item. The one is that what you're highlighting which is that there are more customers that are making late payments this year than last year, but if you frame it over a multiyear time period, we're coming off of really really low delinquency time periods over the last several years.

Years, and remain well below 2019 levels of delinquency, but youre seeing an uptick there in late payments and then I think more and more interestingly the.

The fact that we had significant move in volume growth also contributed there with our administrative fee that is charged to new customers when they move in leading to a year over year increase in that line item as well.

Okay. Thank you.

Thanks Pete.

Well take our next question from Todd Thomas with Keybanc capital markets.

Yeah.

Hi, Thanks, Good morning out there first question just related to.

Investments Tom.

Sheets in great shape.

I think you commented that youre seeing an increase in inbound call volume from owners or are you seeing the pipeline build and can you speak a little bit to pricing whether pricing seems to be moving in your favor such that we should expect to see deal flow pick up in the quarters ahead.

Sure. So we have started to see or started to receive more inbounds more recently and I do think that that's healthy and as you know Todd it's traditional to have a busier second half for storage transaction volumes in the first half and we're encouraged to start to see that in that activity and.

We suspect it is going to lead to a pickup in volume as we move into the second half this year.

And in terms of evaluation.

Yeah, as you think about the assets and where things are traded transaction volumes have been relatively light to start the year. So I wouldn't point to a significant amount of data for us to sit here and say that cap rates are at X or Y with significant precision, we're continuing to find good value and in many of the assets in and.

Our our clothing that buyer and seller gap in many instances, but it remains wide and others and so we're still working through that and anticipate to work through that through through the rest of the year, given what's played out with interest rates and the macro environment.

To put some numbers on it I think on the last call. We said the cap rates had moved up about 100 to 125 basis points from from the lows and I would say we haven't seen anything over the last three months that would have US direct you are any differently from that.

Yeah, Okay, and then Todd just a little bit more relative to the complexion of the activity. So far so Tom mentioned that we've been doing a number of deals off market. So as always we're looking for those kinds of opportunities as well there are still owners out there that we're looking for inefficient clean transaction.

And the average occupancy of the 186 million that we've done so far has been about 50%. So thematic Lee very similar objective on our part where and if we can acquire properties that have upside once we put them on our platform that's going to make sense relative to the ultimate yields that we're likely to achieve from those assets. So.

We're confident we're going to continue to see those kind of opportunities going into the rest of the year.

Yes.

Okay and then.

How would you sort of pair in contrast, the U S versus non.

Non U S opportunity set today and then.

Also would you.

Given the amount of.

Development activity, that's taken place over the last several years and some of the tighter.

Tighter lending.

Lending environment that we're seeing today would you consider building out.

The structure Finance program at all of the financing solution for borrowers, but also as a way to maybe expand the platform through third party management or build a future investment pipeline.

Okay. So yeah, a couple of questions are more on that you know in that statement. So first of all from an international standpoint, I would say you know consistent with what we've spoken to for some time, which is you know we're well equipped to consider and evaluate outside border opportunities. We continue to do that and nothing to speak to as we.

You know that are here today.

But again, that's you know part of the the overall mining that we're doing both inside and outside borders, but you know, we'll see how that plays out over time clearly there has been far more and boarder opportunities you know over the last three or four years and you know maybe too tied at another.

Part of your question is the fact that part of the reason for that is the amount of development that's coming to the cycle.

Has been done by owners that have no intention of being long term holders of those assets. So that continues to be a good breeding ground for us to find deals.

I'll, let Tom talk about thoughts around you know going into any kind of lending platform et cetera, but yeah, I'd, maybe take a step back and comment on.

Your question around the lending environment, because if he think stepping back the lending environment has certainly gotten more challenged for many developers at this point and could lead to lower new supply.

Heading forward.

I have to see how that plays out in terms of our participation in other parts of the capital stack. We continue to find very good value in the equity portion of the capital stack and have been deploying capital there consistently over the last several years and have found that to be a good risk adjusted return.

And I'd note. In addition to that we have made some some lending investments with some of our partners on a smaller scale so something that.

We're considering and as part of our wheelhouse AR as we move forward.

Alright, thank you.

Thank you.

We'll take our next question from Keith and Karl with Wolfe Research. Your line is open.

Hey, guys. Thanks for the time, maybe first year, just any more color your development pipeline, particularly with those assets are completed from 2018 to 2020.

Occupancy levels are below your portfolio average by a decent margin, but yet they should have stabilized at this point based on your press release commentary. So just any any sort of color on what's driving and if it's maybe market specific would be helpful.

Yeah, I'd characterize as the performance of those assets to be pretty strong alright, I mean anything we delivered over that time period has benefited from really strong demand drivers and frankly they've.

They've been exceeding our expectations your comments around the Occupancies I think some of those vintages are a touch under 90%.

But they'll certainly stabilize above 90% one of the things that I would remind you is that occupancy is only one part of the equation of stabilization and rental rates certainly the other and we're seeking to maximize revenue from those pools of assets. The same way, we do our same store pool so occupancy.

Well ultimately.

Right.

Ultimately get over 90%, but I think more importantly, the rate growth there has been exceptionally strong.

Unlikely has several more years of strong rate growth compared to the same store pool.

From that that group of assets and you can see the yields that we're achieving there.

It continues to reinforce the strong risk adjusted return of that program.

And it leads to our increase and in desire to continue to build moving forward. So the.

You know the development pipeline now sitting over $1 billion as we seek to grow that program.

That's helpful. And then one thing I noticed in the supplement just your commentary on credit card fees stood out I'm just kind of curious is there a way for you guys to charge a higher rate than those using credit cards to offset that or do you just now to take the risk of them bulking. Given you know those people on autopay tend to be better customers.

Yeah, I'd say for the most part the increase in credit card fees related to the increase in revenues and that's by far and away. The contribution so as revenues increase youre going to see those payment processing fees go higher from an operational standpoint, we do spend time thinking about ways to incentivize.

Our customers to use our attractive payment patterns for them, but also ones that may be cheaper for us to process and so that's an ongoing kind of year in and year out attempt through through different operational methods, but to your point.

We.

He loved to move people in and achieve that that auto pay and ultimately it's much more important to achieve that move in than it is to focus on their payments.

Process.

Got it Super helpful. Thanks for the time guys.

And once again that is star one if you would like to ask a question. We will take our next question from Steve Sochua with Evercore ISI. Your line is now open.

Hi, great. Thanks, good morning.

I'm sure you guys are are disappointed in the outcome with you know with life storage, but does.

Does that sort of change kind of your view at all about kind of large scale M&A or do you feel like this kind of puts pressure for you to find other transactions of size to you know kind of keep your lead in the industry.

Yeah, Steve you know clearly you know we are well positioned to continue to grow in all different shapes and sizes and we feel every bit if not more confident that you know.

Opportunities will continue to rise going forward. So we're very focused on that.

We.

Are you looking at many different alternatives, you know going into future opportunity scenarios, but we feel that.

You know again, the the reset to whatever degree happens in the sector by virtue of the LSI and yet saw a combination at the end of the day doesn't change the landscape from a competitive standpoint, one of the things that we've learned over time scales.

Scales, one part of efficiency and optimization, but many other things play through as well that we continue to invest in that lead to our industry, leading margins the things that we've done to enhance.

Enhance our own brand the effectiveness of the presence we have market to market and we feel very confident we're in good shape going forward and we'll continue to make those investments.

Great and then I guess secondly on development, we continue to hear the development should be coming down given all the challenges in the in the lending environment. You guys have remained I think active I'm. Just curious are you sort of changing kind of how you guys underwrite development today have you changed your hurdles.

Are you changing anything in that I guess, the framework and the way you evaluate new development projects. Yeah. The you know first of all you know developments along game right. So you know we're typically looking at scenarios.

Yeah.

Without question go in and out of all kinds of different ranges of economic cycles et cetera. When you were thinking about you know total time periods to actually put a property.

To a point of not only opening but stabilization I mean, you could easily be at a five year plus mark asset to asset. So that I think as you know a good headwind, particularly in this environment, where you know again, many owners are saying different.

Headwinds around cost of capital availability of capital component cost I mentioned, the amount of timing it takes to get approval.

Approval city to city and we've been talking about this for some time, it's a far more difficult today than its ever been on that front and literally almost everywhere you can't even name a market, where it's easier to develop today than it was one two or three years ago. So you've gotta be again ready to.

Worked through those kinds of demands or those kinds of factors those kinds of risk components, we feel very well suited to do that in this environment, we're actually seeing the opportunity to pull more interesting properties into our own pipeline that.

Potentially how far less competition from a land standpoint, or even a repurposing standpoint, so the team's working hard and we're finding some good opportunities I'll, let Tom talk a little bit about how our underwriting process play through as well, but you know that's something that always is reflective of not only the current environment, but the long term.

<unk>.

Yeah, and just to piggyback on that I think.

We're consistently looking to try to improve our underwriting processes year in and year out and if you recall at Investor Day, Our data science leader had talked about some of the tools that that that team has helped develop with for use with our development and acquisition team.

Those processes continue to be underway, we try to use our wealth of data internally to give us advantages on picking those sites and adding in new development. So the underwriting processes consistently evolving.

In a positive way in terms of hurdles and the like he obviously, we do with acquisitions as well as development and think about what our cost of capital is in and evaluate that in the context of the returns that we expect on new capital allocation, but I'd point, you to a relatively consistent trend, which he said that we're seeking.

To build new sites that will generate a yield on cost of circa 8% plus at at delivery and that that has not significantly changed over the last several years.

Great. Thanks.

Thanks, Steve.

We will take our next question from Kai Pan with Truest. Your line is open.

Thanks, Good morning, I did.

Did you guys provide an update on April moving rates.

Sorry, if I missed it.

No we didn't.

The way I'd characterize move in rents and I think this is the first question on move in rents on the college, which maybe a record in terms of depth.

Before we get that question, but moving rates across the sector have been lower and I think that's been pretty well well documented a move in rents in the first half of the year, we anticipate to be down more.

More significantly than maybe the back half of the year given the comps scenario that we've been discussing with the first half really tough comps versus last year in the second half.

Easy comps and so as we move into the second quarter, we would anticipate moving rents and we're seeing that in April to be down in that kind of upper single digits to low double digit types of coke.

Okay, great and.

How many stores do you have right now that are managed fully remotely without people.

And are those any kind of shared characteristics are those usually just smaller stores in tertiary markets or in different places as well.

Yeah keep in there I would tell you there's a broader context of the way we're approaching the whole concept of quote unquote remote one of the things you know I mentioned in my opening comments as we've now got 400 properties on what we call customer driven technological platforms, which includes.

On a piece of what you might consider a property to be remotely managed a misnomer on remote is remote also requires an every property is still requires some level of onsite personnel, what we have done in a broader context.

Continue to test and now deploy pretty effective technological predictive.

And data sources that we have to put people in the right places based on property activity the amount of demand that's likely to come through the patterns. Both on a weekly daily and monthly and even quarterly basis. So with that we can really take you know even that.

<unk> concept of remote to a far different level, which can work in suburban or remote areas. It can work in more dense areas. It can help us optimize the amount of necessary onsite labor and this is all built around something that's first and foremost which is actually.

Maintaining or improving customer service. So there's a whole range of different components to that platform. Some of which include kiosks for for instance, some of which include the way that we interact with customers through our customer care Center.

And then you know another leg of that whole puzzle as you know are very effective time and presence from of face to face a public storage employee. So all of those things are being optimized piece by piece and we've done some very interesting things and we have a lot more to come very excited about that part of the business.

And so you said 400 properties you have about 2900 I guess.

What can you apply it to all and if you do like does the FTE go from two to one or I'm, just trying to understand the impact overall yeah. Yeah. It is you know it's the roadmap right now I wouldn't say, it's pure enough to say each and every one of the 2900 properties have the same impact.

From the platform, but the great part about our overall strategy or is there are there are components to this so you can optimize FTE based on again, what size of property youre dealing with what historic level of either staffing or presence you have from an employee standpoint.

And then Tom you can talk a little bit about some of the economic benefits that we're likely to continue to see but.

The great thing about this it's like I said far deeper than just remote 'cause it can apply to many different types of assets and we're excited about deploying it at many mark more parts of the business.

Yeah, the only thing I'd add to that keeping us in in our Investor Day presentation. We did highlight our objective to to reduce labor hours and get more efficient with labor hours through the specialization and centralization that Joe speaking to in reacting to customer demand and the target. We set was for a reduction in labor hours and 25.

<unk> will achieve that this year in fact that we think that there is more upside from here. So just another.

A component of how we're seeking to get more efficient and drive our industry leading margins higher.

Thank you.

Great. Thank you.

Well take our next question from Mike Mueller with Jpmorgan. Your line is open.

Yes, Hi, I was wondering are you seeing any signs of like degradation of length of stay for your longer term customers that have been there over a year or two.

Yeah, I mean, we characterize the length of stay is sitting at records in our prepared remarks earlier and so generally speaking.

While we have seen move outs increase and trend back towards 2019 levels. The length of stay of the overall platform continues to be really strong portfolio now the average length of stay of the tenant base. Today is over 36 months has been seeing around that sort of ZIP code for the last several quarters.

In terms of the longer length of stay customers themselves and how they're behaving they continue behave quite well and on a year over year basis, the percentage of customers greater than two years is actually higher than where it was last year. So continuing to demonstrate the strength of of that component of the tenant base.

Got it okay. Thank you.

Well take our next question from Spenser <unk> with Green Street. Your line is open.

Thank you and maybe just another one similar to the development topic, but can you just remind us what percent of the portfolio would you say has true expansion opportunity.

But yeah Spencer I don't think we've ever characterize that as a.

Specific number what leads to those kinds of expansion opportunities or several factors. We have you know.

Hundreds of properties that.

Have been developed say 30, or 40 or 50 years ago that in those.

Those periods of time, you know a traditional property might have a much larger amount of acreage.

And would typically have you know what we would call you know our gen. One product simple single story drive up product there are many opportunities within the portfolio to potentially.

Acquired different and higher levels of F F. A R.

To magnifies the size of those properties and frankly many of them are in great locations. Some of which you know we get far better customer demand once we actually even make the property that much bigger so you know.

There's a sizable set of those types of assets the time and the effort that goes into that can be quite complex. Many cities won't allow us to do certain expansions of that magnitude.

That may open the door to that actually that'll put you through a multiyear process that again, you've got to work through very diligently. So we've got you know a number of those efforts in play as we speak are another.

Another thing that we have at hand in many assets for instances either some additional excess land or parking area that too can be.

Developed or expanded into you know again, a more modern facility as an extension of whats already on the property.

So there's you know there's a whole range of things that we're continuing to evaluate on that front, but the good news.

As you know by virtue of our very consistent.

Investment processes now for several decades, we've got amazing sites and with that in many areas you know properties that have far different demand and better demand dynamic dynamics. When they originally built that could fit very well to again the opportunity going forward.

Today in the 1 billion dollar development pipeline, plus or minus about 50% of that is actually tied to the kinds of sites I'm speaking to.

And the team is going to continue to work to monetize and unlock those opportunities as we go forward one of the great things about our development team as they you know they they can wear both hats. They can work on ground up development as well as expansion development, where we're doing that like for like clearly many of the markets that we're looking for expansion.

Okay, that's very helpful color and.

And also just wondering just given the fact that there has been a lack of larger portfolios on the market has there been any increase to the personnel dedicated to sourcing are underwriting acquisitions, just as I would imagine the deals are a little bit more granular granular excuse me than normal, but it sounds like from what you. Just said you know your personnel are very dynamic and perhaps.

Tomorrow marks perhaps.

To that point, maybe just to give you a little context around 2021 to your point, we had it was an unusual year, where we did a.

A couple of very large unusual transactions.

And again, but flip side of that though is that that was only half of our volume of the $5 1 billion that we did the other half was dedicated to with very traditional either single asset acquisitions or much smaller portfolios.

We've got a deep seated team very knowledgeable very well placed relative to knowledge of market knowledge of owners.

And the kind of dialogue that comes with that you know from a relationship standpoint has been and will continue to be very important for our efforts to grow the portfolio as.

You know Tom mentioned, you know about half or more than half excuse me a lion's share of the.

Acquisition volume that we've done in 2020 threes come from off market transaction. So part of that is just again as I think you're alluding to we've got the right team in place to go out engage them. We've got a great reputation as a preferred buyer and we're going to continue to leverage that.

Thank you.

Great. Thank you. It appears we have no further questions on the line at this time I will turn the program back over to Ryan Burke for any additional or closing remarks.

Thanks, Britney and thanks to all of you for joining us have a great day.

Yeah.

This does conclude today's program. Thank you for your participation you may disconnect at any time.

Hum.

[music].

Yes.

Okay.

Uh huh.

[music].

Mhm mhm.

[music].

Hmm.

Mhm mhm.

[music].

Mhm.

[music].

Hum.

Oh.

Mhm.