May 10, 2013
Executives
Clemente Teng - Vice President of Investor Services Ronald L. Havner - Chairman, Chief Executive Officer and President Edward John Reyes - Chief Financial Officer, Principal Accounting Officer and Senior Vice President David F.
Doll - Senior Vice President and President of Real Estate Group
Analysts
Gaurav Mehta - Cantor Fitzgerald & Co., Research Division Todd M. Thomas - KeyBanc Capital Markets Inc., Research Division David Harris - Imperial Capital, LLC, Research Division Michael Knott - Green Street Advisors, Inc., Research Division Michael W.
Mueller - JP Morgan Chase & Co, Research Division Michael J. Salinsky - RBC Capital Markets, LLC, Research Division Paula J.
Poskon - Robert W. Baird & Co.
Incorporated, Research Division Omotayo T. Okusanya - Jefferies & Company, Inc., Research Division Michael Bilerman - Citigroup Inc, Research Division Jordan Sadler - KeyBanc Capital Markets Inc., Research Division
Operator
Ladies and gentlemen, thank you for standing by, and welcome to the Public Storage First Quarter 2013 Earnings Conference Call. [Operator Instructions] I will now turn the call over to Clem Teng.
Please go ahead, sir.
Clemente Teng
Good morning, and thank you for joining us for our first quarter earnings call. Here with me today are Ron Havner and John Reyes.
All statements other than statements of historical facts included in this conference call are forward-looking statements, subject to a number of risks and uncertainties that could cause actual results to differ materially from those projected in these statements. These risks and other factors that could adversely affect our business and future results are described in today's earnings press release and in our reports filed with the SEC.
All forward-looking statements speak only as of today, May 10, 2013, and we assume no obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise. A reconciliation to GAAP of the non-GAAP financial measures we are providing on this call is included in our earnings press release.
You can find our press release, SEC reports and the audio webcast replay of this conference call on our website at www.publicstorage.com. I'll turn the call over to Ron.
Ronald L. Havner
Thank you, Clem. The first quarter benefited from solid demand resulting in record-high occupancies and a higher realized rent.
Net customer acquisition cost declined $2 per customer versus $31 per customer in 2012. Charlotte, Denver and New York markets, our leading markets, growing by over 8%.
Los Angeles, our largest market, grew by 5.5%. And San Francisco, our second largest market, increased by 6%.
At the end of April, occupancy and in-place rents were higher than last year. In the second quarter, we expect lower media and Yellow Page spend due to our record-high occupancies.
In Europe, same-store NOI declined by 1%. The U.K.
market continues to be negatively impacted by the VAT that was introduced last October. Q1 NOI declined by 8% in that market.
We have acquired, or have under contract, 3 facilities. We also have about $170 million of project under development or redevelopment.
With that, operator, let's open it up for questions.
Operator
[Operator Instructions] The first question comes from the line of Gaurav Mehta from Cantor Fitzgerald.
Gaurav Mehta - Cantor Fitzgerald & Co., Research Division
A question on your expenses. If you look at your same-store expenses, your expenses have been going down for last couple of years, I guess.
So when you look at your expenses today, do you think the 1Q number reflects the long-term run rate for you guys or you think there's more expense savings ahead?
Ronald L. Havner
Gaurav, this is Ron. I think, we tell people long term, you should assume a 3% to 4% expense increase, longer term.
I think what we've benefited from the last couple of years, and in particular Q1, again, is lower advertising media cost, lower Yellow Page cost. As I touched on earlier, we expect Q2 expenses in that area to also be lower.
The other big swing items were repairs and maintenance. And if you recall in Q1 of 2012, we had a big surge in R&M, and so we kind of got easier comps this quarter versus last year.
That was partially offset by snow removal cost in Q1, and you should expect to see an uptick in snow removal cost in Q2, offset by somewhat lower core R&M expenses.
Gaurav Mehta - Cantor Fitzgerald & Co., Research Division
That's very helpful, and one follow-up question. In your prepared remarks, you touched upon the markets that outperformed.
Could you also talk about the markets that did not meet your expectations?
Ronald L. Havner
Yes. The 2 that come to mind are the D.C./Northern Virginia markets, which I think the growth is 2% to 3%, and Philadelphia is about 1.5%.
Operator
Your next question comes from the line of Todd Thomas of KeyBanc Capital.
Todd M. Thomas - KeyBanc Capital Markets Inc., Research Division
Ron, over the last few years, I believe, Public Storage has attempted to raise rates to new customers during each of the last couple of cycles, but the pricing power wasn't really there, so the industry as a whole was filling up a bit. But it seems like the industry now and the other storage REITs are more stabilized, from an occupancy perspective, and so I was just wondering, based on what you're seeing, if you think that the industry, sort of on a broad level, be able to sustain increases in asking rent this season, and since we're maybe halfway through May, maybe you can shed some light on what you're seeing so far.
Edward John Reyes
Todd, this is John, actually, not Ron. Right now, our street rates are about flat year-over-year, which is consistent with kind of your comment about what we've been talking about over the past conference calls.
With our occupancies as high as they are, we are certainly going to try to push our street rates as we move into -- further into May and into June. So we'll test those waters, again.
And to the extent that they stick and our occupancies stick, we'll certainly be happy with that. But to the extent that we start losing occupancy, we will probably backtrack off of that.
So we haven't started doing it, but plan on doing it fairly soon, and we'll see how it goes.
Todd M. Thomas - KeyBanc Capital Markets Inc., Research Division
Okay. And then second question I was just curious within Shurgard Europe what the strategy is like there with demand declining a bit.
Occupancy was lower year-over-year, but realized rates were higher. And I'm just curious if you could talk about the strategy to stabilize operations in Europe a bit.
Ronald L. Havner
Yes, Todd. The big laggard for us in Europe continues to be Holland, which is one of our larger markets.
We've got in the same-store group 30 properties out of 163. So about 20% of the same-store properties, and that same-store group is down to 70% occupancy.
We've done some experimenting there with some pretty aggressive rate reductions and, in fact, we've got a test going on right now with, what I would call, draconian rate reductions to see if we can stimulate demand for our product. So that's the big one that's influencing, really, the drag there on the same-store property.
Operator
Our next question comes from the line of David Harris of Imperial Capital.
David Harris - Imperial Capital, LLC, Research Division
I noticed the CapEx spend for the quarter was significantly lower this quarter and way below the sort of run rate for what you booked in '12. Is that just seasonal?
Ronald L. Havner
Yes. This year -- recall last year, we had a pretty mild winter, and we accelerated CapEx, as well as R&M.
This year, much different weather, lot more snow, rain across the country, so it pushed back some of the CapEx spend. But we're not expecting a material change in the normalized CapEx this year versus prior years.
David Harris - Imperial Capital, LLC, Research Division
Okay. And then on your preferred, you're next preferred stock that, I think, is callable is April '15, which is obviously quite a gap.
I mean, I know you probably don't want to talk about your prospects of the issuance, but I'm just wondering if you might be tempted, given if rates stay low, to issue, to help fund, say, development or acquisition activities? Or would you wait until the next series of preferred is due?
Edward John Reyes
Well, I seriously doubt we'll wait until the next preferred before we issue another preferred. Because that would be another 2 years out before we issue another preferred.
And I would hope that we would be able to invest the excess cash that we have on our balance sheet between now and then a lot sooner, before then. So I would expect us to be out in the market issuing preferred in sometime in the near future, to continue to put some capital on the balance sheet at these historic low coupons.
So we can build a fund to continue to develop and buy properties.
Ronald L. Havner
With high yield piercing the 5% range, we've touched a couple of times in the call, about trying to do a 4% preferred, and the probability of that seems to increase each and every month. So...
David Harris - Imperial Capital, LLC, Research Division
Looks like it's coming your way, Ron.
Ronald L. Havner
It is.
Operator
Your next question comes from the line of Michael Knott of Green Street Advisors.
Michael Knott - Green Street Advisors, Inc., Research Division
Just, Ron, just curious. Looking back on acquisition activity over the past 2 years, you guys haven't grown as much through acquisitions, relative to the size, as your peers.
Just curious how you grade yourself, given how well the asset classes performed over that time period? And then looking forward, do you guys still think that you're going to be acquiring at kind of this pretty slow pace?
Ronald L. Havner
Well, Michael, the -- acquiring the same percentage as the public comps, you kind of run into a mathematical problem there, given our size. So no one should expect us to acquire the same percentage of our asset base as the smaller public company.
In terms of what we've acquired over the last couple of years, I'd have to say David Doll and his team have done an outstanding job. If you look at our 2010 acquisitions, I think, for the most part, they're north of a 10% cash on cash, excluding 10 in insurance and merchandise, that's a well 100, 150 basis points north of what we underwrote them.
The 2011 acquisitions are doing great as well. So the stuff that we bought it's been great, great product, great return on investment of capital, and we plan to continue to remain disciplined buyers.
Michael Knott - Green Street Advisors, Inc., Research Division
Does that suggest your return thresholds are kind of 8.5% type return? Is that just subtracting 150 bps from 10 there's no doubt those are great acquisitions.
Just curious, if that math is about right, is that return hurdle too high to grow as much as you might need to?
Ronald L. Havner
Well, I don't know that I need to grow, but the -- in terms of the returns, that's what we underwrote them for in 2010. What we underwrite today is different and it varies by market, in terms of what replacement cost is, what we think the growth potential is, by market.
Operator
Your next question comes from the line of Mike Mueller of JPMorgan.
Michael W. Mueller - JP Morgan Chase & Co, Research Division
I guess looking at your occupancy, it's hovering around 80%, and you talked about a little bit about Holland. But even before the downturn, it was running lower than the U.S.
And I was just wondering I mean, when you look at the disparity between the U.S. and Europe, do you think there's something structural there, where maybe you just don't have as big a pool of tenants, and that's going to keep occupancy always lower?
Or is it really the economics of what's going on today?
Ronald L. Havner
Well, Michael, I'm sure the economy over in Europe is having some impact on our business. But recall, in Europe, we're in 7 different countries and a number of markets in those countries.
So in Europe, we have nowhere near the scale, the brand recognition or the customer awareness that we have here in the U.S. Television is uneconomical, for the most part, for us in Europe, because the portfolio is spread across multiple markets, multiple languages.
And to put that in perspective, we have more properties in Los Angeles than we have in all of Europe, okay? So we just don't have the ability to drive the brand, the whole [ph] customer awareness, in Europe.
Western Europe itself has 1,400, 1,500 facilities, 800 of them in Great Britain. And for the most part, in the continent, self-storage is a relatively small, unknown business.
Having said that, I mean, we've done well, and the return on capital's pretty darn good, and the team over there, I think, operating the business has done a pretty exceptional job.
Michael W. Mueller - JP Morgan Chase & Co, Research Division
Got it. And one other quick one.
John, sequential G&A picked up pretty significantly. I was wondering if you can just talk about what was happening in the first quarter.
Edward John Reyes
On the first quarter, Mike, on a year-over-year basis, our G&A was mostly up because we had about $1.7 million, $1.8 million of severance cost. That was a nonrecurring cost that hit this year that wasn't there last year.
So that's the uptick that you're seeing on a year-over-year basis.
Operator
Your next question comes from the line of Michael Salinsky of RBC Capital Market.
Michael J. Salinsky - RBC Capital Markets, LLC, Research Division
Ron, I think you mentioned $160 million in development or in redevelopment. How big do you plan to grow that pipeline?
And also, as you look at the $400 million of cash on the balance sheet, is that development pre-funding or is that more reflective of the acquisition opportunities you're seeing in the market?
Ronald L. Havner
Well, I think, Mike, John touched on it. We hope to be able to deploy that capital and actually go back into the preferred market and deploy that capital both for development and acquisitions.
And the development pipeline, as you touched on, I said it's $170 million or so. I expect that, that will continue to ramp up over the next year to 2 years.
What the stabilized rate's going to be, I can't tell you at this time. Because as that ramps up, there'll be properties coming online that'll come in and out of that pool.
So I can't predict what the absolute level's going to be, but it'll be higher than $170 million.
Michael J. Salinsky - RBC Capital Markets, LLC, Research Division
And then just as a follow-up to that, as you look -- as you're underwriting new development versus acquisitions, what spread premium do you need, given the 3- to 4-year lease up there?
Ronald L. Havner
Well, the way we underwrite developments is we factor in the lease up reserve and kind of cost of money to do that. And the fill up time, and the fill up time varies by the size of the property.
I think,on average, our developments are coming in, what? 150 -- at least, 200 basis points north of the acquisitions.
Operator
Our next question comes from the line of Paula Poskon of Robert W. Baird.
Paula J. Poskon - Robert W. Baird & Co. Incorporated, Research Division
Ron, are you seeing any better acceptability than this industry has historically seen around neighborhood concerns of "not in my backyard," just given the dearth of new supply, are you finding that municipalities are more welcoming?
Ronald L. Havner
Well, Paula, we're really just ramping up the development program. I've got David Doll here, so I'll let him touch a little bit.
But I know, over the years, like here in Southern California, there's 2 communities that for 5-plus years have had a ban on self-storage, Pasadena and Long Beach. But, I mean, you can't build them in those markets, in those particular cities.
And that's really because -- they put those bans in because we don't generate sales tax, we don't provide housing, and we don't generate a lot of jobs in self-storage. So those municipalities have wanted the densification of either one in apartments or retail, for space, not self-storage.
Dave, any thoughts on kind of zoning issues that you've...
David F. Doll
No, I think, as Ron mentioned it, those are old legacy issues that quality of the architecture can ban some of those. The fact that there aren't a lot of retail uses in the marketplace today for what historically has been retail properties, is starting to get us through some of those hurdles that have been thrown up over the years.
So as long as there's not a great retail demand, I think that there'll be some great opportunities for us out there.
Operator
[Operator Instructions] Your next question comes from the line of Tayo Okusanya of Jefferies.
Omotayo T. Okusanya - Jefferies & Company, Inc., Research Division
Just one quick question. I mean, we had higher taxes going for consumers in January.
Your numbers still look very, very good, despite that. Just kind of curious over the past 3 to 9 months, if you could talk about any meaningful changes you've just generally seen with regards to consumer behavior and their demand for self-storage space, just how they behaved in the past.
Ronald L. Havner
I'll let John amplify this. I mean, we haven't seen any discernible adverse behavior.
Demand for the product is good, and I think you've seen it with the other public self-storage companies, it's kind of across the entire industry and across multiple markets, demand is pretty solid for the product across multiple platforms and multiple markets. So, I mean, it's cross-country in terms of pretty solid demand.
John?
Edward John Reyes
Tayo, demand into our system is down. I would attribute that mostly to the fact that we've scaled back on our advertising campaigns, combine that with the fact that our call volumes down because, generally, people call multiple times before they actually rent a space, and part of the problem, which is kind of a good problem in some respects is that we're pretty full.
So we don't have as much inventory to sell. So we can't quite satisfy all the demand that's coming into our call center or our website.
And so we have scaled back the advertising, which has kind of slowed down, at least the amount of calls and hits to our website. But I would not attribute that, necessarily, to the increased taxes that had rolled in or anything of that nature.
I mean, I'm not that smart to figure that out. I'm mostly attributing that to the fact that we are scaling back on marketing campaigns, as well as the fact that we don't have as much inventory to sell as we did last year.
Operator
Our next question is a follow up from Michael Knott of Green Street Advisors.
Michael Knott - Green Street Advisors, Inc., Research Division
I just wondering if you can maybe comment on the realized rent profile and the growth there as you head into the prime rental season. Obviously, you're really well positioned from an occupancy standpoint.
I think the rental growth has been about -- could be really positioned to really start pushing rents with how high your occupancy is as you head into rental season. Do you think...
Ronald L. Havner
Michael, you're cutting out on your question. So could you repeat it?
Michael Knott - Green Street Advisors, Inc., Research Division
Sorry about that. The question is just really on realized rent growth.
Do you think as we head into the prime rental season that -- it seems like you're really well positioned to maybe have some of the best realized rent growth you've ever had in your company's history. Do you feel like pricing power is that strong or is that too optimistic of a sentiment?
Ronald L. Havner
Well, Michael, I'll let John amplify this since he runs all the revenue and the pricing. Earlier in the call, I touched on our customer acquisition cost being down to $2 per new customer versus $31 last year.
And if you recall customer acquisition cost, the way we define it, consist of 2 things: our marketing cost, which is the Yellow Pages, the phone center, Internet advertising, television; as well as promotional discounts, principally the $1 special that we offer new customers. And if you look at the combined total of those 2 numbers in Q1, it was about $27 million versus $33 million last year.
And that's split between -- that decrease of about $6 million is about 50% reduced media, Yellow Page costs and 50% reduced dollar specials. So -- and that the reduced dollar specials go right into the realized rent per foot line.
So we've had about a 15%, 16% reduction in the dollar specials that we offer, we gave out in the Q1. John, pricing?
Edward John Reyes
Right. So what Ron was talking about is, an effective increase to the incoming tenant by reducing for discounts.
I think, Todd Thomas had asked earlier about pushing street rates, and my comment was that, I'm going to try to push the street rates. But I'll tell you, I'm not real optimistic that we're going to be able to push much because our experience has been as that, that as we push street rates, most of our competition is not coming with us.
So my guess is they just want to purely grow their revenues on occupancy gains as opposed to the new incoming tenant, in terms of pushing the absolute street rate. So, Michael, as we move forward, I mean, really, where I expect our revenue growth to come from is still the occupancy spreads, the reduced discounts that Ron talked about, as well as, and the biggest part is going to be, the renewals, the annual increases that we send to our existing tenants because we're able to be very aggressive with them.
And we're finding that they're still very sticky, sticking around and paying those higher rates, notwithstanding the fact that a good chunk of our tenant base is paying well above current street rates today.
Michael Knott - Green Street Advisors, Inc., Research Division
Okay. That's interesting.
And then a follow-up question would just be, it sounds like the entire State of California performed below the portfolio average, including Northern California. Can you just maybe touch on what you see in Northern Cal and Southern Cal and maybe what, in particular, might help Southern California perform better?
Ronald L. Havner
Well, I think, L.A., I think, I mentioned grew top line 5.5%, which I think is consistent with the same-store pool at 5.5%. And then San Francisco was up 6%, just 50 bps north of the same-store pool average.
Michael Knott - Green Street Advisors, Inc., Research Division
Okay, I thought you were giving those numbers on the NOI line.
Ronald L. Havner
No, the rent, revenue line. Revenue line, I'm sorry.
Edward John Reyes
On the NOI line, Michael, it's kind of outlined in our 10-Q. Los Angeles was up 8.5%; San Francisco, up 9.4%.
Operator
Our next question comes from the line of Michael Salinsky of RBC Capital Markets.
Michael J. Salinsky - RBC Capital Markets, LLC, Research Division
John, just to follow up to the leasing questions. What percentage of your tenant base is applicable for a rent increase this year?
And how does that compare to last year going into peak leasing season?
Edward John Reyes
Well, if you -- we generally send them to tenants that have been here longer than a year. And roughly about 56%, or 55% of our tenant base has been here longer than a year.
And that's fairly consistent with last year. In terms of absolute numbers, however, I think we're slightly higher, in terms of the number of tenants that have been here longer than a year, so we're up a little bit there.
But what we're going to do is be a little more aggressive actually on the absolute percentage increase to the tenants versus last year. So again, roughly 55%.
As the year progresses, however, we will probably send out increases somewhere in the neighborhood of 70% to 75% of the tenant base, we'll get them. Because I'm telling you, they're aging at a point in time, and as each month goes by, an additional group of tenants becomes aged past a year, so we will send them increases also.
Operator
Your next question comes from the line of Michael Bilerman of Citi.
Michael Bilerman - Citigroup Inc, Research Division
John, what percentage of your customers -- or maybe just on NOI, is paying above street rates?
Edward John Reyes
I don't have that particular number. But I would say it's a fairly significant number, of our tenants are paying above street rates.
And it varies too in terms of the street rates because that differential between street rates, because street rates fluctuate with seasonality, so that differential narrows quite a bit during the summer months and then widens again during the winter months. So we're getting into the summer months, so our street rates are rising, so that the differential is starting to narrow and will continue to narrow until we kind of, I think, peak somewhere in July, August.
And then that'll start widening out again. That's been the case for many, I would say, the past 5 years, so there's nothing new.
Michael Bilerman - Citigroup Inc, Research Division
Right. And at that spread, in terms of that like 5% or 10% above sort of street, does that make you buzz?
Ronald L. Havner
Yes, again, it varies all over the place. And it depends on the time of the year, and I couldn't tell you exactly where it is today.
Michael Bilerman - Citigroup Inc, Research Division
And just thinking about where occupancy was at the end of the quarter and sort of just talking a little bit about what's been happening in April and early May, just as your occupancy comps do become extraordinarily more difficult than in -- as we move to the second quarter and the back half of the year relative to last year. So I'm just kind of curious if -- last year, it was 92.6% in the second quarter, where are you sort of trending in the first half of the quarter right now?
Ronald L. Havner
Well, Michael, at the end of April, our occupancy was 93% versus 91.4% last year.
Michael Bilerman - Citigroup Inc, Research Division
But you're still a little bit -- so you even -- even though last year, in the second quarter, you averaged 93.1% for the quarter, in April it was much less?
Ronald L. Havner
No. This April, we're at 93%.
Last April, we were at 91.4%. So if you're -- and that's just for April.
May, June, I mean, we'll tell you what happens, but I think your question is, "Okay, what's the trend going into Q2?" The occupancy spread is still there, we're nicely ahead of last year and into the rental season.
Michael Bilerman - Citigroup Inc, Research Division
Okay. Yes, I would have thought last -- second quarter last year you were at 92.6%.
So I guess, I was surprised to hear that you were at 91.4% in April of last year. So...
Ronald L. Havner
No, it trends up each month.
Edward John Reyes
It trends up quite a bit, Michael. So in May and June we were a little above 93% last year.
So I think, your point is, which is a valid point, is that the occupancy spread that we've experienced in Q1, even though Ron's telling you that it was still there during April, it's going to tighten up when we get into May and to June. So that for the full second quarter, I don't expect our occupancy spread to be the same, or a similar spread that we experienced in Q1.
Michael Bilerman - Citigroup Inc, Research Division
That what I was just trying to hone in on.
Edward John Reyes
Yes, I mean, look, it gets really tough to get above 93% occupancy because we have -- kind of have this frictional vacancy. When you have roughly 7% of your portfolio vacating each and every month and -- they're month-to-month leases, we don't pre-lease a space because we don't know which -- who's going to move out, they don't necessarily stand up and tell us, they just move out.
We have this kind of a frictional vacancy of about 6% to 7%. So it's really tough for us, for anyone I think, to get past 93% occupied.
Not that it can't happen because we have, obviously, we average 93%. So there's a lot of our properties that are well above 93%, but as a full system, it's very difficult.
Michael Bilerman - Citigroup Inc, Research Division
Have you noticed a change in the types of customers that are coming? Or in the types of goods that are being stored?
Edward John Reyes
I can't tell you that, Michael, because I just don't know. I mean, I could tell you that customers are staying longer.
They're more sticky than they have been in the past.
Michael Bilerman - Citigroup Inc, Research Division
Nothing about the new customer that's coming in that differentiates it or the type of demand that you're seeing?
Ronald L. Havner
Michael, the great thing about our business is we serve everyone for a wide variety of needs.
Operator
Your final question comes from the line of Michael Knott of Green Street Advisors.
Michael Knott - Green Street Advisors, Inc., Research Division
Ron, I was just curious if you have that statistic that you've given before, speaking of the tenants staying longer. The percent of tenants that have been there over a year, this quarter compared to last year's first quarter?
Ronald L. Havner
Yes, Michael. The actual percentage this quarter is 55.4% versus 56.1% last year, and that is, in part, attributable to the fact that we have more customers, so the absolute number of customers that have been here longer than a year is up about 2,100 versus last year.
So it's a slightly smaller percentage of the portfolio. The portfolio's grown so it's reduced that percentage.
It'll age out and move up. But the absolute number of customers greater than a year, as of today or as of the end of the quarter, was up about 2,100 year-over-year.
Michael Knott - Green Street Advisors, Inc., Research Division
And then, last question is just on the idea of the advantages that the big operators have over smaller operators and the ability to spend on mobile and the Internet. What's your current view on that?
Is that advantage widening or is it -- where do you stand on that?
Edward John Reyes
Well, I mean, I think, in our business, Michael, there are economies of scale, it's definitely economies of scale. I think, even among -- if you compare Public Storage to some of our smaller public companies, I'm sure there's differences in Internet spend, media spend and how it's allocated on a property-by-property basis.
So I have to believe that when you talk about the mom-and-pops out there trying to compete on the Internet, it's probably fairly expensive on like on a per click or per move-in cost relative to some of the public guys. And you're seeing a lot of the mom-and-pops kind of jumped into bed with aggregators, and there's a couple of aggregators that are just now popping up in the self-storage space who are gathering together a lot of the mom-and-pops to help, basically, help them compete in keyword search relevancy, and I'm sure cost per clicks and cost per move-ins.
Operator
Your final question comes from the line of Todd Thomas of KeyBanc Capital.
Jordan Sadler - KeyBanc Capital Markets Inc., Research Division
It's Jordan Sadler. John, just wanted to dig back into one comment regarding pricing and the ability to push rate.
You made a comment along the lines of not having necessarily the confidence to push rate. I don't want to put words in your mouth, but because the industry tends to not come along with you.
And I'm just kind of curious about that. Is that -- do you think -- is that going to be perpetual or at what point does that change or can it change?
And then in that same context, have you thought about, I'm sure you have, but how do you sort of think about using media or advertising as a lever to continue to drive traffic despite the fact that your occupancy is high, if you're trying to push rate?
Edward John Reyes
Well, let me touch on the media part. We've scaled back on media not because the media or television doesn't work.
It works, and it's a very competitive advantage that Public Storage has because we could afford to be on television, whereas many of our competitors cannot. The reason why we scaled back is, obviously, on an ROI basis, media doesn't pencil out because of our occupancies.
We'll get a lot of call volume in, but we just can't satisfy the demand and we thought of, geez, this generates a lot of demand with media, and therefore, we can charge higher prices. That just doesn't hold water.
People shop around. They shop off of our website.
I think something like 70% of our move-in traffic tell us that they've been to our website, which kind of tells me they're shopping around. Whether they made a reservation or just walked in, they still go to the websites, and they're shopping.
So going down the path of spending more media to drive more demand thinking that you're going to get better pricing within our system, it just doesn't really doesn't work. When I was talking about pricing and I'm trying to push pricing, I'm talking about street rates, because I'm confident we could push pricing to our existing tenants, but in terms of pushing them to new customers via higher street rates, part of the problem that we've had there is that our competition doesn't really tend to move much.
So as we're driving rates, competition doesn't do that, and we start experiencing a drop-off in move-in volumes. And that bothers me in the sense that I don't want to be losing occupancy.
When does that change? I don't know, ask the other guys.
But I suspect it changes at some point in time, when they get to occupancy levels that they're comfortable with, and then they want to start pushing rates, too.
Jordan Sadler - KeyBanc Capital Markets Inc., Research Division
And just on the promotions, I may have missed this, what percent have you -- were you able to sort of pull off year-over-year?
Edward John Reyes
In the first quarter, we were probably down about 18% in terms of absolute dollar reduction and discount. We're going to continue to see how far we can continue to reduce discounts.
I mean, we give away, I mean, I think, last year alone we gave away almost about $90 million of discounts. So it's a fairly large number that we're going to try to chip away at.
It's not going to 0. It's not going to go to half of that amount, but we'll continue to chip away at that.
Operator
At this time, there are no further questions. I will now return the call to Clem Teng for any additional or closing remarks.
Clemente Teng
Thank you, everybody, for attending our conference call this morning, and we'll speak to you next quarter. Have a good afternoon.
Operator
Thank you for participating in the Public Storage first quarter 2013 earnings conference call. You may now disconnect.