Q1 2024 U-Haul Holding Co Earnings Call
Participants
Edward Joseph Shoen; Chairman of the Board, President & CEO; U-Haul Holding Company
Jason Allen Berg; CFO; U-Haul Holding Company
Sebastien Reyes; Director of IR; U-Haul Holding Company
Craig Inman; MD & Portfolio Manager; Artisan Partners Limited Partnership
Keegan Grant Carl; Research Analyst; Wolfe Research, LLC
Steven Ralston; Senior Special Situations Analyst; Zacks Investment Research, Inc.
Unidentified Analyst
Presentation
Operator
Good day, and welcome to the U-Haul Holding Company First Quarter Fiscal 2024 Investor Call. All participants will be listen-only mode. (Operator Instructions) Please note, this event is being recorded. I would now like to turn the conference over to Sebastien Reyes. Please go ahead.
Sebastien Reyes
Good morning, and thank you for joining us today. Welcome to the U-Haul Holding Company First Quarter Fiscal 2024 Investor Call. Before we begin, I'd like to remind everyone that certain of the statements during this call, including, without limitation, statements regarding revenue, expenses, income and general growth of our business, may constitute forward-looking statements within the meaning of the safe harbor provisions of Section 27A of the Securities Act of 1933 as amended and Section 21E of the Securities Exchange Act of 1934 as amended.
Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified. Certain factors could cause actual results to differ materially from those projected. For a discussion of the risks and uncertainties that may affect the company's business and future operating results, please refer to the company's public SEC filings and Form 10-Q for the quarter ended June 30, 2023, which is on file with the U.S. Securities and Exchange Commission. I'll now turn the call over to Joe Shoen, Chairman of U-Haul Holding Company.
Edward Joseph Shoen
Good morning, and thank you for joining us today. We continue to struggle to post U-Move numbers as good as the prior 2 years. My experience says overall moving activity has contracted. We have seen this before in an uncertain economy. Of course, we're continuing to scramble for business. As consumers become more optimistic, the entire market will likely expand. Our repair spending on trucks and trailers continues to rise. Of course, there's always some waste, and I am working to eliminate the waste. But the fundamental drivers of repair are too few replacement units, leading to increased mileage per unit, and parts and labor inflation.
We have not resorted to large-scale discounting in self-storage, unlike some of our major competitors. We are continuing to build and buy the rate above our rate of unit rent up. This doesn't disturb me greatly, and I plan to continue adding units and drive on increasing the room of -- rate of room rent ups.
In U-Box, our total revenue was down for the quarter due to decreased pricing. Freight costs finally went down, and we lowered some rates due to that. Our margins, however, are holding. Transactions are up. This should continue to be an expanding market for us. I look forward to speaking with you on our upcoming Investor and Analyst Video Conference, and Jason will now address the numbers in greater specifics.
Jason Allen Berg
Thanks, Joe. Yesterday, we reported first quarter earnings of $257 million. That's compared to $338 million for the same quarter of last year, representing our company's third-best first quarter results. Looking at it from the perspective of earnings per share, we reported $1.31 per nonvoting share this quarter compared to $1.68 per nonvoting share in the first quarter of last year.
Starting off with equipment rental revenue results. Compared to the first quarter of last year, we had a $92 million decrease that's about 8.4% down. To put it into context, over the last 4 quarters, we've had a nearly $230 million decrease in U-Move revenue. In the 8 quarters before that, so starting with the second quarter of fiscal 2021, we've experienced $1.428 billion increase. So in the last 12 months, we've given back a small portion of the gains.
The trends that we've seen in the past several quarters continued, declining transactions and reduced miles per transaction. Revenue per mile growth has remained positive, and July results trended down compared to last year.
Capital expenditures for new rental equipment in the first quarter were $454 million. That's a $103 million increase compared to 1Q last year. The majority of this increase is in our box truck fleet. And we have increased our fiscal 2024 full year net CapEx projection from $685 million to approximately $820 million. I would say about 3/4 of this increase is from the addition of more units under our manufacturing schedule, but the remainder being projected decreases in sales proceeds from what we initially thought was going to happen.
Speaking of, proceeds from the sales of retired rental equipment increased by $34 million to a total of $193 million for the first quarter. Sales volume increased, while average proceeds per sale declined. Self-storage continues to be positive. Self-storage revenues were up $26 million. That's 15% up for the quarter. Average revenue per foot continued to improve across the entire portfolio of nearly 6%. Our occupied unit count at the end of June was up a little over 42,000 units compared to the end of June last year. During that same 12-month time frame, we've added nearly 64,000 new units to the portfolio. This differential led to the average occupancy ratio coming down for all of our owned locations by about 170 basis points to an average occupancy rate of just under 83%.
This same moderation in occupancy was also seen in our same-store grouping of these properties. We saw about an average decrease again of 170 basis points, bringing the occupancy level to 95 -- just over 95%. We continue to fine-tune our new self-storage disclosure in the press release.
During the first quarter of fiscal 2024, we invested $294 million in real estate acquisitions, along with self-storage and U-Box warehouse development. That's a $16 million increase over the first quarter of last year. During the quarter, we added just over 1.1 million new net rentable square feet. About 73,000 of that was in the form of existing self-storage acquisitions. We currently have just under 7.1 million new square feet being developed across 159 projects.
Operating earnings in our Moving and Storage segment decreased $95 million to $387 million for the quarter. Operating expenses were up $28 million for the first quarter. Fleet repair and maintenance led the way with a $30 million increase. Work continues on increasing capacity, shifting repair work to company-operated shops and rotating the truck fleet, but we are -- we have fallen behind.
Personnel costs increased $11 million, about half of that coming from increased health plan costs. Compared to the last 2 years, personnel costs as a percent of revenue are elevated. However, over a longer-term view, they're not out of line on a percent of revenue basis. Some other expenses, including accident liability costs, the cost of freight and shipping and payment processing costs all decreased during the quarter.
We continue to place a premium on having access to cash and liquidity. At June -- at the end of June, cash, along with availability from existing loan facilities that are moving to the storage segment, totaled $2.792 billion. During the quarter, interest expense at Moving and Storage increased $11 million, while interest income that we earned on our cash and short-term investments was up $22 million.
During the quarter, we implemented accounting standards update 2018-12 that targeted improvements to the accounting for long-duration contracts. This affects most of the products that we have on the books at our life insurance subsidiary. While this new rule has increased the amount of life insurance disclosures that you're going to see in our filings, and it's going to lead to some additional earnings or comprehensive earnings shifts between years, it does not have any effect on the underlying economics of our book of business there. With that, I would like to hand the call back to our operator, Dave, to begin the question-and-answer portion of the call.
Question and Answer Session
Operator
(Operator Instructions) The first question comes from Steven Ralston with Zacks.
Steven Ralston
Obviously, the self-moving equipment rental business is being driven by some macroeconomic factors that are out of your control. But looking down deeper, it seems like the one-way market is being especially affected. I'm wondering how the -- your effort to reposition the fleet from the situation that was created by COVID, a couple of years ago, given that slowdown in the one-way traffic business.
Edward Joseph Shoen
Okay. This is Joe. I'll speak to it for a minute. At least 3 times in my career, I've seen, during the time of consumer confidence decreasing, people shorten the entire mileage that they move. And that also results in a shift of longer-mileage one-way rentals into shorter-mile rentals. The vast majority of our moves are driven by necessity, people's family grow or (inaudible) or people retire. These are life events. And they kind of continue just in a pretty even great, but people's optimism and their willingness to go a long distance in a move, we've seen decline. And I believe that's what we see going on here.
Our fleet issues are that we're not able to purchase at quite the rate that we would like to get the optimum balance of repair costs versus depreciation. And any time you buy a car or a truck, it's just like in your personal life. You're kind of trading off variable costs, repair, for fixed costs, which is capital cost. So we would rather hear today be a little bit heavier on the fixed cost. And we think that balance -- our experience says the balance would favor profits, but just don't have availability of that many units yet. Does that answer your questions?
Steven Ralston
I was more thinking about how the equipment has migrated, let's say, from New York and California towards Florida, that the equipment is not equally dispersed.
Edward Joseph Shoen
Yes. We -- of course, we always have some equipment imbalances. Actually, Florida and Texas, which you would think would -- that would be buried in equipment are not. And we're seeing more localized, call it unproductive or what we call unproductive areas more around retirement communities than a simple shift from the North and the East to the South. So there's a lot of factors go into that. Part of it is where my team does a better job. If they do a better job, we rent more equipment out. And I think we've got teams in Florida and Texas right now that on balance are doing a pretty good job. So they've kind of alleviated that, but we have other imbalances, and this is just is a constant juggling.
Steven Ralston
Looking at something more under your control, though not completely, are the expenses. There are different components and some interesting dynamics in the different line items. But it looks like there's about a 3.5% to 4% inflation to the costs. Can you mention anything specific that you're using to address this -- these increased expenses?
Edward Joseph Shoen
Well, of course, we're trying to purchase smarter, but there's an end to that. Everything is inflating in our experience, from electricity to steel. And we've seen a little catch-up, which probably a little more catch up in wage rates, because that's just the truth that the (technical difficulty) point of sale, which is where the bulk of our people exist. There's a lot of pressure on wages, as you see with people -- other people in retail areas if they're seeing wage pressure, we're seeing it too. And so people are getting paid more, which normally you would kind of celebrate, but it's inflationary and that's going to go on.
I don't -- we don't have any spin on the ball as far as controlling that. What we can control and what we work very hard on is simplifying processes and making them less labor-intensive. So to a certain degree, truck rental just simply is very physical. Trailer rental is the same. It just -- just a tremendous physicality to it. We have several initiatives. One would be our Truck Share 24/7, which I think just recently broke its 6 millionth transaction. Now that's program to date. So -- but it means we're getting that process working pretty good.
We also have revitalized, I would say, our focus much more on the U-Haul app, and the U-Haul app gets the customer to participate in some of this activity and reduces basically hours needed to work at the point of sale. That's not a perfect equation, but overall, it works. And we're driving on that, and I think that will continue to yield results for 2 or 3 more years. There's a lot of room to refine that.
So I think our best chance of countering increased cost is not in that we're going to get a better deal on -- deal or something of that nature or building materials, I think that we're going to eliminate some processes that can be better done. Technology lends something to that, and get some increases in efficiency, which will result in less labor, man hours per transaction.
Steven Ralston
And just 1 last question on the self-storage area. You mentioned -- and it's interesting they way it was worded, but you said that you looked at that subset, that the occupancy has stabilized at 80% for at least 24 months and showed that the decline was consistent with the overall number. I assume the purpose of that was to show that the decline is consistent across most of the segments there, and therefore, it's just a general industry trend, and there's nothing specific to worry about there other than what -- that the market is weakening?
Jason Allen Berg
Yes, that was the general thrust of that comment. It's Jason.
Operator
The next question comes from Keegan Carl from Wolfe Research.
Keegan Grant Carl
So first on the Moving business being down 8.4%, it obviously includes locations that were added over the last 12 months. I'm just kind of curious on a true like-for-like basis, what you think it actually would have been down year-over-year?
Edward Joseph Shoen
I don't have that number, but I think that's a fair question. It's more complicated than just what it's -- how many new locations you brought on because it also -- we do about half of our Moving business through independent dealers. And always, when we add a new location, we have to be careful that we're not cannibalizing those dealers. And undoubtedly, there's been some cannibalization of that by these new stores. So if they hadn't been built, we just still got in that part of the revenue. If you want to assume there's 10% or 15% cannibalization -- and I don't have a firm number on that. It's very location-specific. And then the rest of it is new business. That might be fair. I don't know, Jason, if you have any more specific on that.
Jason Allen Berg
Yes. I don't think that that's going to be a material part. I don't know if we would have seen a much bigger decrease on that. But that's an interesting question, Keegan.
Keegan Grant Carl
No, that's a super helpful way to think about it. I guess shifting gears to storage. So obviously, occupancy was down 170 basis points, and that makes sense to us, just given a challenging market. I know in the opening remarks, you said you're not lowering your street rates like the broader peer group is. But I guess I'm curious, what would it take for you to see to actually start to lower street rates?
Edward Joseph Shoen
Well, we analyze every location and every room size by location, and that's how we manage rates. So you're unlikely to see us do something like, say, put in a 10% rate decrease. If we did a rate decrease, it would more likely be in a certain size. So I'd say, 5x10 non-air-conditioned rooms or 10x15 air-conditioned rooms. Or more specifically, 10x15 air-conditioned rooms on the upper floors. So there's -- it's very, very specific.
We don't have in our bag of tricks or whatever you want to call it, normally -- a normal maneuver to simply drop rates. And I mean, of course, there's -- you probably saw the nice article in The Wall Street Journal recently that said, basically anybody with a little bit of capital can get rich in storage. Well, it's a little bit more to it than that, as you might imagine. Mostly, I see people when they drop rates, that -- when they drop rates across the board, they're in a very uncomfortable situation. Once in a great while, a competitor will literally move next door or across the street. They'll drop rates as an introduction. That's not an uncommon phenomenon. And we'll lose tenants at that location because of that, but we typically don't drop the rate, because our competitor will come up with a rate increase 90 days later, and some of those customers now bounce back because now it will be cheaper.
In the meantime, it disrupts everybody to just drop our rate overall. So that's a specific competitive situation, and that would be our typical response is, hold tight and wait for them to get a little bit of occupancy and they'll increase rates greater than they decreased them. So -- that's just about what our strategy typically is, Keegan.
Keegan Grant Carl
Got it. And I guess on the topic of storage, just curious if you're seeing any change in your average length of stay? And then how that helps you guys determine what sort of rate increases you're sending out to your existing customers?
Jason Allen Berg
This is Jason. I just looked at that this last quarter, and compared to, say, like a year ago, it looks like each one of our duration stratification has maybe moved out a percent. So across the portfolio, there has been a general move to a little bit longer moves or longer stays.
Edward Joseph Shoen
And I would say, while that seems paradoxical, it's not because a little bit less moving activity. A lot of the storages, people are moving in or out, and so they're going to store for 30 or 60 days because they're waiting for a place to be firmed up or these kind of just little timing difficulties. And it's overall moving declines that real short stays, not as frequent.
Keegan Grant Carl
Got it. And then just 1 final 1 here on the topic of storage. So if we think about supply in general, it's often what causes storage to underperform over a short time period. You mentioned in the opening remarks that you don't necessarily plan on stopping growing your footprint right now. So I guess I'm just curious, from the operational side of things, what you would need to see for that to change?
Edward Joseph Shoen
Well, I'd have to be discouraged on the long-term prospects. When COVID broke out in March, I think, in 2020, I got a little bit uncertain. So I stopped a whole bunch of projects. And it took me at least 24 months to recover and get momentum back again. And COVID was a first-time deal for me. And if I had, let's say, that same event, I wouldn't back off. I would say no, the U.S. economy is going to roll through this and I'll have a little dip, but it's better than being undersupplied. So I was undersupplied the last half of COVID, which I lost opportunity. There's no certainty -- now, is there overbuilding? Certainly, and I've said that for a couple of years at least. .
Of course, there's overbuilding. The beauty of it is, the markets are local. So you could be overbuilding on the north suburb and underserved in the south suburbs. All these things exist, and of course, part of this is can you find the place that still needs more supply? We're -- as you probably are aware, we operate in all 50 states. So we make some different choices than some of our competitors. And so -- which are just kind of our strategy is to be in all 50 states. So we'll be expanding in a market maybe they're not even in because they just don't -- it's not got enough mass, they're not interested in being there.
And that's what I would try to do if I saw things get squirrely, which I have been doing, which is, well, let's search out some different markets that we have great long-term confidence in but aren't really on the radar of a lot of people because that market will never have 5 stores -- in 5 stores from 1 supplier. It's always going to be a smaller market, and we do find in those smaller markets and our management structure works good for it. And some of our competitors, it doesn't work good for them, which is just a slight difference in strategy, not one is better than the other, with a slight difference.
Keegan Grant Carl
And 1 final 1 for me here. Just from a capital allocation standpoint, you guys are sitting on a ton of cash. Just curious, how we should be thinking about the deployment of that over the next several quarters and years and where you're currently finding the best risk-adjusted returns? Because it looks like it might be through short-term treasuries.
Jason Allen Berg
This is Jason. So we were fortunate to lock in rate on a large piece of this cash going into this rising rate cycle, and we benefited from that. I mentioned the increase in interest income as -- as we're in short-term government securities, and we've gone out and opportunistically purchased some treasuries here and there.
I think our sense is that we are going to be going into a credit tightening cycle. We've already seen some small anecdotal evidence of that within our own lending group. And since that is the primary way that we raise capital, we are sitting on a bunch of cash. And that will give us the ability that should we not -- should we want to buy more trucks and not have access to debt financing at that point in time or as much as we would like, it gives us some flexibility at that point.
So our target goal for bringing cash down is probably closer to the $500 million mark. It's going to take us a few years to get back to that point. But we have -- in the pipeline of development, we're still looking at potential spending of up to $2 billion in that, along with increasing fleet purchases over the next several years.
Operator
The next question comes from Steve [Burrell] with Oppenheimer.
Unidentified Analyst
Quick question about CapEx. Are you expecting the remaining spend to be spread out over the rest of the year or more weighted towards the next quarter or 2?
Jason Allen Berg
It will be weighted a little bit heavier for the next 2 quarters.
Unidentified Analyst
And has it been easier to get supply from the manufacturers, Ford and them?
Edward Joseph Shoen
Yes, it's loosening up, but it's at a snail pace and it has me biting my fingernails. They just -- the -- it's a political question. You probably know as much about it as I do, which is -- we're trying to reconfigure the automotive industry, and that's causing them fits in being able to do their fundamental job, which is manufacturing automobiles. And they've made progress on it, but it's -- they have their hands full. We're on good terms with everybody. We're getting units, but they just -- their total overall production is -- has been short of demand. And it's been that way for a while.
Unidentified Analyst
And how do you think that affects the fleet moving forward? Should we be expecting longer age of the fleet and less CapEx and turnover there?
Edward Joseph Shoen
Well, that may happen. If it does, that basically increases our effective cost per mile, and we're trying to manage the cost per mile, which is the trade-off of repair, a variable cost with CapEx, which is basically you get a fixed cost. The balance is a little bit too much on the repair variable cost side right now, in our judgment. And we're trying to, of course, do that more towards an optimum spot. So if what you describe happens, it won't be because it was our choice, it is because the market has constrained us. Now we can go through that. We've done that before. But we think a more optimum trade-off would be larger number of annual replacement vehicles.
Unidentified Analyst
And how should we be thinking about the impact from the increase in CapEx this year and the effect that will have on maintenance and repairs and the timing of those benefits?
Edward Joseph Shoen
Going to slow the increase, but it's not enough to stop the increase, in my judgment.
Unidentified Analyst
And do you think spend from the first half of this year, that will start to slow the pace more in the first half of next year or second half?
Edward Joseph Shoen
I'll let Jason take a stab at that.
Jason Allen Berg
Steven, on this one, the pace of new acquisitions is coming in reasonably well. If we finish out this year on new acquisitions the way that it looks like, we could make a dent of maybe picking up 2,500 units over a normal pace. We started off the year about a year behind in rotation from the last few years. So that would still put us over 4 years out from fixing it at that pace.
The bigger piece that's going to affect maintenance as to how fast we're taking the old trucks out. So the new trucks are coming in. I think our team is feeling a little bit more -- has more confidence that the new trucks will be there for them. Now we need them to start removing the older trucks that have the higher maintenance costs attached to them. And on that one, I would say we're at least a quarter behind. I don't think we made a lot of progress in this first quarter in getting older trucks pulled out of the fleet. So that's going to delay some of the benefits to repair and maintenance here at least another quarter until we can really start to pull old trucks out of the fleet so we can stop fixing them.
Unidentified Analyst
And moving to self storage. The other self-storage REITs have reported a pretty big price per square foot drops on move-ins versus move-outs. Are you seeing the same thing?
Jason Allen Berg
Our move-in rates are about 3% higher than what they were last year, and we still have a positive differential between move-in and move-out rates. So we're moving in people at a higher rate than what the people are paying who are moving out.
Unidentified Analyst
And do you think that's because you have somewhat insulated -- they're not as heavily concentrated in the top 25 MSAs? Do you think that's a benefit for you guys?
Edward Joseph Shoen
I'm not so sure it is. I think it's -- we've -- you watch our -- we'll just take the REIT competitors. They'll have a good month -- they'll have a good week, they'll jam rates. I mean they could go up 15%. So they are a little bit more aggressive on the upside, which causes them to be a little more prone to retreat. Does that make sense?
Unidentified Analyst
Yes.
Edward Joseph Shoen
For an instance, we post rates. Now, our competitors don't post rates. They're -- the next person in line can get a different rate. So we have a different strategy. And we've tried to create an expectation with our customer, and we largely have to kind of understand what our strategy is. And for one reason or another, they think that -- is -- works for them. I think they're all probably aware or not all of it. Many customers can figure out -- the REIT down the street just dropped prices. Do they want to move to save $15 a month? Maybe, maybe not.
And so I think they do a little bit -- they harvest a little bit more on the up, and they give away a little bit more on the down. But I don't know that either strategy is perfect to just kind of the way we've built our customer relationship.
Unidentified Analyst
And how do you balance rental rates versus occupancy rates when you're looking at where to set the price per square foot?
Edward Joseph Shoen
Again, we do it by location, by room type. So a given location and -- so here in Phoenix, Arizona, I don't know, we probably have 85 or so stores. And there will be certainly 10 different rates out there on a [comparable] room. So it's pretty specific, just because you're in the Phoenix metro, [we're going to be]a lot more discerning than that. We're going to get right down to the location. We have a staff that's all (inaudible) what they do, their storage rate department. And they are looking, of course, at occupancy and ramp up both depends on where you are in the cycle if you're filling a new store or you're trying to trim the sales just right on a store that has 92%, you'd like to be at 95%. Just how you're going to trim the sales to get there? They -- I'm more -- I'm pretty much satisfied with their work and have been for some time.
Unidentified Analyst
And on the cost side, I know you don't break out the costs, specifically for self-storage. But as locations that share in self-storage and equipment rentals, are there synergies compared to a stand-alone self-storage facility? Or are NOI margins about the same?
Jason Allen Berg
This is Jason. That -- it's a complicated question. From an asset owner, it certainly benefits the truck product line -- the equipment rental product line, the U-Box product line to have a blended location. The way a specific measurement would work for determining what the storage margin might be. We do have many locations that are essentially storage only. And the way that the costs get allocated to those locations, those look like they have -- appear to look like they have a higher margin because there just isn't as much overhead costs going on there, and you don't have to split up the profits across multiple product lines.
So we think the best returning locations for us have the full product line available to all the customers. And so that would look a lot different than a self-storage income statement by itself.
Unidentified Analyst
Got it. And last question, I saw on the release, we included the chart again for the self-storage by state. Are the same-store numbers comparable year-over-year?
Jason Allen Berg
So the same-store numbers that we're putting there represent what the same-store count was at that time. Right? So there's a couple of different ways of presenting that. The way we've presented it is showing what the same-store pool looked like a year ago and 2 years ago versus taking the same-store pool from this year and then carrying that back 2 years. We didn't go that route.
Unidentified Analyst
Would it be possible to maybe include both of them just so that you can compare whatever subset you're looking at, you're looking at the same group of stores, the same cohort?
Jason Allen Berg
Yes. [Steve], I've been accepting feedback since last quarter on that. I would say the comments asking for that have been fewer than the ones who have been happy with it. We've tried to index this against what people are used to from our storage competitors. And we found this presentation in some of theirs. But it's an open question. So I wouldn't say that the book is closed.
Unidentified Analyst
All right. Well, that's all my questions, and I appreciate you taking my questions on the call.
Operator
The next question comes from Craig Inman with Artisan Partners.
Craig Inman
Finally on here live for once instead of sending questions. I guess one of the things I was wondering about from a strategy perspective, obviously, moving in household formation, and I don't have these macro questions. But interest rates on housing and all that are a lot different now than they were 2 years ago, and you've seen that slow down. I'd imagine that kind of moving in household formation puts pressure on the truck rental business, but I'm not sure. Can you comment on just what that means for the business, how big it should be? I know you want to win and gain transactions, but some thoughts around strategy with this change in -- what the consumer can afford from housing and what we're seeing there.
Edward Joseph Shoen
Again, I'd say the total drivers of moving are life events. When your family grows, you're looking for opportunity. A lot of forces and factors going in there, 1 that I've been focusing on most recently, is the trend towards consolidation of the people in the property -- housing rental business and the people who are attempting to (inaudible) form large tracks of rental single-family dwellings.
That's -- to me, that those are 2 kind of big changes that will maybe impact the frequency. People who rent more move more often. Maybe not in Manhattan, people were renting for 30 years. But in most of the country, you see all these 4- and 5-story multifamily basically apartment units that just sprung up nearly on every piece of vacant land. Well then, that's become a -- a growing subset of movers. And they have some different characteristics, and we're trying to really understand them so we can make sure that our products and services are tailored in a way that's very attractive to them.
So I think that's -- if I want to say what it was going to be -- will maybe move the needle a little bit over the next 2 or 3, 4, 5 years. I think that may be what moves the needle even more than interest rates. And these -- again, I'm sure you've heard the pitches, but they're saying we're going to get people to rent rather than own. [World War II], we've been had, let's get people to own rather rent, okay?
And I don't -- I don't claim to understand the overall implications of that. But you can see that they've put up -- I don't have a statistic, but you see them everywhere you go, these 4- and 5-story units are just popping up. Three years ago, I would have taken [a bet] they were overbuilt. And then they've continued building, and they're building today.
And they seem to find customers now that, again, The Wall Street Journal reported a bunch of pressure on these people because the rising rates and -- Okay. But I think that's going to really just really drive more consolidation of ownership, not drive use. And maybe it will compress their margins for a while. But I think that this rental phenomenon and it seems like people who rent -- it's always been our mantra, people who rent are more likely to move than people who own. And so if they can have a shift in the number of people who rent, so it's going to change this movement a little bit.
25 years ago, Phoenix was a crazy market, and they'd offer a 6-month lease, 1 month free. And people move every 6 months. So it was just (inaudible). Finally, they quit doing that, but it was great for us because they were moving a mile. Okay. So great. We get our 1995, and the total trip mileage uses maybe 7 miles for the whole trip, we make great money. But that's how sensitive these people can get. And I don't know quite what these big consolidating owners are going to do. I know they plan to pass customers between their properties. They think they will be able to encourage people to move from this property to that property, I don't know, based, I assume on some combination of amenities and rental rates. So I think that's, to me, that may be an opportunity for the whole industry. And if it is, I intend for you all to be there.
Craig Inman
Okay. Yes. So it's too simple a thought to think that affordability decreased and new sales are down, and that's going to really put a ton of pressure on the rental business.
Edward Joseph Shoen
I really think that would be my conclusion. Yes, you're exactly right. You said it better than I did.
Craig Inman
Okay. Yes. Well, my question was a little too long-winded there, sorry. And I hadn't thought about the strategy difference with the REITs in terms of how rate would play through later, because your move in rates are higher than in place, which is the opposite of the REITs. How much longer would this trend go on, given how you all operate structurally? Like how much more is there to go there in rate gains as the in-place ages?
Edward Joseph Shoen
That's kind of the $64,000 question. My team still believes they have some running room. Okay? I'm probably wrong. My brain says, over the last 12 months, we saw increases at 30% of units. I'm not sure if that number is right.
Craig Inman
It sounds right.
Edward Joseph Shoen
Don't put that in a calculation, but my team, they kind of have -- they kind of know what they're going to do for the next 30 days. I mean they don't -- they're familiar with the properties they manage. And they believe there's still room. I've been surprised. We are seeing pushback from customers. Obviously, everybody is in this economy. So -- but if (inaudible) floor air-conditioned rooms are 100% full, they're going to look at a bump in the rate. And you almost always find that if you really study a location that some class of rooms is full and another class of rooms is at 80%. Well, did you make a mistake in your original model mix? Are your rates out of line? There's several things to look at. And of course, my team looks at those things. So they think that the year ahead sees some promise for rate increases.
Craig Inman
Okay. And then I didn't catch fully on the liquidity talk there. $2 billion to finish out in-place developments? Or does that include possible deals? What was the -- just wanted some clarification on how you are thinking about liquidity.
Jason Allen Berg
That would be to finish everything that we have on the books right now.
Craig Inman
The escrow and everything?
Jason Allen Berg
Not including escrow.
Craig Inman
Then that cash is -- you're effectively prefunding a lot of that development with cash in case market conditions deteriorate and if you need to keep buying trucks to catch the fleet up?
Jason Allen Berg
Yes. I think what we've learned over time is it's better to have it than not have it with where we're headed. So the spending on real estate -- the last 2 years now, we've been well over $1 billion in spend. I think we'll see that continue for the next couple of years at least. And then the fleet spend is increasing because we're starting to get an increased number of units, and the cost for these new units is higher than it used to be.
So in the first quarter of this year, I would say, if you took the units that we purchased this year, if we were to have bought them at last year's prices, that's about $25 million of inflation. We had bought them at the prices from 2 years ago. It's little over $40 million of inflation. So with all of those headwinds, we are being very cautious.
Craig Inman
Okay. And then on the app for the company locations, you said you crossed 6 million transactions. Can you talk about the trend in terms of some color on the percentage of transactions that are happening in the app at the company locations versus -- just -- because it does seem like it can be a labor-saving tool. Obviously, there's always going to be a group that is just going to show up and walk in. But how big a percentage of your business is that?
Edward Joseph Shoen
Well, 2 separate subjects. One is what we call Truck Share 24/7, which can go either through the app or you could go through...
Craig Inman
Oh, yes, through desktop.
Edward Joseph Shoen
So we're transitioning those people to the app. We're seeing good growth in the app. I think I can state correctly that 2 weeks ago, we were in the top 10 in the travel apps adopted on Google. We got ahead of steam up there, and we intend to run with it. Just where that will go, I can't predict, but we're trying to (inaudible) correct indicators on that. It looks like the app is just -- we have, as I said, 3 years of running [room], maybe. (inaudible) steady growth. So I think that that's going to pay off for us very much. And I think it will (inaudible). The customers who want to do business that way will increase their satisfaction.
So I'm all in on it, if you just want to know what I'm working on. I'm all in on it, and I think it's going to continue to grow. How far will it go? I have no opinion. But of course, I don't know your habits, but I have adult children in there, they do so much on the handheld mobile that -- I think that's just -- that trend is here to stay. And we're trying to make sure we're in it in a big way. Of course, the (inaudible) another group of competitors who are Internet-savvy people, and they want to be industry disruptors in every industry in the world (inaudible). So I believe right now, we have better tech than they do. And my plan is to continue to have better tech than they do so that we don't give ground to those people.
Craig Inman
Okay. Last one, I was -- I remember when filling 30,000 rooms a quarter was pretty good in the summer, and now we're 44,000 and have been above that. Anything changed in the last few years in terms of the ability to fill rooms faster, doing something better? Obviously, you have more rooms, so that makes more availability, but...
Edward Joseph Shoen
We have more rooms. They're thoughtfully placed in the present tense. We could -- we have stores that are 20 years old. We have stores that are 40 years old. So is that location now as hot as it once was? You see? So if we're doing this right, there's -- we have good room in newer stores. Yes, with the whole online move-in, we have a whole online move-in process for those stores. But they have -- they have amenities as good as or better than our competition. And of course, customers want certain services, and they want certain levels of customer service. And we are largely exceeding their expectations at the new stores, because the bathrooms are nice or the load/unload area is a little better. These are all they seem like small things, but to the consumer, they add up.
So I think what the real things that changed is the percentage of new -- or newer say, let's say, 24-, 36-month old rooms, that that percentage has risen in our own portfolio. So I think that that has had a lot to do with this. You'll see a new place come online, and it'll start renting up at a feverish pace. So that first 60% or 70% occupancy just really impacts your rent up rate overall for the company.
Craig Inman
Okay. So that newer mix. And nothing in terms of just getting smarter about marketing or no big change in strategy there?
Edward Joseph Shoen
But everybody else is getting smarter, too. I mean normal capitalism is rat racing. So we learn a little thing, and then they learn a little thing, and we both are trying to figure out what the other one is doing and -- just its normal capitalism. So we have a slightly different strategy because of our truck and trade rental business. And so we're more interested in Wyoming, let's say, than most people are, because we rent trucks in Wyoming. We're all over Canada, most of that's just a vast uninhabited expanse. So we end up in some places our competitor would have no appetite for, but we're making them work.
And so -- I -- there's -- everything that is -- what my son likes to call secret sauce -- is a very tiny increment. There's a bunch of them, and when you execute them all -- so let's say I came upon a new store and the rent up rate wasn't what I would have anticipated. Well, immediately, I know we're failing on 1 or more fundamentals if we go through and just basically do a top-down work up on the store. We'll find out where we're short and tune that up, rent up goes in the curves. There's a tremendous amount of alternate site selection. You want to get the right site. And we spend a lot of effort. Money. And I think all that -- tell me, Jason, I think all that's expensed. I think all our site selection expense basically just goes through...
Jason Allen Berg
We capitalize as little as we have to.
Edward Joseph Shoen
Yes. So we're not -- if it's a question of which way to push, we push it towards expensing it. And I think -- I just think that there's a lot -- that money comes back to you over time. You could make an argument for capitalizing it, but I just don't want to do it.
Craig Inman
Yes, no need to defer the -- better to defer the -- pay the taxes now. Okay. No, that's -- that's it for me. Thank you.
Operator
This concludes our question-and-answer session. I would like to turn the conference over to management for any closing remarks.
Sebastien Reyes
Well, thank you, everyone for their support. As a reminder, 1 week from today on Thursday, August 17 at 9 a.m. Pacific, we'll hold our Annual Stockholder Meeting. And then 2 hours later, at 11:00 a.m. Pacific, 2:00 p.m. Eastern, we'll host our 17th Annual Virtual Analyst and Investor Day. Both events can be accessed on the web at investors.uhaul.com. And questions for the Q&A portion of our Investor Day can be sent prior to the meeting at ir@uhaul.com or submitted live during the event. We look forward to speaking with you next week. Thank you.
Operator
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
