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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is Masters in

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Speaker 1: Business with Barry Ritholts on Bloomberg Radio.

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Speaker 2: This week on the podcast, What a Fascinating Conversation. Bob

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Speaker 2: Moser is founder and CEO of Prime Group Holdings. They're

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Speaker 2: the largest privately held self storage owner operator investor in

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Speaker 2: the country. Fascinating conversations. Started acquiring properties in college, eventually

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Speaker 2: started doing RVs and mobile homes, just really fascinating methodology

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Speaker 2: of identifying undervalue properties. I thought the conversation was fascinating,

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Speaker 2: and I think you will also with no further ado.

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Speaker 2: Bob Moser of.

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Speaker 3: Prime Group Holdings, Thanks for having me.

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Speaker 2: So let's start out with you. Your background, Bachelors with

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Speaker 2: honors and economics from Union College. Yes, sir, what was

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Speaker 2: the original career plan?

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Speaker 3: Tell you the truth? It was always real estate. So

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Speaker 3: I've always had an affinity for real estate.

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Speaker 2: Really.

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Speaker 3: My mom tells the story that when I was like

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Speaker 3: fourteen or fifteen, should drop me off at the local

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Speaker 3: real estate broker's office and I would drive them nuts

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Speaker 3: for a couple hours. And it was either that or

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Speaker 3: just to get rid of me out of her hair, probably,

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Speaker 3: but I always had it. Got my real estate license

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Speaker 3: before college. I got my brokerage license while at college

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Speaker 3: and actually started the business basically my sophomore junior year

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Speaker 3: while at Union.

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Speaker 2: Wow, that's amazing. So your college thesis focused on how

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Speaker 2: to value income producing real estate investments by comparing demands

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Speaker 2: and value, like, so you really knew exactly what you

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Speaker 2: wanted to do by your senior year. What was the

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Speaker 2: outcome of that college thesis?

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Speaker 3: It's a good question. So it was on the valuation

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Speaker 3: of income producing properties using hadonic and non handonic regression analysis.

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Speaker 2: So when we say hadnic, you're adjusting for quality.

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Speaker 3: Location, attributes of the property, taking away basically the revenue

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Speaker 3: stream what else adds value to the asset? And I

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Speaker 3: was really hyper focused on fragmented real estate assets. So

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Speaker 3: basically every real estate asset when you look at it,

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Speaker 3: goes through the same life cycle when they're originally owned, developed,

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Speaker 3: managed by local regional developers. Then over time the larger

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Speaker 3: groups come in and consolidate. So I was looking for

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Speaker 3: that reflection point when that consolidation starts. And I was

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Speaker 3: focused back then in college on the thesis for manufactured

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Speaker 3: housing communities. And when you're a college student, you know

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Speaker 3: people pick up the phone when you call because they're

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Speaker 3: always trying to help somebody out. And I was very

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Speaker 3: fortunate to speak to Sam Zell and some other obviously

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Speaker 3: leaders in the real estate business, and they gave me

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Speaker 3: some great insight, and one of the ones he said

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Speaker 3: to me was that there's a lot of buyers, but

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Speaker 3: there's not much product out there. You have to go

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Speaker 3: out and find product for people. If you're going to

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Speaker 3: be a good real estate investor, you have to have

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Speaker 3: the ability to find the assets. So I decided to

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Speaker 3: start a company in college to facilitate that transaction. Obviously,

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Speaker 3: I didn't have any money. My dad was a retired

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Speaker 3: New York City detective. My mom was a teacher's aid,

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Speaker 3: so I didn't grow up any wealth. But I figured

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Speaker 3: out that if I could find good product, there was

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Speaker 3: a numerous amount of buyers to buy it. And I

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Speaker 3: did this by using the Freedom Information Act of New

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Speaker 3: York and then various other states, where I figured out

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Speaker 3: that I could track all real estate asset classes using

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Speaker 3: the same common denominator of water and sewer permitting. So

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Speaker 3: I went down the Albany and I made my request

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Speaker 3: and union was trimester, so I had these big gaps

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Speaker 3: off around Thanksgiving the New Years, and one day ups

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Speaker 3: knocked at my door and I had converted my parents

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Speaker 3: upstairs bedroom to my corporate office, like any kind of

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Speaker 3: broke entremneur would do. And he's like and hit me

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Speaker 3: a box. I'm like, oh, there's my real estate information.

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Speaker 3: And he's like, actually, that truck out there is. I

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Speaker 3: had boxes and boxes of the old doss printouts every

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Speaker 3: self storage facility, every mobile home park, every RV park,

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Speaker 3: Marina multi family.

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Speaker 2: Just so some of the younger listeners can appreciate this,

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Speaker 2: forget Ai. This is really before there was any sort

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Speaker 2: of usable internet where you could say, hey, let me

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Speaker 2: scan Andy dot gov and find all the real estate permitting.

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Speaker 2: This is physical papers stored in physical office buildings and

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Speaker 2: file cabinets.

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Speaker 3: I had a pay per page on the pronoun.

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Speaker 2: And what did that cost? And how long ago is this?

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Speaker 3: So this was back in ninety seven, ninety six, ninety seven.

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Speaker 3: It probably cost me a couple hundred dollars, which I

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Speaker 3: really didn't have as a college student. But I realized

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Speaker 3: quickly that that information was the key to finding assets.

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Speaker 3: And what I would do is I would systematically go

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Speaker 3: through these lists basically county by county, asset type by

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Speaker 3: asset type, identifying the institutional quality assets that were still

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Speaker 3: loaned by mom and pops or non institutional investors. I

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Speaker 3: would do a deep dive on those assets. I would

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Speaker 3: call and get the rents. I would call the tax

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Speaker 3: assessor to get the real estate taxes. My goal was

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Speaker 3: to know more about the real estate than the owner

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Speaker 3: did by the time I called them on the phone

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Speaker 3: to see if they'd be interested in selling, and then

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Speaker 3: I would continually call them every thirty to forty five

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Speaker 3: days after that until they became a seller.

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Speaker 2: Huh, that's unbelievable. So that's what led you to unconventional

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Speaker 2: and overlook segments. You mentioned marinas and RV parks and

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Speaker 2: other things like that. Manufactured homes. How long did it

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Speaker 2: take you before you managed to acquire your first property?

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Speaker 3: So there was a acquired my first property shortly after college.

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Speaker 3: And what happened was there was a mobile home park

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Speaker 3: in Streetsboro, Ohio. It was actually called Camelot Village. Again.

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Speaker 3: A guy named Mike Duffy owned it, and I used

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Speaker 3: to call mister Duffy probably every thirty days to see

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Speaker 3: if he would sell his asset, and one day I

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Speaker 3: finally got him to sell and I made a nice

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Speaker 3: fee on the transaction, but I still needed a little

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Speaker 3: bit more. In the year I graduated, my mom took

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Speaker 3: a home equity loan against the family house.

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Speaker 2: Is that how you finance?

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Speaker 3: That's how acquisition. That's how I financed my first acquisition.

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Speaker 3: So before that I was facilitating transaction to making fees,

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Speaker 3: almost like a broker, but not a listing broker. And

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Speaker 3: then the first asset I bought was when my parents

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Speaker 3: took a home equity loan.

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Speaker 2: So if in you mentioned you got your real estate

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Speaker 2: license in college, how you finding buyers for these sortive,

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Speaker 2: unconventional properties. Are you going to the big institutions and saying, hey,

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Speaker 2: I have a property that fits into your portfolio.

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Speaker 3: And what I actually did was I had these lists

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Speaker 3: obviously that I got from the foil request, and I

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Speaker 3: kept on seeing the same name show up as buyers

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Speaker 3: or that were owners. So if I knew they owned

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Speaker 3: five assets in that particular region, I thought, Hey, if

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Speaker 3: I developed when or I get a relationship with a

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Speaker 3: seller that would sell, I would bring it to that.

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Speaker 2: You knew where to bring it?

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Speaker 1: Huh?

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Speaker 2: Really, really, quite fascinating. And so when did you found

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Speaker 2: your own real estate brokerage farm?

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Speaker 3: So that was basically in college. So I was in college.

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Speaker 3: That was in college I became a real estate broker.

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Speaker 3: Before college, I was a licensed salesperson and then you

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Speaker 3: have to have X amount of hours under your belt

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Speaker 3: before you can become a brokerage. And I've got my

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Speaker 3: brokerage license in ninety seven.

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Speaker 2: So how long did you do that as a as

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Speaker 2: a broker rather than an investor? Or? They coon of

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Speaker 2: around parallel path.

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Speaker 3: No, so I was basically working exclusively for generating fees

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Speaker 3: from like ninety seven to two thousands, two thousand and one.

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Speaker 3: I started buying my first asset around two ninety nine,

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Speaker 3: going into two thousand. Obviously the first one I bought.

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Speaker 3: It took me a while obviously to give up the

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Speaker 3: transactional side until I could support myself on owning assets.

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Speaker 2: So you ramp up various assets until twenty thirteen when

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Speaker 2: you start Prime group. Was that the path?

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Speaker 3: So what I did was so my mom took the

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Speaker 3: home equity loan my parents did against their home. The

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Speaker 3: first asset I bought, actually I had sold to that

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Speaker 3: gentleman ten months prior and I called them up and

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Speaker 3: I said, hey, you know, Wayne, I sold you this

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Speaker 3: property was on Cape Cod, would you be interested in

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Speaker 3: selling it? And I sold it to him for three million.

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Speaker 3: He ended up selling it to me for five million

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Speaker 3: ten months eailier and then I moved up to Cape

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Speaker 3: Cod and I actually ran the asset for the first

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Speaker 3: two years to see how the business worked, because I

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Speaker 3: didn't want to be that owner that would tell people

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Speaker 3: what to do without actually being able to do it themselves.

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Speaker 3: And then I bought my second property, and then I

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Speaker 3: bought my third, and then by two thousand and five

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Speaker 3: August twelve, two thousand and five, I had a large

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Speaker 3: liquidity event. I sold a group of assets to Sam Zell.

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Speaker 3: That's when he converted MHC, which was manufactured housing communities

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Speaker 3: his rate to equity lifestyle communities and he started to

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Speaker 3: focus on RV parks. So on that date I sold

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Speaker 3: him roughly five assets back then, which provided a substantial

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Speaker 3: amount of liquidity to myself, and I went out and

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Speaker 3: did a bunch of That's when I really started to

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Speaker 3: build the portfolio.

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Speaker 2: So I want to draw a line. So you're a

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Speaker 2: college kid randomly calling big real estate investors, including Sam

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Speaker 2: Zel who took your phone call, took my phone call

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Speaker 2: and you had a long conversation with did they did?

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Speaker 2: And so how many years later it's like, hey, Sam,

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Speaker 2: it's me Bob. Do you remember me? I have some

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Speaker 2: assets for you.

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Speaker 3: It was funny when you say that, because when I

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Speaker 3: was dealing with the CEO. There's a CEO at the time,

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Speaker 3: I always wanted because I never really spoke to him

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Speaker 3: then after so I wonder if you'd actually put two

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Speaker 3: and two together. I'm sure he did, But it was

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Speaker 3: it was a really interesting transaction, you know. It was

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Speaker 3: the RV world was an interesting business, the RV parks.

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Speaker 3: It was basically I was the first one to really

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Speaker 3: use securitize financing in the RV park world. That hadn't

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Speaker 3: been really done prior. So it was. It was an

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Speaker 3: interesting time.

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Speaker 2: So now you have a liquidity event, you're tapping into

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Speaker 2: Wall Street securitization, all the funnes. How at what point

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Speaker 2: do you say, oh, there's a ready source of capital.

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Speaker 2: I could just put a roll up strategy together and

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Speaker 2: run all of these properties more of efficiently. Then mom

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Speaker 2: and Pops can do. Every one of these would have

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Speaker 2: to have a separate accounting and a separate tax filing

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Speaker 2: and all that stuff. You centralize that and suddenly it's

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Speaker 2: productive and efficient one.

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Speaker 3: Hundred percent what I So, basically, from let's say two

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Speaker 3: thousand through two thousand and five two thousand and six,

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Speaker 3: I was acquiring a lot of mobile homr V parks.

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Speaker 3: I also owned shopping centers, a little bit of everything.

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Speaker 3: It was a pretty diversified portfolio. And what really transitioned

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Speaker 3: to me to become an asset specialist, which we are now,

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Speaker 3: was how well self storage was doing during the first

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Speaker 3: financial crisis. I was doing a year in portfolio review

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Speaker 3: in around two thousand and seven two thousand and eight,

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Speaker 3: and the self storage assets were a smaller part of

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Speaker 3: my portfolio back then, but they were outperforming everything else

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Speaker 3: at that time. It wasn't like they were going, you know,

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Speaker 3: straight up, but they were so defensive and they were

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Speaker 3: doing so well when all these other assets were getting

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Speaker 3: beat up. And I decided at that point to become

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Speaker 3: an asset specialist stingularly focus on self storeage. So I

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Speaker 3: sold off Over the next few years, I sold off

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Speaker 3: the rest of the mobilehome in RV parks. I had

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Speaker 3: multifamily that went to third party management, and from that

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Speaker 3: time forward, I continued just to consolidate self storage. This

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Speaker 3: was on my own balance sheet at this time, and

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Speaker 3: then I started the co mingled fun business around twenty

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Speaker 3: and fourteen. So from basically two thousand and seven two

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Speaker 3: thousand and eight through twenty and fourteen, I was using

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Speaker 3: my own capital or in house capital to acquire these assets.

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Speaker 2: So I'm curious why would self storage do well during

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Speaker 2: the financial crisis. Was it literally people were losing their homes,

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Speaker 2: they had to figure out where all their stuff had

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Speaker 2: to go, or what was happening in that period that

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Speaker 2: made that such a standout performer.

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Speaker 3: I would say it was more the defensive nature of it,

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Speaker 3: wh were these other assets were decreasing dramatically. Storage was

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Speaker 3: holding its own and its need based real estate. I

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Speaker 3: do not buy aspirational real estate. I think that's where

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Speaker 3: a lot of people get in trouble. I buy real

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Speaker 3: estate that people need for all different economic cycles, and

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Speaker 3: that's what self storage is. You know, it's upgrades, downgrades, death, divorce,

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Speaker 3: all of those type of life cycles or some that

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Speaker 3: happens in life creates some need for storage.

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Speaker 2: It seems like you are in a variety of different

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Speaker 2: regions everywhere from Saratoga to Springs to Chelsea. Here in

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Speaker 2: New York City, how do your underwriting assumptions differ relative

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Speaker 2: to is this urban? Is this suburban? Is it ex urban?

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Speaker 2: Is it out in the Styx? How do you look

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Speaker 2: at these different spaces? Obviously valuations differ, in rents differ.

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Speaker 2: What's the thought process?

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Speaker 3: So we truly obviously real estate. That's some cliche, but

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Speaker 3: it's location, location, locations. So if you look at our portfolio,

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Speaker 3: it basically you take the United States and it looks

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Speaker 3: like a U. So we're up and down the coasts

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Speaker 3: where right now we don't have exposure in Texas. And

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Speaker 3: the reason why is that there's a lot of open

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Speaker 3: zoning in Texas and one of our major requirements is

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Speaker 3: barriers to entry. And the reason why we're along coastlines

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Speaker 3: and then we're up picking up in the mountain cities

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Speaker 3: out in like Utah and Colorado is that there's a

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Speaker 3: barrier that's natural barrier keeping the population tight to a nucleus.

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Speaker 3: So we want to be in predictable downtown retail corridors

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Speaker 3: when we're choosing the asset. So that's the first glance

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Speaker 3: over deciding where we're going to buy. Then it goes

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Speaker 3: down to what is the supply, what's going to constrain

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Speaker 3: the supply in that particular market, because like any other

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Speaker 3: type of real estate, there's always areas that are oversupplied,

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Speaker 3: and the key is finding these areas that are undersupplied.

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Speaker 3: When I was first doing this with paper, it was

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Speaker 3: a lot of obviously calling on the phone, calling the assessor,

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Speaker 3: feeling the market out, visiting. Now we have built very

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Speaker 3: sophisticated software that helps us pre identify these areas that

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Speaker 3: we should be buying, not even the area, the exact

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Speaker 3: asset we should be buying, even though it's not for sale.

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Speaker 3: So we built out this program where it basically I

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Speaker 3: can put in our buybox and it populates out of

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Speaker 3: the sixty thousand self storage facilities in the country the

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Speaker 3: ones we should go after though they're not for sale.

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Speaker 3: And then what we have is our deal teams, which

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Speaker 3: are a group of roughly three dozen people internally that

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Speaker 3: we allocate the deals that fit our criteria to and

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Speaker 3: then they continue to call and visit those owners until

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Speaker 3: we convert them to sellers. So we truly buy everything

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Speaker 3: off market and it's one organically originated.

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Speaker 2: Huh really really fascinating. Coming up, we continue our conversation

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Speaker 2: with Bob Moser, CEO of Prime Group Holdings, discussing the

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Speaker 2: prime storage business. I'm very results you're listening.

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Speaker 4: To Masters in Business on Bloomberg Radio. I'm very results

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Speaker 4: you're listening to Masters in business on Bloomberg Radio. My

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Speaker 4: extra special guest this week is Bob Moser. He is

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Speaker 4: the CEO of Prime Group Holdings, specializing in privately held

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Speaker 4: self storage commercial real estate. The firm has acquired over

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Speaker 4: ten billion dollars in real estate assets across three hundred

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Speaker 4: and fifty locations, twenty eight states, Canaona, and the Virgin Islands.

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Speaker 4: So let's talk a little bit about the business model

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Speaker 4: of self storage. I see these areas popping up everywhere.

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Speaker 4: I see these self storage facilities popping up everywhere.

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Speaker 2: How widely used are they? How profitable are they versus

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Speaker 2: you know, traditional commercial real estate? What is the appeal

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Speaker 2: that just over the past ten twenty years this space

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Speaker 2: has exploded.

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Speaker 3: It's a great question. So self storage has the lowest

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Speaker 3: break even occupancy of any institutional real estate asset class

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Speaker 3: I can think of, So at forty percent occupied, your

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Speaker 3: break into even on expenses. So there it's very risk adverse.

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Speaker 3: It's a very risk adverse asset from top to bottom.

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Speaker 3: When you're looking at how what the tenant signs to

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Speaker 3: become a tenant. These are month to month leases, so

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Speaker 3: we can adjust to what's happening in the macro environment

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Speaker 3: at any given time. There's no lease risk whatsoever in

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Speaker 3: the asset class.

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Speaker 2: So no lobby, no doorman, no no door showers to

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Speaker 2: none of the things that multifamily.

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Speaker 3: Correct makes so expense Well, you think about a multifamily.

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Speaker 3: If you're gonna turn a unit, it's gonna cush you

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Speaker 3: anywhere from let's say fifteen hundred to five thousand, depending

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Speaker 3: on what you're doing. Self storage is five dollars. We're

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Speaker 3: sweeping it and replacing a light bulb if there is one.

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Speaker 3: So and ten. Improvement is what really hurts, especially office,

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Speaker 3: but a lot of real estate assets. You're constantly chasing

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Speaker 3: that capital improvement.

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Speaker 2: Really really quite interesting. What about ancillary revenue streams? We've

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Speaker 2: all seen those silly reality shows where they find these

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Speaker 2: you know, someone abandons the unit and they find some

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Speaker 2: million dollar painting in there. How much nonsense?

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Speaker 3: Yeah, I haven't had that look, but the h it's

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Speaker 3: funny that you bring that up. So prior to those

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Speaker 3: TV shows, we would have the auctions on site, kind

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Speaker 3: of like you see in those the TV shows. What

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Speaker 3: happened though, everybody all of a sudden started showing up

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Speaker 3: to these had a personality they thought they were on TV.

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Speaker 3: The traffic became overwhelming on the asset. So everything now

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Speaker 3: was virtual. So when we have an auction, it's all

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Speaker 3: done online and it's not a revenue source for the business.

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Speaker 3: So we put our properties through a five step value

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Speaker 3: creation process, and one of those steps is diversifying the

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Speaker 3: revenue stream. And it's a great question because there's a

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Speaker 3: substantial amount of value picked up in self stores through

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Speaker 3: these ancillary revenue streams. One of them is a tenant

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Speaker 3: protection program where the tenants are able to push the

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Speaker 3: liability of a storm or something happening to their goods

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Speaker 3: onto the landlord for paying a certain price. There's obviously

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Speaker 3: there's prime access if you need access past the operating hours.

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Speaker 3: So let's say you need access twenty four hours a day.

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Speaker 3: You're a small business, you can pay for that. So

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Speaker 3: these items obviously add up when you have two to

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Speaker 3: three hundred thousand units like we currently operate.

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Speaker 2: I hadn't even thought about the idea of a storm.

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Speaker 2: So you live near a coast, there's a big hurricane coming. Hey,

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Speaker 2: I have a bunch of furniture and I want to

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Speaker 2: get soaked. If we're if we're swamped, let's move an

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Speaker 2: inland to a storage area.

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Speaker 3: And that's and God forbid something happens to their home.

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Speaker 3: You know, obviously a lot of stuff gets moved into

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Speaker 3: the storage facility.

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Speaker 2: So you, you guys are the largest privately held self

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Speaker 2: storage set of ownership. What's the competition, Like, I know,

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Speaker 2: I know Blackstone is in here. We see cubes everywhere,

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Speaker 2: we see public storage. Who are your big competitors? And

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Speaker 2: is there an eventual play where someone takes you out?

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Speaker 1: Correct?

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Speaker 3: So there's the group of public companies that you were

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Speaker 3: just mentioning. You have extra space, you have public storage,

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Speaker 3: you have cubesmart U Hall and you all.

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Speaker 2: I didn't even think of you all that exactly.

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Speaker 3: Most people think I'm just at the moving rights, but

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Speaker 3: obviously they own a substantial amount of self storage. Substantial amount.

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Speaker 3: What we do differently is we operate differently. We have

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Speaker 3: a different I would say rationale when it comes to

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Speaker 3: operating compared to the reats, where the reats are highly

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Speaker 3: focused on occupancy, they want to keep their occupancy of

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Speaker 3: ninety ninety two percent, where I'll trade occupancy for top

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Speaker 3: line revenue. So what we'll do is in the off

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Speaker 3: season when it's slower, we'll hold our rents, create some occupancy,

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Speaker 3: and then come spring when the season's busier, we have

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Speaker 3: room to put the higher payers in. Where the rates

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Speaker 3: are more focused on keeping that occupancy steady at ninety two,

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Speaker 3: then come spring they have no room to put those

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Speaker 3: people in. So we really focus on driving the value.

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Speaker 3: We've looked at what works over the last twenty years

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Speaker 3: and then we've just implemented it on scale across the portfolio.

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Speaker 2: And then the related issue I see are the mobile

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Speaker 2: pods people sometimes use. Seems sort of adjacent to the space.

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Speaker 2: What are your thoughts on that?

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Speaker 3: So we're not in that business. It's a lot more

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Speaker 3: labor intensive.

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Speaker 2: You got to physically drop the pod off and come

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Speaker 2: collect it later.

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Speaker 3: Correct. So in storage, one of the main benefits is

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Speaker 3: there we take no abailment risk, so we're never taking

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Speaker 3: possession of the person's goods. Where the pod, you start

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Speaker 3: to cross that line a bit. So on the storage,

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Speaker 3: it's one hundred percent the consumers or the clients' possessions.

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Speaker 3: We have no contact with it. They put their lock

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Speaker 3: on it, they're the only one that has access to it.

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Speaker 3: Were one hundred percent hands off.

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Speaker 2: So this really went from kind of a niche to

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Speaker 2: a mainstream investment class over the past couple of years.

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Speaker 2: You were really early in this space. What did you

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Speaker 2: see that are those miss and what do you think

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Speaker 2: a lot of commercial real estate investors don't quite understand

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Speaker 2: about this space?

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Speaker 3: It was the fragmentation again, the first fragment assets I

402
00:20:30,800 --> 00:20:33,200
Speaker 3: was focused on with the mobile home parks and RV parks,

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Speaker 3: which I saw starting to consolidate, and then obviously how

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Speaker 3: well storage did during those tougher times, which really led

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Speaker 3: me to the storage being highly fragmented. When I first

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Speaker 3: entered the asset class, even back in around twenty and

407
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Speaker 3: fifteen twenty fourteen, it was roughly eighty percent still owned

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Speaker 3: by mom and pops. Wow, so just the reach and

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Speaker 3: the institutionals only owned twenty percent of the the outstandings.

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Speaker 3: Today it's probably closer to seventy seventy five percent, So

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Speaker 3: there's been a lot of consolidations. But what's interesting about

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Speaker 3: storage is that the new supply coming online is being

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Speaker 3: brought online by what we call merchant builders. So there

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Speaker 3: are regional developers who have an extra piece of land,

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Speaker 3: they're shopping center developers who put a storage up on

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Speaker 3: that corner lot or that key lot they might have.

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Speaker 3: It's not the large institutions building the supply, so it

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Speaker 3: keeps it pretty fragmented. So they're the ones adding the

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Speaker 3: new supply to the market.

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Speaker 2: That's really kind of interesting. So a couple of years ago,

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Speaker 2: you did a raise a couple of billion dollars from

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Speaker 2: outside investors. Seems like that's a good chunk of money

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Speaker 2: to go out and start either buying or building. How

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Speaker 2: do you look at the two options?

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Speaker 3: So we don't like taking construction risks, so I like

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Speaker 3: that we buy cash looan so day one for an

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Speaker 3: asset to make it through our ic committee, we have

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Speaker 3: a very high threshold, and that part of that threshold

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Speaker 3: is cash flow. We pride ourselves on being able to

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Speaker 3: distribute free cash flow to our investors pretty early in

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Speaker 3: the fund is life, even during the investment period, which

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Speaker 3: is pretty rare. But the fun business started in actually

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Speaker 3: twenty fifteen as a smaller fund. Up until that point

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Speaker 3: I had only purchased on my own capital, and we

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Speaker 3: did a test fund that did very well. Was a

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Speaker 3: smaller fund. It was only one hundred and fifty four million,

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Speaker 3: and then the second fund we grew it to seven

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Speaker 3: hundred and twenty five million, and then the third fund

439
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Speaker 3: is when you're referring to, is roughly two and a

440
00:22:24,760 --> 00:22:25,840
Speaker 3: half billion dollar fund.

441
00:22:26,000 --> 00:22:29,439
Speaker 2: So why go to outside investors rather than go the

442
00:22:29,520 --> 00:22:32,560
Speaker 2: securitize route? Is it that much less expensive to do?

443
00:22:33,200 --> 00:22:33,439
Speaker 2: It was?

444
00:22:33,440 --> 00:22:36,760
Speaker 3: Basically it's a it's scale play. So I knew them

445
00:22:36,800 --> 00:22:39,560
Speaker 3: as a class was going to consolidate quickly once the

446
00:22:39,600 --> 00:22:43,000
Speaker 3: other the large institutions understood it better, or when the

447
00:22:43,119 --> 00:22:45,960
Speaker 3: origin investors did, and I wanted to have that foothold

448
00:22:46,040 --> 00:22:48,040
Speaker 3: in the market, and the best way to do it

449
00:22:48,119 --> 00:22:51,200
Speaker 3: was through the comingled fund way where and also by

450
00:22:51,280 --> 00:22:53,800
Speaker 3: doing that, I think we were able to disrupt things

451
00:22:53,800 --> 00:22:56,359
Speaker 3: a bit because we pride ourselves on delivering what we

452
00:22:56,440 --> 00:23:00,480
Speaker 3: call entrepreneurial type returns. We are operators, are in the

453
00:23:00,480 --> 00:23:03,080
Speaker 3: field on a daily basis, we're in the office grinding

454
00:23:03,119 --> 00:23:05,840
Speaker 3: this out. So we try to deliver direct property level

455
00:23:05,920 --> 00:23:08,040
Speaker 3: returns to our investors.

456
00:23:08,119 --> 00:23:13,000
Speaker 2: So not hands off like correct numbers. So let's you

457
00:23:13,040 --> 00:23:17,640
Speaker 2: mentioned your investment committee walk us through the typical acquisition.

458
00:23:18,080 --> 00:23:20,679
Speaker 2: How do you source these things? Is it still just

459
00:23:21,280 --> 00:23:23,680
Speaker 2: calling people up and saying hey, let us know when

460
00:23:23,720 --> 00:23:26,440
Speaker 2: you want to sell and following up and then what's

461
00:23:26,480 --> 00:23:28,600
Speaker 2: the process like through the investment committee.

462
00:23:28,600 --> 00:23:32,119
Speaker 3: So this is where it takes the correct personality to

463
00:23:32,200 --> 00:23:34,159
Speaker 3: be this part of the team. And these are what

464
00:23:34,160 --> 00:23:36,320
Speaker 3: we call our deal team members. So what we use

465
00:23:36,440 --> 00:23:40,080
Speaker 3: is our proprietary software we have developed in house that

466
00:23:40,200 --> 00:23:43,720
Speaker 3: we load our entire buybox into this software and it

467
00:23:44,080 --> 00:23:47,320
Speaker 3: projects it's an AI system every self storage that fits

468
00:23:47,320 --> 00:23:50,440
Speaker 3: that criteria in the country, and it has every data

469
00:23:50,440 --> 00:23:53,119
Speaker 3: point about that asset, the owner, how big it is,

470
00:23:53,200 --> 00:23:56,000
Speaker 3: the tax is, the rate, everything you can imagine. Then

471
00:23:56,080 --> 00:23:58,560
Speaker 3: we allocate that deal to the deal team member that

472
00:23:58,600 --> 00:24:01,480
Speaker 3: covers that area. Then he or she continues to call

473
00:24:01,560 --> 00:24:03,879
Speaker 3: that owner every thirty to forty five days until we

474
00:24:03,920 --> 00:24:06,320
Speaker 3: convert them to a seller. So some of these deals

475
00:24:06,320 --> 00:24:08,679
Speaker 3: that we're buying today we've been working on for a

476
00:24:08,720 --> 00:24:11,120
Speaker 3: decade and we finally got the seller to the point

477
00:24:11,119 --> 00:24:15,840
Speaker 3: to sell. So it's a very thick, skinned long relationship.

478
00:24:15,840 --> 00:24:18,240
Speaker 3: But it's a numbers game. So if we have thirty

479
00:24:18,240 --> 00:24:21,800
Speaker 3: six people with good information calling these owners, and the

480
00:24:21,840 --> 00:24:25,239
Speaker 3: reason why we do so much upfront information is we

481
00:24:25,280 --> 00:24:27,560
Speaker 3: want to know more about the asset than the seller

482
00:24:27,600 --> 00:24:29,679
Speaker 3: does in a way, because we want to separate ourselves

483
00:24:29,680 --> 00:24:32,199
Speaker 3: from anybody else calling them. We want to show that

484
00:24:32,240 --> 00:24:34,800
Speaker 3: we're sincerely interested in buying their asset when we were

485
00:24:34,840 --> 00:24:37,919
Speaker 3: able to tell them, you know, or even educate them

486
00:24:37,960 --> 00:24:38,760
Speaker 3: about their own asset.

487
00:24:38,800 --> 00:24:41,320
Speaker 2: At times, so I get calls from an emails from

488
00:24:41,320 --> 00:24:43,520
Speaker 2: private equity guys, Hey, do you guys want to sell?

489
00:24:43,520 --> 00:24:46,959
Speaker 2: Blah blah blah. It's like it gets annoying at a point.

490
00:24:47,960 --> 00:24:51,560
Speaker 2: What's the conversation like with a seller, Hey spoke to

491
00:24:51,600 --> 00:24:55,880
Speaker 2: you back in October, just checking in seeing if anything changes.

492
00:24:56,119 --> 00:24:57,520
Speaker 2: How receptive are people to this?

493
00:24:57,640 --> 00:24:59,760
Speaker 3: So it's more than And I get those same emails

494
00:25:00,000 --> 00:25:01,560
Speaker 3: and it drives me nuts. Or the phone call, will

495
00:25:01,600 --> 00:25:03,920
Speaker 3: you sell your property? I'm like, which property? What area?

496
00:25:04,000 --> 00:25:06,399
Speaker 3: So when we call, you know we're referring to an

497
00:25:06,400 --> 00:25:09,720
Speaker 3: exact asset. We've already been by the asset. We know

498
00:25:09,800 --> 00:25:11,639
Speaker 3: what the numbers are, we know the size of it,

499
00:25:11,720 --> 00:25:14,119
Speaker 3: we've done, and we might have spent already two weeks

500
00:25:14,240 --> 00:25:17,240
Speaker 3: researching that asset before we called the owner and instead

501
00:25:17,240 --> 00:25:19,320
Speaker 3: of somebody just blindly calling you Berry, but if they

502
00:25:19,359 --> 00:25:21,439
Speaker 3: called you and they knew a lot about you, know,

503
00:25:21,480 --> 00:25:24,320
Speaker 3: your business, and they knew the numbers are estimated, sometimes

504
00:25:24,359 --> 00:25:26,359
Speaker 3: you're more intrigued to say, hey, this guy spent the

505
00:25:26,400 --> 00:25:29,040
Speaker 3: time to learn about But then we visit them on

506
00:25:29,080 --> 00:25:31,520
Speaker 3: the holidays, we find out when their birthday is, we

507
00:25:31,520 --> 00:25:34,680
Speaker 3: sent them acart, but it's a constantly being in contact

508
00:25:34,760 --> 00:25:37,120
Speaker 3: with them, and then we try to solve that problem

509
00:25:37,160 --> 00:25:39,040
Speaker 3: what they do with the money afterwards? How do they

510
00:25:39,080 --> 00:25:42,120
Speaker 3: maximize their sale proceeds? And we hold their hand through

511
00:25:42,160 --> 00:25:45,159
Speaker 3: the process and they become one of our biggest referrals

512
00:25:45,960 --> 00:25:46,600
Speaker 3: our sellers.

513
00:25:46,920 --> 00:25:50,719
Speaker 2: Huh, that's amazing. Maximizing returns afterwards. I'm going to assume

514
00:25:51,200 --> 00:25:55,600
Speaker 2: that's some combination of it's obviously capital gains, there's a

515
00:25:55,600 --> 00:25:59,159
Speaker 2: bunch of depreciation that comes along. There's a lot of

516
00:25:59,160 --> 00:26:03,800
Speaker 2: different things a seller can do. I would not have

517
00:26:03,880 --> 00:26:07,720
Speaker 2: thought that a buyer is going to facilitate that process.

518
00:26:07,760 --> 00:26:09,480
Speaker 3: We hold there and through it because we want to

519
00:26:09,480 --> 00:26:12,760
Speaker 3: eliminate any kind of friction. We need to buy assets.

520
00:26:12,800 --> 00:26:15,000
Speaker 3: We need to buy that asset. Like you said, we're

521
00:26:15,040 --> 00:26:18,119
Speaker 3: not blindly taking a shotgun and just waiting for something

522
00:26:18,119 --> 00:26:21,640
Speaker 3: to come to market. We're specifically targeting assets that fit

523
00:26:21,680 --> 00:26:25,720
Speaker 3: our criteria, so we know which ones make sense until

524
00:26:25,720 --> 00:26:28,840
Speaker 3: we dive into the actual real you know, initially it's

525
00:26:28,840 --> 00:26:31,320
Speaker 3: all hypothetical. Until we get the actual numbers from that seller,

526
00:26:32,040 --> 00:26:33,560
Speaker 3: that's the only time things would change.

527
00:26:33,720 --> 00:26:36,760
Speaker 2: So this sounds like it's a really unique approach in

528
00:26:36,800 --> 00:26:40,160
Speaker 2: the commercial real estate is Are you concerned that someone's

529
00:26:40,200 --> 00:26:43,000
Speaker 2: going to say, Hey, these guys seem to figure it out,

530
00:26:43,119 --> 00:26:44,159
Speaker 2: let's do what they're doing.

531
00:26:44,320 --> 00:26:46,600
Speaker 3: Well, we have twenty five year headstart on them, so

532
00:26:46,640 --> 00:26:50,199
Speaker 3: we have, you know, decades of information gathering, decades of

533
00:26:50,240 --> 00:26:54,120
Speaker 3: conversations with these sellers. Moreover, it's a heavy lift, it's

534
00:26:54,119 --> 00:26:56,760
Speaker 3: a burdensome, it's a expensive what I carry on my

535
00:26:56,840 --> 00:26:59,520
Speaker 3: deal teams. But the reason we do it is because

536
00:26:59,760 --> 00:27:02,320
Speaker 3: there's no other way to buy assets the way we

537
00:27:02,320 --> 00:27:04,560
Speaker 3: do and create the value we do. If we were

538
00:27:04,600 --> 00:27:06,680
Speaker 3: buying them on the open market. You think about it,

539
00:27:06,920 --> 00:27:08,840
Speaker 3: if we weren't buying it this way, we would be

540
00:27:08,880 --> 00:27:11,000
Speaker 3: buying it like ninety nine percent of every other asset

541
00:27:11,040 --> 00:27:14,880
Speaker 3: where it gets brokered. Beautiful pictures are taken, it's presented

542
00:27:14,920 --> 00:27:17,600
Speaker 3: in its best color, its shot gunned around to one

543
00:27:17,640 --> 00:27:20,560
Speaker 3: hundred buyers. You go through multiple delayers of bidding, and

544
00:27:20,600 --> 00:27:22,600
Speaker 3: at the end you'll overpaid for the asset.

545
00:27:22,760 --> 00:27:26,880
Speaker 2: The winner's curse in an auction situation, exactly. The more

546
00:27:26,880 --> 00:27:29,000
Speaker 2: buyers there are, the more likely it is the winter

547
00:27:29,080 --> 00:27:30,120
Speaker 2: over paid hundred percent.

548
00:27:30,160 --> 00:27:32,880
Speaker 3: So we bypass all that and we go directly to

549
00:27:32,960 --> 00:27:35,800
Speaker 3: the cellar and we solve problems for them.

550
00:27:35,920 --> 00:27:39,680
Speaker 2: That's really fascinating. I would not have guessed that degree

551
00:27:39,880 --> 00:27:45,000
Speaker 2: of complexity, sophistication, and facilitation to the seller.

552
00:27:45,240 --> 00:27:47,320
Speaker 3: Here's the crazy thing. We're closing six to seven deals

553
00:27:47,359 --> 00:27:50,640
Speaker 3: a month, so one or two a week on average.

554
00:27:50,640 --> 00:27:52,160
Speaker 3: When you look at that way, you know we will

555
00:27:52,200 --> 00:27:54,280
Speaker 3: bundle them up so they all close in a certain

556
00:27:54,320 --> 00:27:56,800
Speaker 3: maybe couple quarters. But yeah, when you average it.

557
00:27:56,760 --> 00:28:00,439
Speaker 2: Out, so it sounds like just the prep for you

558
00:28:00,480 --> 00:28:04,159
Speaker 2: make an offer off if it's a few weeks, it

559
00:28:04,200 --> 00:28:07,560
Speaker 2: sounds like you're spending tens of thousands, maybe hundreds of

560
00:28:07,560 --> 00:28:08,760
Speaker 2: thousands of dollars easily.

561
00:28:09,359 --> 00:28:11,360
Speaker 3: Really, but you think about it, if I don't get

562
00:28:11,359 --> 00:28:13,000
Speaker 3: that asset today, I might get it in a month.

563
00:28:13,000 --> 00:28:14,080
Speaker 3: If I don't get it in a month, I might

564
00:28:14,080 --> 00:28:15,560
Speaker 3: get it next year. If I don't get it next year,

565
00:28:15,560 --> 00:28:17,600
Speaker 3: We're into this for the long run, you know. We're

566
00:28:17,640 --> 00:28:22,840
Speaker 3: building a I think, become the best operator of alternative assets.

567
00:28:23,000 --> 00:28:25,800
Speaker 2: And when you guys raised Fund three, that was the

568
00:28:25,880 --> 00:28:30,440
Speaker 2: largest dedicated self storage fundraise at the time. I think

569
00:28:30,440 --> 00:28:32,160
Speaker 2: that was two and a half billion dollars or something

570
00:28:32,200 --> 00:28:35,959
Speaker 2: like that. Is that still the largest? Have there been

571
00:28:36,000 --> 00:28:38,640
Speaker 2: other subsequent raises in the self storage space?

572
00:28:38,720 --> 00:28:40,240
Speaker 3: That's the largest I know if that might have been

573
00:28:40,280 --> 00:28:44,000
Speaker 3: one of the largest property specific funds raised as well.

574
00:28:44,560 --> 00:28:45,720
Speaker 3: I've heard that before.

575
00:28:46,320 --> 00:28:50,800
Speaker 2: And what's the total self storage headcount? That's over three

576
00:28:50,880 --> 00:28:51,680
Speaker 2: hundred Now.

577
00:28:52,200 --> 00:28:54,160
Speaker 3: We have over three hundred, close to three hundred and

578
00:28:54,160 --> 00:28:57,120
Speaker 3: fifty assets. We have around seven or eight hundred employees

579
00:28:57,160 --> 00:29:01,040
Speaker 3: around the country. We have two main three main offices.

580
00:29:01,040 --> 00:29:03,360
Speaker 3: Now we have one in Sara, Choga Springs, where we're

581
00:29:03,440 --> 00:29:06,080
Speaker 3: it's our main headquarters. Then we have one in Jupiter, Florida,

582
00:29:06,520 --> 00:29:08,720
Speaker 3: and we're just opening an office here in West Chelsea.

583
00:29:09,560 --> 00:29:13,560
Speaker 2: Really really quite fascinating. Coming up, we continue our conversation

584
00:29:13,680 --> 00:29:18,000
Speaker 2: with Bob Moser, founder and CEO of Prime Group Holdings

585
00:29:18,440 --> 00:29:23,400
Speaker 2: discussing the state of commercial real estate today. I'm Barry Ridholts.

586
00:29:23,440 --> 00:29:36,960
Speaker 2: You're listening to Masters in Business on Bloomberg Radio. I'm

587
00:29:36,960 --> 00:29:40,680
Speaker 2: Barry Ridolts. You're listening to Masters in Business on Bloomberg

588
00:29:40,800 --> 00:29:45,560
Speaker 2: Radio and watching Masters in Business on YouTube. My extra

589
00:29:45,600 --> 00:29:47,840
Speaker 2: special guest this week is Bob Moser. He is the

590
00:29:47,880 --> 00:29:53,600
Speaker 2: CEO of Prime Group Holdings, the largest privately held self

591
00:29:53,640 --> 00:29:58,280
Speaker 2: storage investment group in the United States. The over three

592
00:29:58,400 --> 00:30:01,600
Speaker 2: hundred and fifty locations across on eight states, the US,

593
00:30:01,680 --> 00:30:05,280
Speaker 2: Virgin Islands, and Canada. I want to talk a little

594
00:30:05,320 --> 00:30:08,480
Speaker 2: bit about the state of commercial real estate today, but

595
00:30:08,560 --> 00:30:11,040
Speaker 2: I still have a handful of questions I have to

596
00:30:11,080 --> 00:30:18,560
Speaker 2: ask you about self storage. You mentioned small businesses are

597
00:30:18,720 --> 00:30:22,200
Speaker 2: a big customer. I wouldn't have guessed that. What percentage

598
00:30:22,320 --> 00:30:26,280
Speaker 2: of your units are rented by small businesses and what

599
00:30:26,320 --> 00:30:26,680
Speaker 2: do they.

600
00:30:26,640 --> 00:30:28,880
Speaker 3: Use this for? It's a great question. It's probably one

601
00:30:28,920 --> 00:30:32,440
Speaker 3: of the most overlooked aspects of self storage. Self storage

602
00:30:32,440 --> 00:30:35,920
Speaker 3: has two demand drivers, which is very unique in real

603
00:30:36,040 --> 00:30:38,680
Speaker 3: estate in general. You think about residential, do you have

604
00:30:38,760 --> 00:30:42,440
Speaker 3: residential demand? An office has business demand? Self storage we

605
00:30:42,520 --> 00:30:45,960
Speaker 3: have both residential and business demand. A lot of people

606
00:30:45,960 --> 00:30:48,920
Speaker 3: think of self storage. They think of storing their grandmother's couch.

607
00:30:49,000 --> 00:30:51,680
Speaker 3: It's far from it. That might be one or two percent.

608
00:30:52,240 --> 00:30:57,000
Speaker 3: The rest is of thirty to forty percent or small businesses, contractors, landscapers,

609
00:30:57,320 --> 00:31:01,600
Speaker 3: a lot of pharmaceutical reps. So their warehouse. We're the

610
00:31:01,600 --> 00:31:04,280
Speaker 3: warehouse for that small business that employs the majority of

611
00:31:04,280 --> 00:31:07,440
Speaker 3: the US population. And what's nice about storage being on

612
00:31:07,480 --> 00:31:10,120
Speaker 3: a month to month basis the terms of the contract.

613
00:31:10,360 --> 00:31:13,320
Speaker 3: They can expand or contract as needed with their business.

614
00:31:13,560 --> 00:31:15,720
Speaker 3: They don't have to sign a long term lease with

615
00:31:15,760 --> 00:31:19,040
Speaker 3: an industrial or a warehouse. It's a perfect fit for

616
00:31:19,120 --> 00:31:22,240
Speaker 3: an entrepreneur or a starting business or even a mature business.

617
00:31:22,640 --> 00:31:22,920
Speaker 1: Huh.

618
00:31:22,960 --> 00:31:28,560
Speaker 2: Really really interesting, And we were talking previously about self

619
00:31:28,600 --> 00:31:32,720
Speaker 2: storage isn't covered by the traditional landlord tenant law. This

620
00:31:32,800 --> 00:31:35,720
Speaker 2: is a much easier set of rules to operate on there.

621
00:31:36,160 --> 00:31:38,920
Speaker 2: This is a lean lows system. Is that true in

622
00:31:38,960 --> 00:31:40,120
Speaker 2: all states? Most states?

623
00:31:40,120 --> 00:31:42,480
Speaker 3: One hundred percent? And actually it carries to Canada as

624
00:31:42,480 --> 00:31:45,800
Speaker 3: well in parts of Europe that we're looking at. But yeah,

625
00:31:45,840 --> 00:31:48,520
Speaker 3: and it's basically very similar to like a bank loaning money.

626
00:31:48,800 --> 00:31:51,719
Speaker 3: They're collateral or the lean against in a particular asset.

627
00:31:51,800 --> 00:31:53,719
Speaker 3: And that's the way they look at it. And remember,

628
00:31:53,720 --> 00:31:56,160
Speaker 3: we take, like you're saying, for no abailment risk, so

629
00:31:56,200 --> 00:31:59,240
Speaker 3: we have no idea what's being stored, what the value is,

630
00:31:59,600 --> 00:32:02,360
Speaker 3: so that is the collateral to their lease. If they

631
00:32:02,360 --> 00:32:05,720
Speaker 3: don't pay that, there's an auction process. Obviously, we don't

632
00:32:05,720 --> 00:32:08,720
Speaker 3: want to auction off anybody's goods. And if let's say

633
00:32:08,720 --> 00:32:11,040
Speaker 3: we send out fifty auction notices, maybe one or two

634
00:32:11,080 --> 00:32:13,720
Speaker 3: go because hopefully we can work with that tenant and

635
00:32:13,760 --> 00:32:16,400
Speaker 3: get them caught up. But it provides a way to

636
00:32:16,480 --> 00:32:19,880
Speaker 3: collect the rent that's owed. Unlike a multifamily where it

637
00:32:19,920 --> 00:32:22,480
Speaker 3: might take you a year if you're lucky to fix

638
00:32:22,520 --> 00:32:25,040
Speaker 3: somebody that's not paying. Self storage is a lot quicker,

639
00:32:25,120 --> 00:32:26,040
Speaker 3: easier process.

640
00:32:26,480 --> 00:32:29,160
Speaker 2: And you mentioned Europe. I don't think you have a

641
00:32:29,200 --> 00:32:32,080
Speaker 2: whole lot of exposure currently in Europe. How big a

642
00:32:32,120 --> 00:32:34,440
Speaker 2: push are you looking to make on the continent.

643
00:32:34,760 --> 00:32:37,200
Speaker 3: So we've been doing a lot of digging in figuring

644
00:32:37,200 --> 00:32:41,480
Speaker 3: out what the different aspects in different cities. You know,

645
00:32:41,520 --> 00:32:44,360
Speaker 3: it's interesting because some of the owners in Europe, let's say,

646
00:32:44,400 --> 00:32:46,240
Speaker 3: let's look at London, there will be two or three

647
00:32:46,240 --> 00:32:50,080
Speaker 3: owners that own the majority of that inventory. Our play

648
00:32:50,160 --> 00:32:53,560
Speaker 3: again is going out and buying from that one off owner.

649
00:32:53,600 --> 00:32:55,680
Speaker 3: I really haven't gove into that much, but it's an

650
00:32:55,680 --> 00:33:00,400
Speaker 3: important aspect to our business is we identify the initutional

651
00:33:00,480 --> 00:33:02,440
Speaker 3: asset that's still owned by mom and pop, So we

652
00:33:02,520 --> 00:33:05,000
Speaker 3: target that person that owns one or two facilities, and

653
00:33:05,040 --> 00:33:07,840
Speaker 3: the reason for that is that they're not a professional operator,

654
00:33:08,240 --> 00:33:10,560
Speaker 3: and the chances are that we'll be able to achieve

655
00:33:10,920 --> 00:33:14,320
Speaker 3: our returns, if not better than what we estimated based

656
00:33:14,360 --> 00:33:18,520
Speaker 3: on putting our systems and processes over that family operated asset.

657
00:33:18,960 --> 00:33:21,760
Speaker 3: So in Europe they've been consolidated into groups, so it

658
00:33:21,760 --> 00:33:24,840
Speaker 3: really doesn't provide us that ability to buy assets that

659
00:33:24,880 --> 00:33:29,320
Speaker 3: we think are highly undermanaged. So we're very risk adverse,

660
00:33:29,360 --> 00:33:31,680
Speaker 3: so we'd like to see exactly how the value is

661
00:33:31,680 --> 00:33:33,920
Speaker 3: going to be created. You know, we have a game

662
00:33:34,000 --> 00:33:36,640
Speaker 3: plan on every asset what levers need to be pulled

663
00:33:36,640 --> 00:33:39,120
Speaker 3: in order to create that value, and one of those

664
00:33:39,240 --> 00:33:41,440
Speaker 3: is a lot of the optimization of the rent role,

665
00:33:41,720 --> 00:33:45,040
Speaker 3: optimization of the actual unit mix, the layout of the facility,

666
00:33:45,600 --> 00:33:48,520
Speaker 3: and if it's a larger, more professional owner, the chances

667
00:33:48,560 --> 00:33:51,320
Speaker 3: are those low hanging fruit might not be there. So

668
00:33:51,360 --> 00:33:53,560
Speaker 3: we're still trying to find the markets that have that

669
00:33:53,640 --> 00:33:57,080
Speaker 3: fragmentation where they're still one often two off owners, because

670
00:33:57,080 --> 00:33:59,400
Speaker 3: that is really our bread and butter.

671
00:34:00,000 --> 00:34:03,960
Speaker 2: In US, laws vary somewhat from state to state, but

672
00:34:04,040 --> 00:34:08,120
Speaker 2: it's fairly uniform. How different is it country to country

673
00:34:08,400 --> 00:34:10,000
Speaker 2: in the EU even or the UK.

674
00:34:10,120 --> 00:34:12,239
Speaker 3: Yeah, but even in the States when it comes to

675
00:34:12,320 --> 00:34:15,200
Speaker 3: the actual implementation of the lean law, it does. There's

676
00:34:15,239 --> 00:34:18,799
Speaker 3: different timings, there's different fees that can be charged, There's

677
00:34:18,840 --> 00:34:21,680
Speaker 3: different things that you do with the proceeds from the auction.

678
00:34:22,239 --> 00:34:25,200
Speaker 3: Let's say you receive more than what the person owed to.

679
00:34:26,000 --> 00:34:28,160
Speaker 3: Some of it gets donated away, some of it gets

680
00:34:28,160 --> 00:34:31,080
Speaker 3: contributed back to that cellar. Depending on the state that

681
00:34:31,200 --> 00:34:33,960
Speaker 3: extra free proceeds determined and where it goes. So we

682
00:34:34,000 --> 00:34:36,719
Speaker 3: have a whole legal compliance team that works on this

683
00:34:36,800 --> 00:34:39,080
Speaker 3: on a daily basis to make sure that each state

684
00:34:39,160 --> 00:34:43,040
Speaker 3: law is being followed every municipality in the US, every

685
00:34:43,080 --> 00:34:46,360
Speaker 3: county or every territory in Canada. And that's the research

686
00:34:46,360 --> 00:34:49,040
Speaker 3: we're doing right now in Europe and in Australia, trying

687
00:34:49,080 --> 00:34:51,319
Speaker 3: to find the markets where we know we can go

688
00:34:51,360 --> 00:34:54,360
Speaker 3: in and consolidate get economies a scale out of it,

689
00:34:54,440 --> 00:34:56,399
Speaker 3: but by the assets the way we want to buy

690
00:34:56,440 --> 00:34:57,640
Speaker 3: them on this one off way.

691
00:34:58,840 --> 00:35:06,880
Speaker 2: Really interesting commercial real estates have seen higher rates of costs,

692
00:35:07,280 --> 00:35:11,240
Speaker 2: interest rates and inflation have been kind of stubborn and sticky.

693
00:35:11,800 --> 00:35:15,080
Speaker 2: What sort of refinancing stresses does that create? Or are

694
00:35:15,160 --> 00:35:19,240
Speaker 2: you sidestepping that whole interest rate chase these days?

695
00:35:19,360 --> 00:35:21,799
Speaker 3: So we're very fortunate being in real estate for as

696
00:35:21,840 --> 00:35:24,960
Speaker 3: long as we have. We have developed really deep relationships

697
00:35:25,000 --> 00:35:28,520
Speaker 3: with the large institutional lenders, from City Bank, the GOLOB

698
00:35:28,719 --> 00:35:33,279
Speaker 3: and the JP, the BMO to Northern Trust. You know,

699
00:35:33,320 --> 00:35:35,359
Speaker 3: I'm sure I'm missing one. I'll probably get a call

700
00:35:35,440 --> 00:35:38,960
Speaker 3: after this, but we have very deep rooted relationships and

701
00:35:38,960 --> 00:35:42,479
Speaker 3: we're relationship oriented, so we're there. We work with these

702
00:35:42,520 --> 00:35:46,440
Speaker 3: banks and it's a flight to quality during this time

703
00:35:46,640 --> 00:35:49,200
Speaker 3: where lenders are going to the lenders they have long

704
00:35:49,280 --> 00:35:52,360
Speaker 3: term relationship and track records with. But we spend a

705
00:35:52,360 --> 00:35:55,560
Speaker 3: lot of time making sure that we're hedging our interest rates,

706
00:35:55,719 --> 00:35:57,840
Speaker 3: We're making sure that we're you know, we're putting the

707
00:35:57,920 --> 00:36:00,640
Speaker 3: right debt on the assets at the right time, you know,

708
00:36:00,760 --> 00:36:03,799
Speaker 3: making sure we're not cross collaterlyzing too much. So a

709
00:36:03,840 --> 00:36:04,600
Speaker 3: lot goes into it.

710
00:36:05,760 --> 00:36:11,360
Speaker 2: I can totally imagine we've certainly seen shifts in demographics

711
00:36:11,400 --> 00:36:16,400
Speaker 2: with everything from migration and remote work and aging populations.

712
00:36:16,960 --> 00:36:21,280
Speaker 2: How does that affect demand for commercial real estate, both

713
00:36:21,320 --> 00:36:24,000
Speaker 2: self storage and other related real estate.

714
00:36:24,160 --> 00:36:26,480
Speaker 3: For it's a big demand driver for self storage. So

715
00:36:26,719 --> 00:36:28,640
Speaker 3: when you think about it, people now are living in

716
00:36:28,680 --> 00:36:31,239
Speaker 3: apartments more. I think I just heard the average the

717
00:36:31,280 --> 00:36:33,600
Speaker 3: first time home buyers now until like they're forty now,

718
00:36:34,000 --> 00:36:35,920
Speaker 3: so late forties. It's crazy when it was used to

719
00:36:35,920 --> 00:36:38,239
Speaker 3: be like twenty eight or twenty six. So obviously they

720
00:36:38,239 --> 00:36:41,720
Speaker 3: live in smaller apartments. They need place to put their stuff,

721
00:36:41,760 --> 00:36:44,120
Speaker 3: they need storage. Storage is almost like a trade off.

722
00:36:44,400 --> 00:36:47,120
Speaker 3: Is it that extra bedroom that might cost you five

723
00:36:47,200 --> 00:36:49,440
Speaker 3: hundred dollars a month or is it a storage for

724
00:36:49,480 --> 00:36:51,720
Speaker 3: seventy five dollars a month? You know, so it's always

725
00:36:51,719 --> 00:36:53,440
Speaker 3: a trade same thing with an office. Is it that

726
00:36:53,480 --> 00:36:56,120
Speaker 3: bigger office where you can have stuff on site or

727
00:36:56,160 --> 00:36:58,279
Speaker 3: do you supplement it with a less expensive at the

728
00:36:58,320 --> 00:37:01,279
Speaker 3: self storage. So this goes back to self storage being

729
00:37:01,280 --> 00:37:04,120
Speaker 3: a need based real estate and this is why during

730
00:37:04,160 --> 00:37:07,200
Speaker 3: tougher times, the aspirational real estate are the ones that

731
00:37:07,280 --> 00:37:09,160
Speaker 3: take the hit. Like we've seen an office lately.

732
00:37:09,600 --> 00:37:13,040
Speaker 2: Yeah, speaking of office, we've seen a lot of underutilized

733
00:37:14,080 --> 00:37:19,600
Speaker 2: office properties. Work from home continues, hybrid working continues. How

734
00:37:19,680 --> 00:37:23,920
Speaker 2: is that affecting what you're doing? I just related to this.

735
00:37:24,000 --> 00:37:25,760
Speaker 2: I just saw a piece in the Wall Street Journal

736
00:37:26,640 --> 00:37:32,399
Speaker 2: this week that there has been a sudden surge of

737
00:37:32,400 --> 00:37:36,520
Speaker 2: office to residential conversions in Lower Manhattan, which two years

738
00:37:36,520 --> 00:37:39,600
Speaker 2: ago everybody said, oh it's too expensive, it's true time consuming.

739
00:37:40,360 --> 00:37:42,040
Speaker 2: Do you track that sort of stuff? What sort of

740
00:37:42,080 --> 00:37:42,920
Speaker 2: impact does that happen.

741
00:37:42,920 --> 00:37:45,040
Speaker 3: We're actually working on one of those now, Oh really

742
00:37:45,200 --> 00:37:46,320
Speaker 3: it is. That's pretty interesting.

743
00:37:46,560 --> 00:37:49,520
Speaker 2: We so commercial office to residential real estate.

744
00:37:49,600 --> 00:37:52,560
Speaker 3: So what it was was there was a group of

745
00:37:52,560 --> 00:37:56,319
Speaker 3: assets in West Chelsea that we ended up buying that

746
00:37:56,440 --> 00:37:58,239
Speaker 3: one of them, by actually two of them by right,

747
00:37:58,320 --> 00:38:01,239
Speaker 3: could be self storage. We're converting into a high end

748
00:38:01,360 --> 00:38:04,000
Speaker 3: storage of the future, we're calling it, and I can

749
00:38:04,000 --> 00:38:07,000
Speaker 3: go into that more modern a lot of technology driven

750
00:38:07,000 --> 00:38:10,200
Speaker 3: self storage. And the other part of the project was

751
00:38:10,239 --> 00:38:13,279
Speaker 3: a ninth story building that's on the high Line that

752
00:38:13,360 --> 00:38:15,600
Speaker 3: we are going in to have it converted from office

753
00:38:15,600 --> 00:38:16,800
Speaker 3: to residential.

754
00:38:16,520 --> 00:38:20,640
Speaker 2: On the Highline. All those properties have become incredibly valuable

755
00:38:20,680 --> 00:38:26,080
Speaker 2: with some starkitech designers and that sort of stuff. It's

756
00:38:26,120 --> 00:38:29,840
Speaker 2: always fascinating. I'm sure that's going to be uh more interesting.

757
00:38:30,560 --> 00:38:34,600
Speaker 2: When you say high tech self storage, I can imagine

758
00:38:35,719 --> 00:38:38,080
Speaker 2: an app and an ability to have stuff brought out

759
00:38:38,120 --> 00:38:40,239
Speaker 2: to you or stuff brought into you. What does high

760
00:38:40,239 --> 00:38:42,040
Speaker 2: tax self storage look like?

761
00:38:42,200 --> 00:38:45,759
Speaker 3: So we have actually harnessed the free energy of your

762
00:38:45,800 --> 00:38:49,320
Speaker 3: cell phone to unlock the lock. So it's pretty interesting.

763
00:38:49,360 --> 00:38:52,319
Speaker 3: So it's almost like a PayPal I believe that our

764
00:38:52,360 --> 00:38:55,000
Speaker 3: Apple pay uses. So basically, if you look at the

765
00:38:55,040 --> 00:38:57,719
Speaker 3: lock is what controls this business. The actual lock that's

766
00:38:57,719 --> 00:39:00,719
Speaker 3: put on and you have this a physical key, you

767
00:39:00,760 --> 00:39:02,879
Speaker 3: can lose that key, you can you know, it's hard

768
00:39:02,920 --> 00:39:05,120
Speaker 3: to share. Like let's say your small business, how do

769
00:39:05,160 --> 00:39:07,400
Speaker 3: you give your employee access, I'll give multiple keys. So

770
00:39:07,719 --> 00:39:11,319
Speaker 3: we've devised and have built a lock that your cell

771
00:39:11,360 --> 00:39:14,160
Speaker 3: phone gets an electronic key sent to it and then

772
00:39:14,200 --> 00:39:16,399
Speaker 3: you can use that to open up the lock. There's

773
00:39:16,400 --> 00:39:18,760
Speaker 3: no batteries needed, there's no Wi Fi needed.

774
00:39:18,840 --> 00:39:20,960
Speaker 2: Some of the new evs are the same way where

775
00:39:21,120 --> 00:39:24,360
Speaker 2: you show up with the phone and it exactly unlocks

776
00:39:24,400 --> 00:39:26,359
Speaker 2: the car, it lets you start it.

777
00:39:26,400 --> 00:39:29,359
Speaker 3: So we're bringing this to the self storage business and

778
00:39:29,400 --> 00:39:32,239
Speaker 3: we have our first five thousand being deployed as we

779
00:39:32,280 --> 00:39:35,080
Speaker 3: speak right now. But what's really nice it's catering not

780
00:39:35,160 --> 00:39:39,120
Speaker 3: only to the residential the business. Consumer then can share

781
00:39:39,200 --> 00:39:41,200
Speaker 3: their key for one time use or coming use with

782
00:39:41,239 --> 00:39:43,960
Speaker 3: an employee. The other thing is if they're late and

783
00:39:44,000 --> 00:39:47,360
Speaker 3: don't pay, their electronic keys turned off. But they also

784
00:39:47,400 --> 00:39:49,239
Speaker 3: the customer gets a full audit at the end of

785
00:39:49,280 --> 00:39:51,880
Speaker 3: the month when their unit's been opened, what time it was,

786
00:39:51,960 --> 00:39:54,080
Speaker 3: so they know who's been in and out of their tracks.

787
00:39:55,760 --> 00:39:59,520
Speaker 2: That's that's really fascinating. If it's not Wi Fi, how

788
00:39:59,520 --> 00:40:01,359
Speaker 2: does the key operator? Is that Bluetooth or.

789
00:40:01,360 --> 00:40:04,080
Speaker 3: No, it's purely off, So your cell phone gives off

790
00:40:04,160 --> 00:40:07,520
Speaker 3: energy just sitting there, and it was enough to harness

791
00:40:07,560 --> 00:40:10,960
Speaker 3: to actually flip that solenoid. It's pretty amazing. So we've

792
00:40:10,960 --> 00:40:13,080
Speaker 3: been working for a couple of years to get this perfected.

793
00:40:13,239 --> 00:40:16,360
Speaker 2: I'm assuming there has to be a battery, no battery.

794
00:40:16,080 --> 00:40:19,239
Speaker 3: Your phone, no battery, no battery. That's the key to this,

795
00:40:19,960 --> 00:40:22,040
Speaker 3: and it's good that you brought that up because everybody

796
00:40:22,040 --> 00:40:23,600
Speaker 3: else has done it with a battery in.

797
00:40:23,560 --> 00:40:27,200
Speaker 2: The lock, and eventually that battery battery the digital type

798
00:40:28,000 --> 00:40:30,560
Speaker 2: digital safs have a battery. The first time the battery

799
00:40:30,600 --> 00:40:33,120
Speaker 2: dies on your safe. You know, they're like, oh my god,

800
00:40:33,160 --> 00:40:35,240
Speaker 2: and you call them up and say, just just replace.

801
00:40:35,320 --> 00:40:36,960
Speaker 3: This wasn't supposed to happen right now.

802
00:40:36,960 --> 00:40:37,200
Speaker 1: It is.

803
00:40:37,239 --> 00:40:38,799
Speaker 3: So if you think about it, one of our facilities

804
00:40:38,800 --> 00:40:42,279
Speaker 3: in the Storia, it's thirty three hundred units. Okay, it's

805
00:40:42,320 --> 00:40:45,439
Speaker 3: one hundred and fifty six thousand square feet. So first

806
00:40:45,480 --> 00:40:48,280
Speaker 3: of the month comes, if people haven't paid, that manager

807
00:40:48,320 --> 00:40:50,800
Speaker 3: has to leave the front desk, go around and double

808
00:40:50,840 --> 00:40:54,440
Speaker 3: lock those units. Right now. The electronic key just matically

809
00:40:54,440 --> 00:40:57,600
Speaker 3: freezes the unit. So it reduces our labor. It gives

810
00:40:57,640 --> 00:41:00,319
Speaker 3: the consumer a better product and easier product. You don't

811
00:41:00,320 --> 00:41:01,759
Speaker 3: have to worry about losing a key. They have a

812
00:41:01,800 --> 00:41:04,240
Speaker 3: lock for free on their unit, They get an audit

813
00:41:04,400 --> 00:41:06,400
Speaker 3: of their unit. It gives them everything they want to know.

814
00:41:06,840 --> 00:41:08,640
Speaker 3: It's a great win win, huh.

815
00:41:09,400 --> 00:41:15,200
Speaker 2: Quite fascinating. So giving your perspective and experience in all

816
00:41:15,239 --> 00:41:18,560
Speaker 2: sorts of commercial real estate twenty twenty six, there's a

817
00:41:18,600 --> 00:41:20,920
Speaker 2: lot of questions. People have no idea what's going on

818
00:41:21,440 --> 00:41:25,759
Speaker 2: in terms of rates, in terms of government policies and

819
00:41:25,800 --> 00:41:28,320
Speaker 2: tariffs and all these different things. What are you seeing

820
00:41:28,320 --> 00:41:31,960
Speaker 2: in the commercial real estate space? Circa twenty twenty six.

821
00:41:31,880 --> 00:41:33,239
Speaker 3: It's a good question. I was on the phone on

822
00:41:33,239 --> 00:41:34,959
Speaker 3: the way down here with some of my bankers talking

823
00:41:34,960 --> 00:41:37,160
Speaker 3: about this. You know, where's the curve look like in

824
00:41:37,200 --> 00:41:40,480
Speaker 3: the short term. You know, obviously I think SOFA is

825
00:41:40,480 --> 00:41:42,200
Speaker 3: going to be coming down. You know, obviously the race

826
00:41:42,239 --> 00:41:44,520
Speaker 3: of being lowered. I'm hoping to see that on the

827
00:41:44,560 --> 00:41:46,040
Speaker 3: five year treasury as well.

828
00:41:47,239 --> 00:41:50,520
Speaker 2: You know, is that your benchmark for surfees as opposed

829
00:41:50,560 --> 00:41:52,600
Speaker 2: to you know, ten years for mortgages.

830
00:41:52,680 --> 00:41:54,480
Speaker 3: Yeah, so I look at the five year quite a bit.

831
00:41:54,640 --> 00:41:56,600
Speaker 3: You know, we'll do ten year and some but the

832
00:41:57,080 --> 00:42:00,200
Speaker 3: length of the fund really the five years probably the

833
00:42:00,239 --> 00:42:04,440
Speaker 3: most conducive in a fun structure. It gives you the flexibility.

834
00:42:04,640 --> 00:42:06,440
Speaker 3: You know, you can refinance out of it, but you're

835
00:42:06,440 --> 00:42:09,359
Speaker 3: not locked into a point where at times the debt

836
00:42:09,360 --> 00:42:11,760
Speaker 3: could be a penalty. If it's under leverage, you eliminate

837
00:42:11,800 --> 00:42:13,279
Speaker 3: a lot of buyers at the end when you do

838
00:42:13,320 --> 00:42:15,120
Speaker 3: a roll up, or if it's too costly, then you

839
00:42:15,200 --> 00:42:18,000
Speaker 3: have defeasants and everything else that goes along with it,

840
00:42:18,680 --> 00:42:20,719
Speaker 3: you know, maintenance. But the five year works well.

841
00:42:21,480 --> 00:42:25,680
Speaker 2: So we've been hearing from various manufacturers. There's no sort

842
00:42:25,719 --> 00:42:29,400
Speaker 2: of clarity as to policy. Everybody is kind of frozen,

843
00:42:29,560 --> 00:42:32,400
Speaker 2: cap X in place and are a little reluctance of

844
00:42:32,440 --> 00:42:35,480
Speaker 2: builds or require I get the sense that's not really

845
00:42:35,560 --> 00:42:37,080
Speaker 2: an issue with your business.

846
00:42:37,200 --> 00:42:40,040
Speaker 3: Going back, it's need based real estate. People need it

847
00:42:40,080 --> 00:42:42,880
Speaker 3: to no matter what the life cycle is, whatever the

848
00:42:42,920 --> 00:42:48,120
Speaker 3: macro economy is. They need space for their products, goods, inventory,

849
00:42:48,160 --> 00:42:49,120
Speaker 3: their personal items.

850
00:42:49,880 --> 00:42:54,560
Speaker 2: Really really fascinating last question before we get to our favorites.

851
00:42:55,080 --> 00:42:59,080
Speaker 2: So what do you think commercial real estate investors aren't

852
00:42:59,120 --> 00:43:03,840
Speaker 2: thinking about talking about but perhaps should be. What's really

853
00:43:03,920 --> 00:43:10,120
Speaker 2: overlooked in terms of pick a subject, assets, geographies, policy,

854
00:43:09,920 --> 00:43:13,800
Speaker 2: that's getting overlooked, But what really deserves more focused.

855
00:43:13,480 --> 00:43:16,400
Speaker 3: And I really think it's about how to really create

856
00:43:16,520 --> 00:43:19,280
Speaker 3: value in real estate. Real estate is not a short

857
00:43:19,360 --> 00:43:22,480
Speaker 3: term investment, and a lot of people look, and I'm

858
00:43:22,560 --> 00:43:24,960
Speaker 3: not even talking three to five years is short in

859
00:43:25,000 --> 00:43:27,719
Speaker 3: real estate. I remember years ago this old timer told

860
00:43:27,760 --> 00:43:29,760
Speaker 3: me that, you know, real estate's boring for the first

861
00:43:29,800 --> 00:43:33,520
Speaker 3: thirty years. But it's true. It really takes a while,

862
00:43:33,640 --> 00:43:36,320
Speaker 3: not only to it not be boring, but to be actually,

863
00:43:37,000 --> 00:43:39,480
Speaker 3: you know, profitable, lucrative, and then you start really then

864
00:43:39,520 --> 00:43:42,360
Speaker 3: it starts to multiply on itself as the rents go

865
00:43:42,560 --> 00:43:46,200
Speaker 3: up and you stabilize those expenses, things start to grow rapidly.

866
00:43:46,480 --> 00:43:48,840
Speaker 3: But I think it's the longer term vision to really

867
00:43:48,880 --> 00:43:51,800
Speaker 3: create true value in real estate. I think the time

868
00:43:51,840 --> 00:43:53,359
Speaker 3: arise and needs to be a little bit bigger than

869
00:43:53,360 --> 00:43:55,600
Speaker 3: three to five years, because what happens and the people

870
00:43:55,600 --> 00:43:57,720
Speaker 3: are put in the situation where they have to sell

871
00:43:58,080 --> 00:44:00,959
Speaker 3: or they have to do something whereins instead. Real estate

872
00:44:01,000 --> 00:44:03,400
Speaker 3: has to live through those cycles and it's just the

873
00:44:03,400 --> 00:44:07,239
Speaker 3: best way to management just buying the right assets, defensive assets,

874
00:44:07,440 --> 00:44:10,040
Speaker 3: Like when we're buying an asset, one of the biggest

875
00:44:10,040 --> 00:44:12,279
Speaker 3: thing is traffic count. But it's not just traffic count,

876
00:44:12,360 --> 00:44:15,239
Speaker 3: it's traffic pattern. We want to make sure that on

877
00:44:15,280 --> 00:44:18,319
Speaker 3: our storage assets, you're driving past that facility every day

878
00:44:18,320 --> 00:44:20,240
Speaker 3: on the way to work, on the way to school.

879
00:44:20,480 --> 00:44:23,640
Speaker 3: It's location, location, location driven. People have to remember the

880
00:44:23,680 --> 00:44:25,840
Speaker 3: basics at times, and sometimes we get away from that

881
00:44:26,239 --> 00:44:27,799
Speaker 3: and we start to look at things that are too

882
00:44:27,880 --> 00:44:31,560
Speaker 3: sexy or you know, stay simple. You know, things that

883
00:44:31,600 --> 00:44:34,920
Speaker 3: people constantly need, and you'll realize when you buy assets

884
00:44:34,960 --> 00:44:37,920
Speaker 3: like that, there's inflation hedges built in. Like storage, I

885
00:44:37,920 --> 00:44:40,560
Speaker 3: can adjust rents on a thirty day notice. You know,

886
00:44:40,600 --> 00:44:43,000
Speaker 3: there's a lot of inflation heads built in those type

887
00:44:43,000 --> 00:44:43,960
Speaker 3: of assets.

888
00:44:43,760 --> 00:44:47,120
Speaker 2: It's funny the line real estate is boring for the

889
00:44:47,160 --> 00:44:51,200
Speaker 2: first thirty years. After sam Zell passed away, I read

890
00:44:51,200 --> 00:44:54,839
Speaker 2: a biography of him and one of the things that

891
00:44:54,960 --> 00:44:57,920
Speaker 2: kind of that's donne me was he owned some of

892
00:44:57,960 --> 00:44:59,240
Speaker 2: his properties for.

893
00:44:59,320 --> 00:45:01,280
Speaker 3: Half a century very ever, yes, forever.

894
00:45:01,400 --> 00:45:03,560
Speaker 2: That's just that's just an unbelievable number.

895
00:45:03,600 --> 00:45:05,799
Speaker 3: It's almost like the Warren Buffett way of a buying

896
00:45:05,920 --> 00:45:07,839
Speaker 3: real estate, and that's the way I and I think

897
00:45:07,840 --> 00:45:09,719
Speaker 3: that was probably the hardest thing for me to get

898
00:45:09,719 --> 00:45:12,040
Speaker 3: my head around doing the funds, because I know what

899
00:45:12,080 --> 00:45:14,680
Speaker 3: real estate can do. Over when you get past that

900
00:45:14,760 --> 00:45:17,560
Speaker 3: ten year period, that's when your values start to really

901
00:45:17,600 --> 00:45:20,759
Speaker 3: start escalating and really really growing, and it's really having

902
00:45:20,760 --> 00:45:24,680
Speaker 3: the right LPs understanding, you know, the asset classes.

903
00:45:24,960 --> 00:45:27,400
Speaker 2: Long term is really long term when it comes to

904
00:45:27,400 --> 00:45:27,920
Speaker 2: real estate.

905
00:45:27,960 --> 00:45:30,640
Speaker 3: I'm I'm God willing I'll be here when I'm ninety four.

906
00:45:31,680 --> 00:45:34,160
Speaker 2: So so let's jump to our favorite questions that we

907
00:45:34,200 --> 00:45:37,319
Speaker 2: ask all of our guests, starting with who were your

908
00:45:37,360 --> 00:45:41,719
Speaker 2: mentors who helped shape this obsession with real estate from

909
00:45:41,760 --> 00:45:43,880
Speaker 2: the earliest days and help shape your career.

910
00:45:44,600 --> 00:45:47,600
Speaker 3: I've had I've been very fortunate to have some great

911
00:45:47,680 --> 00:45:51,040
Speaker 3: partners along the way from some of my ken Lang

912
00:45:51,120 --> 00:45:53,440
Speaker 3: Go and founder from Depot is a really close friend

913
00:45:53,480 --> 00:45:56,640
Speaker 3: and mentor. And but along the way I've been I

914
00:45:56,680 --> 00:45:58,919
Speaker 3: think everybod you learn from everybody you meet along the way,

915
00:45:59,080 --> 00:46:01,440
Speaker 3: I think kind of and when you look at that,

916
00:46:01,760 --> 00:46:04,200
Speaker 3: anybody can be a mentor at any given point in time.

917
00:46:04,560 --> 00:46:06,280
Speaker 3: But I've been fortunate to have some of the larries

918
00:46:06,360 --> 00:46:08,560
Speaker 3: investors in the world, like the late Ira Harris, who

919
00:46:08,920 --> 00:46:11,520
Speaker 3: was absolutely amazing and taught me a lot, you know,

920
00:46:11,719 --> 00:46:14,759
Speaker 3: just life lessons speaking to them, knowing you know, the

921
00:46:14,880 --> 00:46:18,520
Speaker 3: long term look at assets, how to be patient, what

922
00:46:18,680 --> 00:46:22,040
Speaker 3: to look for you know, there's a lot that I've

923
00:46:22,040 --> 00:46:24,240
Speaker 3: added up over the years and hopefully now I'm passing

924
00:46:24,239 --> 00:46:25,080
Speaker 3: that long to others.

925
00:46:25,520 --> 00:46:28,319
Speaker 2: So let's talk about books. What are you reading and

926
00:46:28,360 --> 00:46:29,640
Speaker 2: what are some of your favorites.

927
00:46:30,320 --> 00:46:33,000
Speaker 3: I think probably my favorite was Remnants of a Stock Operator.

928
00:46:33,200 --> 00:46:34,200
Speaker 3: It was a great book.

929
00:46:34,920 --> 00:46:37,560
Speaker 2: What about streaming? What are you listening to or watching anything?

930
00:46:37,640 --> 00:46:38,920
Speaker 2: Keeping you entertained?

931
00:46:38,920 --> 00:46:42,680
Speaker 3: These days? Podcast why besides yourself? We were all in

932
00:46:43,320 --> 00:46:44,759
Speaker 3: listening to some of that on the way down. It

933
00:46:44,760 --> 00:46:47,040
Speaker 3: was just listening to at you your interview with lang

934
00:46:47,120 --> 00:46:48,799
Speaker 3: Stan's CEO.

935
00:46:48,480 --> 00:46:49,320
Speaker 2: Will Helm Schmidt.

936
00:46:50,360 --> 00:46:52,960
Speaker 3: Yeah, fascinating guy, really, really, I was a great interview.

937
00:46:52,960 --> 00:46:55,280
Speaker 3: By the way, I didn't realize how big into cars

938
00:46:55,280 --> 00:46:55,600
Speaker 3: he was.

939
00:46:56,000 --> 00:46:57,960
Speaker 2: Can I tell you there are worse places to be

940
00:46:58,160 --> 00:46:59,560
Speaker 2: than a beautiful sunny weekend?

941
00:47:00,239 --> 00:47:02,040
Speaker 3: Two port you sounded very happy.

942
00:47:02,880 --> 00:47:06,680
Speaker 2: I had a good time that weekend. So final two questions,

943
00:47:06,960 --> 00:47:09,200
Speaker 2: what sort of advice would you give to a recent

944
00:47:09,239 --> 00:47:13,800
Speaker 2: college grad interest in the career in commercial real estate investment?

945
00:47:13,840 --> 00:47:16,360
Speaker 3: I think it's in anything. Don't count somebody else's money.

946
00:47:16,960 --> 00:47:19,480
Speaker 3: I see a lot of younger people wondering what the

947
00:47:19,520 --> 00:47:21,960
Speaker 3: other person next to me is making and concerned about that.

948
00:47:22,080 --> 00:47:25,000
Speaker 3: Always do more than what you're paid for, and you

949
00:47:25,080 --> 00:47:28,239
Speaker 3: have to be enthusiastic. Enthusiasm is probably the biggest driver

950
00:47:28,360 --> 00:47:29,040
Speaker 3: of success.

951
00:47:29,080 --> 00:47:32,839
Speaker 2: I can think of enthusiasm that's really fascinating. And our

952
00:47:32,880 --> 00:47:35,719
Speaker 2: final question, what do you know about the world of

953
00:47:35,760 --> 00:47:39,879
Speaker 2: commercial real estate investing today? Would have been helpful back

954
00:47:39,880 --> 00:47:43,120
Speaker 2: in the nineteen nineties when you were first starting out.

955
00:47:43,560 --> 00:47:46,399
Speaker 3: I would say, it's more about managing people. It took

956
00:47:46,440 --> 00:47:48,680
Speaker 3: me a long time to learn how to manage people.

957
00:47:48,760 --> 00:47:50,920
Speaker 3: You know, I didn't have the benefit of working for

958
00:47:50,960 --> 00:47:53,280
Speaker 3: a company. I started my own business in college obviously

959
00:47:53,280 --> 00:47:55,960
Speaker 3: grew it straight through, never had that experience. It took

960
00:47:56,000 --> 00:47:59,080
Speaker 3: me a long time to learn how to manage different

961
00:47:59,440 --> 00:48:03,160
Speaker 3: I would say, a strengths of different people and I

962
00:48:03,200 --> 00:48:07,359
Speaker 3: wish I had and the ability to empower people. It took,

963
00:48:07,440 --> 00:48:09,520
Speaker 3: you know, obviously, it took me probably a decade and

964
00:48:09,520 --> 00:48:13,239
Speaker 3: a half before I really felt comfortable doing that. But yeah,

965
00:48:13,320 --> 00:48:15,600
Speaker 3: I think that was probably if I had done that earlier,

966
00:48:15,600 --> 00:48:16,799
Speaker 3: I'd probably be bigger.

967
00:48:16,800 --> 00:48:20,480
Speaker 2: Really, really quite fascinating. Thanks Bob for being so generous

968
00:48:20,480 --> 00:48:24,440
Speaker 2: with your time. We have been speaking to Bob Moser.

969
00:48:24,640 --> 00:48:28,520
Speaker 2: He is the founder and CEO of Prime Group Holding's,

970
00:48:28,840 --> 00:48:34,640
Speaker 2: America's largest privately held self storage investment funds. If you

971
00:48:34,840 --> 00:48:38,239
Speaker 2: enjoy this conversation, well be sure and check out any

972
00:48:38,280 --> 00:48:41,120
Speaker 2: of the five hundred and ninety two that we've done

973
00:48:41,120 --> 00:48:46,000
Speaker 2: over the past twelve years. You can find those that iTunes, Spotify,

974
00:48:46,239 --> 00:48:51,800
Speaker 2: Bloomberg YouTube, or wherever you get your favorite podcasts. I

975
00:48:51,840 --> 00:48:53,920
Speaker 2: would be remiss if I do not thank the crack

976
00:48:54,040 --> 00:48:58,120
Speaker 2: team that helps me put these conversations together each and

977
00:48:58,320 --> 00:49:03,600
Speaker 2: every week. Elect Marxist Noriega is my video producer. Sean

978
00:49:03,680 --> 00:49:07,000
Speaker 2: Russo is my head of research. Anna Luke is my

979
00:49:07,160 --> 00:49:12,239
Speaker 2: podcast producer. I'm Barry Ritolfs. You've been listening to Masters

980
00:49:12,280 --> 00:49:15,960
Speaker 2: in Business on Bloomberg Radio.