# Unconventional Real Estate Investments: Masters in Business with Bob Moser

An episode of [Masters in Business](https://invisiblenetwork.ai/podcast/730188152), 6 Feb 2026, 49 min.

Audio: https://podtrac.com/pts/redirect.mp3/traffic.omny.fm/d/clips/e73c998e-6e60-432f-8610-ae210140c5b1/4e4cd910-40a1-4619-a5f3-ae2b0012ffff/d20d6397-bd74-493f-b985-b3e9010c0d4b/audio.mp3?utm_source=Podcast&in_playlist=5873a3cb-298f-40bc-b71f-ae2b0013000d

Barry speaks with Bob Moser, Owner, Principal and CEO at Prime Group. They discuss his early career in real estate and his current holdings. They focus on his investments in self-storage assets and how non-traditional real estate is essential to his investment strategy. Barry and Bob also discuss how interest rates and the change in homeowner age impact commercial real estate. See omnystudio.com/listener for privacy information.

## Transcript

[0:02] Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is Masters in
[0:11] Speaker 1: Business with Barry Ritholts on Bloomberg Radio.
[0:17] Speaker 2: This week on the podcast, What a Fascinating Conversation. Bob
[0:21] Speaker 2: Moser is founder and CEO of Prime Group Holdings. They're
[0:25] Speaker 2: the largest privately held self storage owner operator investor in
[0:31] Speaker 2: the country. Fascinating conversations. Started acquiring properties in college, eventually
[0:40] Speaker 2: started doing RVs and mobile homes, just really fascinating methodology
[0:46] Speaker 2: of identifying undervalue properties. I thought the conversation was fascinating,
[0:51] Speaker 2: and I think you will also with no further ado.
[0:54] Speaker 2: Bob Moser of.
[0:56] Speaker 3: Prime Group Holdings, Thanks for having me.
[0:58] Speaker 2: So let's start out with you. Your background, Bachelors with
[1:02] Speaker 2: honors and economics from Union College. Yes, sir, what was
[1:05] Speaker 2: the original career plan?
[1:07] Speaker 3: Tell you the truth? It was always real estate. So
[1:09] Speaker 3: I've always had an affinity for real estate.
[1:11] Speaker 2: Really.
[1:12] Speaker 3: My mom tells the story that when I was like
[1:14] Speaker 3: fourteen or fifteen, should drop me off at the local
[1:17] Speaker 3: real estate broker's office and I would drive them nuts
[1:20] Speaker 3: for a couple hours. And it was either that or
[1:22] Speaker 3: just to get rid of me out of her hair, probably,
[1:24] Speaker 3: but I always had it. Got my real estate license
[1:26] Speaker 3: before college. I got my brokerage license while at college
[1:30] Speaker 3: and actually started the business basically my sophomore junior year
[1:34] Speaker 3: while at Union.
[1:35] Speaker 2: Wow, that's amazing. So your college thesis focused on how
[1:39] Speaker 2: to value income producing real estate investments by comparing demands
[1:44] Speaker 2: and value, like, so you really knew exactly what you
[1:47] Speaker 2: wanted to do by your senior year. What was the
[1:50] Speaker 2: outcome of that college thesis?
[1:52] Speaker 3: It's a good question. So it was on the valuation
[1:54] Speaker 3: of income producing properties using hadonic and non handonic regression analysis.
[1:58] Speaker 2: So when we say hadnic, you're adjusting for quality.
[2:02] Speaker 3: Location, attributes of the property, taking away basically the revenue
[2:06] Speaker 3: stream what else adds value to the asset? And I
[2:09] Speaker 3: was really hyper focused on fragmented real estate assets. So
[2:13] Speaker 3: basically every real estate asset when you look at it,
[2:15] Speaker 3: goes through the same life cycle when they're originally owned, developed,
[2:18] Speaker 3: managed by local regional developers. Then over time the larger
[2:21] Speaker 3: groups come in and consolidate. So I was looking for
[2:24] Speaker 3: that reflection point when that consolidation starts. And I was
[2:28] Speaker 3: focused back then in college on the thesis for manufactured
[2:31] Speaker 3: housing communities. And when you're a college student, you know
[2:34] Speaker 3: people pick up the phone when you call because they're
[2:36] Speaker 3: always trying to help somebody out. And I was very
[2:38] Speaker 3: fortunate to speak to Sam Zell and some other obviously
[2:41] Speaker 3: leaders in the real estate business, and they gave me
[2:44] Speaker 3: some great insight, and one of the ones he said
[2:47] Speaker 3: to me was that there's a lot of buyers, but
[2:50] Speaker 3: there's not much product out there. You have to go
[2:52] Speaker 3: out and find product for people. If you're going to
[2:54] Speaker 3: be a good real estate investor, you have to have
[2:56] Speaker 3: the ability to find the assets. So I decided to
[2:59] Speaker 3: start a company in college to facilitate that transaction. Obviously,
[3:03] Speaker 3: I didn't have any money. My dad was a retired
[3:05] Speaker 3: New York City detective. My mom was a teacher's aid,
[3:09] Speaker 3: so I didn't grow up any wealth. But I figured
[3:12] Speaker 3: out that if I could find good product, there was
[3:14] Speaker 3: a numerous amount of buyers to buy it. And I
[3:17] Speaker 3: did this by using the Freedom Information Act of New
[3:20] Speaker 3: York and then various other states, where I figured out
[3:23] Speaker 3: that I could track all real estate asset classes using
[3:27] Speaker 3: the same common denominator of water and sewer permitting. So
[3:30] Speaker 3: I went down the Albany and I made my request
[3:33] Speaker 3: and union was trimester, so I had these big gaps
[3:36] Speaker 3: off around Thanksgiving the New Years, and one day ups
[3:41] Speaker 3: knocked at my door and I had converted my parents
[3:44] Speaker 3: upstairs bedroom to my corporate office, like any kind of
[3:47] Speaker 3: broke entremneur would do. And he's like and hit me
[3:51] Speaker 3: a box. I'm like, oh, there's my real estate information.
[3:53] Speaker 3: And he's like, actually, that truck out there is. I
[3:56] Speaker 3: had boxes and boxes of the old doss printouts every
[4:00] Speaker 3: self storage facility, every mobile home park, every RV park,
[4:04] Speaker 3: Marina multi family.
[4:06] Speaker 2: Just so some of the younger listeners can appreciate this,
[4:10] Speaker 2: forget Ai. This is really before there was any sort
[4:14] Speaker 2: of usable internet where you could say, hey, let me
[4:16] Speaker 2: scan Andy dot gov and find all the real estate permitting.
[4:22] Speaker 2: This is physical papers stored in physical office buildings and
[4:27] Speaker 2: file cabinets.
[4:28] Speaker 3: I had a pay per page on the pronoun.
[4:30] Speaker 2: And what did that cost? And how long ago is this?
[4:33] Speaker 3: So this was back in ninety seven, ninety six, ninety seven.
[4:38] Speaker 3: It probably cost me a couple hundred dollars, which I
[4:40] Speaker 3: really didn't have as a college student. But I realized
[4:43] Speaker 3: quickly that that information was the key to finding assets.
[4:46] Speaker 3: And what I would do is I would systematically go
[4:48] Speaker 3: through these lists basically county by county, asset type by
[4:52] Speaker 3: asset type, identifying the institutional quality assets that were still
[4:56] Speaker 3: loaned by mom and pops or non institutional investors. I
[5:00] Speaker 3: would do a deep dive on those assets. I would
[5:02] Speaker 3: call and get the rents. I would call the tax
[5:04] Speaker 3: assessor to get the real estate taxes. My goal was
[5:07] Speaker 3: to know more about the real estate than the owner
[5:09] Speaker 3: did by the time I called them on the phone
[5:11] Speaker 3: to see if they'd be interested in selling, and then
[5:14] Speaker 3: I would continually call them every thirty to forty five
[5:16] Speaker 3: days after that until they became a seller.
[5:18] Speaker 2: Huh, that's unbelievable. So that's what led you to unconventional
[5:22] Speaker 2: and overlook segments. You mentioned marinas and RV parks and
[5:28] Speaker 2: other things like that. Manufactured homes. How long did it
[5:33] Speaker 2: take you before you managed to acquire your first property?
[5:36] Speaker 3: So there was a acquired my first property shortly after college.
[5:40] Speaker 3: And what happened was there was a mobile home park
[5:43] Speaker 3: in Streetsboro, Ohio. It was actually called Camelot Village. Again.
[5:47] Speaker 3: A guy named Mike Duffy owned it, and I used
[5:50] Speaker 3: to call mister Duffy probably every thirty days to see
[5:52] Speaker 3: if he would sell his asset, and one day I
[5:55] Speaker 3: finally got him to sell and I made a nice
[5:58] Speaker 3: fee on the transaction, but I still needed a little
[6:01] Speaker 3: bit more. In the year I graduated, my mom took
[6:03] Speaker 3: a home equity loan against the family house.
[6:05] Speaker 2: Is that how you finance?
[6:06] Speaker 3: That's how acquisition. That's how I financed my first acquisition.
[6:10] Speaker 3: So before that I was facilitating transaction to making fees,
[6:13] Speaker 3: almost like a broker, but not a listing broker. And
[6:16] Speaker 3: then the first asset I bought was when my parents
[6:19] Speaker 3: took a home equity loan.
[6:20] Speaker 2: So if in you mentioned you got your real estate
[6:22] Speaker 2: license in college, how you finding buyers for these sortive,
[6:29] Speaker 2: unconventional properties. Are you going to the big institutions and saying, hey,
[6:33] Speaker 2: I have a property that fits into your portfolio.
[6:35] Speaker 3: And what I actually did was I had these lists
[6:37] Speaker 3: obviously that I got from the foil request, and I
[6:40] Speaker 3: kept on seeing the same name show up as buyers
[6:43] Speaker 3: or that were owners. So if I knew they owned
[6:45] Speaker 3: five assets in that particular region, I thought, Hey, if
[6:48] Speaker 3: I developed when or I get a relationship with a
[6:50] Speaker 3: seller that would sell, I would bring it to that.
[6:52] Speaker 2: You knew where to bring it?
[6:54] Speaker 1: Huh?
[6:54] Speaker 2: Really, really, quite fascinating. And so when did you found
[6:59] Speaker 2: your own real estate brokerage farm?
[7:01] Speaker 3: So that was basically in college. So I was in college.
[7:04] Speaker 3: That was in college I became a real estate broker.
[7:06] Speaker 3: Before college, I was a licensed salesperson and then you
[7:10] Speaker 3: have to have X amount of hours under your belt
[7:12] Speaker 3: before you can become a brokerage. And I've got my
[7:14] Speaker 3: brokerage license in ninety seven.
[7:16] Speaker 2: So how long did you do that as a as
[7:19] Speaker 2: a broker rather than an investor? Or? They coon of
[7:22] Speaker 2: around parallel path.
[7:23] Speaker 3: No, so I was basically working exclusively for generating fees
[7:26] Speaker 3: from like ninety seven to two thousands, two thousand and one.
[7:30] Speaker 3: I started buying my first asset around two ninety nine,
[7:33] Speaker 3: going into two thousand. Obviously the first one I bought.
[7:37] Speaker 3: It took me a while obviously to give up the
[7:38] Speaker 3: transactional side until I could support myself on owning assets.
[7:42] Speaker 2: So you ramp up various assets until twenty thirteen when
[7:46] Speaker 2: you start Prime group. Was that the path?
[7:48] Speaker 3: So what I did was so my mom took the
[7:50] Speaker 3: home equity loan my parents did against their home. The
[7:53] Speaker 3: first asset I bought, actually I had sold to that
[7:55] Speaker 3: gentleman ten months prior and I called them up and
[7:59] Speaker 3: I said, hey, you know, Wayne, I sold you this
[8:01] Speaker 3: property was on Cape Cod, would you be interested in
[8:04] Speaker 3: selling it? And I sold it to him for three million.
[8:07] Speaker 3: He ended up selling it to me for five million
[8:09] Speaker 3: ten months eailier and then I moved up to Cape
[8:11] Speaker 3: Cod and I actually ran the asset for the first
[8:14] Speaker 3: two years to see how the business worked, because I
[8:17] Speaker 3: didn't want to be that owner that would tell people
[8:19] Speaker 3: what to do without actually being able to do it themselves.
[8:22] Speaker 3: And then I bought my second property, and then I
[8:24] Speaker 3: bought my third, and then by two thousand and five
[8:27] Speaker 3: August twelve, two thousand and five, I had a large
[8:30] Speaker 3: liquidity event. I sold a group of assets to Sam Zell.
[8:34] Speaker 3: That's when he converted MHC, which was manufactured housing communities
[8:38] Speaker 3: his rate to equity lifestyle communities and he started to
[8:41] Speaker 3: focus on RV parks. So on that date I sold
[8:44] Speaker 3: him roughly five assets back then, which provided a substantial
[8:48] Speaker 3: amount of liquidity to myself, and I went out and
[8:51] Speaker 3: did a bunch of That's when I really started to
[8:53] Speaker 3: build the portfolio.
[8:54] Speaker 2: So I want to draw a line. So you're a
[8:56] Speaker 2: college kid randomly calling big real estate investors, including Sam
[9:03] Speaker 2: Zel who took your phone call, took my phone call
[9:05] Speaker 2: and you had a long conversation with did they did?
[9:08] Speaker 2: And so how many years later it's like, hey, Sam,
[9:11] Speaker 2: it's me Bob. Do you remember me? I have some
[9:14] Speaker 2: assets for you.
[9:15] Speaker 3: It was funny when you say that, because when I
[9:16] Speaker 3: was dealing with the CEO. There's a CEO at the time,
[9:19] Speaker 3: I always wanted because I never really spoke to him
[9:21] Speaker 3: then after so I wonder if you'd actually put two
[9:24] Speaker 3: and two together. I'm sure he did, But it was
[9:26] Speaker 3: it was a really interesting transaction, you know. It was
[9:30] Speaker 3: the RV world was an interesting business, the RV parks.
[9:33] Speaker 3: It was basically I was the first one to really
[9:35] Speaker 3: use securitize financing in the RV park world. That hadn't
[9:38] Speaker 3: been really done prior. So it was. It was an
[9:41] Speaker 3: interesting time.
[9:42] Speaker 2: So now you have a liquidity event, you're tapping into
[9:45] Speaker 2: Wall Street securitization, all the funnes. How at what point
[9:51] Speaker 2: do you say, oh, there's a ready source of capital.
[9:54] Speaker 2: I could just put a roll up strategy together and
[9:58] Speaker 2: run all of these properties more of efficiently. Then mom
[10:01] Speaker 2: and Pops can do. Every one of these would have
[10:04] Speaker 2: to have a separate accounting and a separate tax filing
[10:08] Speaker 2: and all that stuff. You centralize that and suddenly it's
[10:11] Speaker 2: productive and efficient one.
[10:13] Speaker 3: Hundred percent what I So, basically, from let's say two
[10:16] Speaker 3: thousand through two thousand and five two thousand and six,
[10:19] Speaker 3: I was acquiring a lot of mobile homr V parks.
[10:21] Speaker 3: I also owned shopping centers, a little bit of everything.
[10:24] Speaker 3: It was a pretty diversified portfolio. And what really transitioned
[10:28] Speaker 3: to me to become an asset specialist, which we are now,
[10:31] Speaker 3: was how well self storage was doing during the first
[10:33] Speaker 3: financial crisis. I was doing a year in portfolio review
[10:37] Speaker 3: in around two thousand and seven two thousand and eight,
[10:40] Speaker 3: and the self storage assets were a smaller part of
[10:42] Speaker 3: my portfolio back then, but they were outperforming everything else
[10:46] Speaker 3: at that time. It wasn't like they were going, you know,
[10:48] Speaker 3: straight up, but they were so defensive and they were
[10:51] Speaker 3: doing so well when all these other assets were getting
[10:53] Speaker 3: beat up. And I decided at that point to become
[10:56] Speaker 3: an asset specialist stingularly focus on self storeage. So I
[11:00] Speaker 3: sold off Over the next few years, I sold off
[11:03] Speaker 3: the rest of the mobilehome in RV parks. I had
[11:05] Speaker 3: multifamily that went to third party management, and from that
[11:09] Speaker 3: time forward, I continued just to consolidate self storage. This
[11:13] Speaker 3: was on my own balance sheet at this time, and
[11:15] Speaker 3: then I started the co mingled fun business around twenty
[11:17] Speaker 3: and fourteen. So from basically two thousand and seven two
[11:20] Speaker 3: thousand and eight through twenty and fourteen, I was using
[11:23] Speaker 3: my own capital or in house capital to acquire these assets.
[11:26] Speaker 2: So I'm curious why would self storage do well during
[11:30] Speaker 2: the financial crisis. Was it literally people were losing their homes,
[11:34] Speaker 2: they had to figure out where all their stuff had
[11:36] Speaker 2: to go, or what was happening in that period that
[11:39] Speaker 2: made that such a standout performer.
[11:42] Speaker 3: I would say it was more the defensive nature of it,
[11:44] Speaker 3: wh were these other assets were decreasing dramatically. Storage was
[11:47] Speaker 3: holding its own and its need based real estate. I
[11:50] Speaker 3: do not buy aspirational real estate. I think that's where
[11:53] Speaker 3: a lot of people get in trouble. I buy real
[11:55] Speaker 3: estate that people need for all different economic cycles, and
[12:00] Speaker 3: that's what self storage is. You know, it's upgrades, downgrades, death, divorce,
[12:04] Speaker 3: all of those type of life cycles or some that
[12:07] Speaker 3: happens in life creates some need for storage.
[12:10] Speaker 2: It seems like you are in a variety of different
[12:13] Speaker 2: regions everywhere from Saratoga to Springs to Chelsea. Here in
[12:18] Speaker 2: New York City, how do your underwriting assumptions differ relative
[12:23] Speaker 2: to is this urban? Is this suburban? Is it ex urban?
[12:27] Speaker 2: Is it out in the Styx? How do you look
[12:30] Speaker 2: at these different spaces? Obviously valuations differ, in rents differ.
[12:36] Speaker 2: What's the thought process?
[12:38] Speaker 3: So we truly obviously real estate. That's some cliche, but
[12:41] Speaker 3: it's location, location, locations. So if you look at our portfolio,
[12:44] Speaker 3: it basically you take the United States and it looks
[12:47] Speaker 3: like a U. So we're up and down the coasts
[12:50] Speaker 3: where right now we don't have exposure in Texas. And
[12:53] Speaker 3: the reason why is that there's a lot of open
[12:56] Speaker 3: zoning in Texas and one of our major requirements is
[12:58] Speaker 3: barriers to entry. And the reason why we're along coastlines
[13:02] Speaker 3: and then we're up picking up in the mountain cities
[13:04] Speaker 3: out in like Utah and Colorado is that there's a
[13:07] Speaker 3: barrier that's natural barrier keeping the population tight to a nucleus.
[13:11] Speaker 3: So we want to be in predictable downtown retail corridors
[13:14] Speaker 3: when we're choosing the asset. So that's the first glance
[13:17] Speaker 3: over deciding where we're going to buy. Then it goes
[13:20] Speaker 3: down to what is the supply, what's going to constrain
[13:22] Speaker 3: the supply in that particular market, because like any other
[13:25] Speaker 3: type of real estate, there's always areas that are oversupplied,
[13:28] Speaker 3: and the key is finding these areas that are undersupplied.
[13:31] Speaker 3: When I was first doing this with paper, it was
[13:34] Speaker 3: a lot of obviously calling on the phone, calling the assessor,
[13:37] Speaker 3: feeling the market out, visiting. Now we have built very
[13:40] Speaker 3: sophisticated software that helps us pre identify these areas that
[13:44] Speaker 3: we should be buying, not even the area, the exact
[13:46] Speaker 3: asset we should be buying, even though it's not for sale.
[13:50] Speaker 3: So we built out this program where it basically I
[13:52] Speaker 3: can put in our buybox and it populates out of
[13:55] Speaker 3: the sixty thousand self storage facilities in the country the
[13:58] Speaker 3: ones we should go after though they're not for sale.
[14:01] Speaker 3: And then what we have is our deal teams, which
[14:03] Speaker 3: are a group of roughly three dozen people internally that
[14:07] Speaker 3: we allocate the deals that fit our criteria to and
[14:10] Speaker 3: then they continue to call and visit those owners until
[14:13] Speaker 3: we convert them to sellers. So we truly buy everything
[14:16] Speaker 3: off market and it's one organically originated.
[14:19] Speaker 2: Huh really really fascinating. Coming up, we continue our conversation
[14:23] Speaker 2: with Bob Moser, CEO of Prime Group Holdings, discussing the
[14:28] Speaker 2: prime storage business. I'm very results you're listening.
[14:32] Speaker 4: To Masters in Business on Bloomberg Radio. I'm very results
[14:44] Speaker 4: you're listening to Masters in business on Bloomberg Radio. My
[14:47] Speaker 4: extra special guest this week is Bob Moser. He is
[14:50] Speaker 4: the CEO of Prime Group Holdings, specializing in privately held
[14:56] Speaker 4: self storage commercial real estate. The firm has acquired over
[15:01] Speaker 4: ten billion dollars in real estate assets across three hundred
[15:05] Speaker 4: and fifty locations, twenty eight states, Canaona, and the Virgin Islands.
[15:10] Speaker 4: So let's talk a little bit about the business model
[15:12] Speaker 4: of self storage. I see these areas popping up everywhere.
[15:18] Speaker 4: I see these self storage facilities popping up everywhere.
[15:22] Speaker 2: How widely used are they? How profitable are they versus
[15:26] Speaker 2: you know, traditional commercial real estate? What is the appeal
[15:31] Speaker 2: that just over the past ten twenty years this space
[15:34] Speaker 2: has exploded.
[15:36] Speaker 3: It's a great question. So self storage has the lowest
[15:39] Speaker 3: break even occupancy of any institutional real estate asset class
[15:43] Speaker 3: I can think of, So at forty percent occupied, your
[15:46] Speaker 3: break into even on expenses. So there it's very risk adverse.
[15:50] Speaker 3: It's a very risk adverse asset from top to bottom.
[15:53] Speaker 3: When you're looking at how what the tenant signs to
[15:56] Speaker 3: become a tenant. These are month to month leases, so
[15:58] Speaker 3: we can adjust to what's happening in the macro environment
[16:01] Speaker 3: at any given time. There's no lease risk whatsoever in
[16:04] Speaker 3: the asset class.
[16:05] Speaker 2: So no lobby, no doorman, no no door showers to
[16:09] Speaker 2: none of the things that multifamily.
[16:11] Speaker 3: Correct makes so expense Well, you think about a multifamily.
[16:14] Speaker 3: If you're gonna turn a unit, it's gonna cush you
[16:15] Speaker 3: anywhere from let's say fifteen hundred to five thousand, depending
[16:18] Speaker 3: on what you're doing. Self storage is five dollars. We're
[16:21] Speaker 3: sweeping it and replacing a light bulb if there is one.
[16:23] Speaker 3: So and ten. Improvement is what really hurts, especially office,
[16:27] Speaker 3: but a lot of real estate assets. You're constantly chasing
[16:30] Speaker 3: that capital improvement.
[16:33] Speaker 2: Really really quite interesting. What about ancillary revenue streams? We've
[16:36] Speaker 2: all seen those silly reality shows where they find these
[16:41] Speaker 2: you know, someone abandons the unit and they find some
[16:44] Speaker 2: million dollar painting in there. How much nonsense?
[16:46] Speaker 3: Yeah, I haven't had that look, but the h it's
[16:49] Speaker 3: funny that you bring that up. So prior to those
[16:51] Speaker 3: TV shows, we would have the auctions on site, kind
[16:55] Speaker 3: of like you see in those the TV shows. What
[16:58] Speaker 3: happened though, everybody all of a sudden started showing up
[17:00] Speaker 3: to these had a personality they thought they were on TV.
[17:03] Speaker 3: The traffic became overwhelming on the asset. So everything now
[17:06] Speaker 3: was virtual. So when we have an auction, it's all
[17:08] Speaker 3: done online and it's not a revenue source for the business.
[17:12] Speaker 3: So we put our properties through a five step value
[17:14] Speaker 3: creation process, and one of those steps is diversifying the
[17:18] Speaker 3: revenue stream. And it's a great question because there's a
[17:21] Speaker 3: substantial amount of value picked up in self stores through
[17:23] Speaker 3: these ancillary revenue streams. One of them is a tenant
[17:26] Speaker 3: protection program where the tenants are able to push the
[17:30] Speaker 3: liability of a storm or something happening to their goods
[17:33] Speaker 3: onto the landlord for paying a certain price. There's obviously
[17:36] Speaker 3: there's prime access if you need access past the operating hours.
[17:40] Speaker 3: So let's say you need access twenty four hours a day.
[17:42] Speaker 3: You're a small business, you can pay for that. So
[17:45] Speaker 3: these items obviously add up when you have two to
[17:48] Speaker 3: three hundred thousand units like we currently operate.
[17:50] Speaker 2: I hadn't even thought about the idea of a storm.
[17:53] Speaker 2: So you live near a coast, there's a big hurricane coming. Hey,
[17:57] Speaker 2: I have a bunch of furniture and I want to
[17:59] Speaker 2: get soaked. If we're if we're swamped, let's move an
[18:02] Speaker 2: inland to a storage area.
[18:04] Speaker 3: And that's and God forbid something happens to their home.
[18:08] Speaker 3: You know, obviously a lot of stuff gets moved into
[18:10] Speaker 3: the storage facility.
[18:11] Speaker 2: So you, you guys are the largest privately held self
[18:14] Speaker 2: storage set of ownership. What's the competition, Like, I know,
[18:19] Speaker 2: I know Blackstone is in here. We see cubes everywhere,
[18:23] Speaker 2: we see public storage. Who are your big competitors? And
[18:27] Speaker 2: is there an eventual play where someone takes you out?
[18:30] Speaker 1: Correct?
[18:31] Speaker 3: So there's the group of public companies that you were
[18:34] Speaker 3: just mentioning. You have extra space, you have public storage,
[18:36] Speaker 3: you have cubesmart U Hall and you all.
[18:39] Speaker 2: I didn't even think of you all that exactly.
[18:41] Speaker 3: Most people think I'm just at the moving rights, but
[18:43] Speaker 3: obviously they own a substantial amount of self storage. Substantial amount.
[18:47] Speaker 3: What we do differently is we operate differently. We have
[18:50] Speaker 3: a different I would say rationale when it comes to
[18:52] Speaker 3: operating compared to the reats, where the reats are highly
[18:55] Speaker 3: focused on occupancy, they want to keep their occupancy of
[18:59] Speaker 3: ninety ninety two percent, where I'll trade occupancy for top
[19:03] Speaker 3: line revenue. So what we'll do is in the off
[19:06] Speaker 3: season when it's slower, we'll hold our rents, create some occupancy,
[19:10] Speaker 3: and then come spring when the season's busier, we have
[19:13] Speaker 3: room to put the higher payers in. Where the rates
[19:15] Speaker 3: are more focused on keeping that occupancy steady at ninety two,
[19:18] Speaker 3: then come spring they have no room to put those
[19:20] Speaker 3: people in. So we really focus on driving the value.
[19:23] Speaker 3: We've looked at what works over the last twenty years
[19:26] Speaker 3: and then we've just implemented it on scale across the portfolio.
[19:30] Speaker 2: And then the related issue I see are the mobile
[19:33] Speaker 2: pods people sometimes use. Seems sort of adjacent to the space.
[19:38] Speaker 2: What are your thoughts on that?
[19:39] Speaker 3: So we're not in that business. It's a lot more
[19:42] Speaker 3: labor intensive.
[19:43] Speaker 2: You got to physically drop the pod off and come
[19:46] Speaker 2: collect it later.
[19:47] Speaker 3: Correct. So in storage, one of the main benefits is
[19:49] Speaker 3: there we take no abailment risk, so we're never taking
[19:52] Speaker 3: possession of the person's goods. Where the pod, you start
[19:55] Speaker 3: to cross that line a bit. So on the storage,
[19:58] Speaker 3: it's one hundred percent the consumers or the clients' possessions.
[20:02] Speaker 3: We have no contact with it. They put their lock
[20:04] Speaker 3: on it, they're the only one that has access to it.
[20:07] Speaker 3: Were one hundred percent hands off.
[20:10] Speaker 2: So this really went from kind of a niche to
[20:13] Speaker 2: a mainstream investment class over the past couple of years.
[20:17] Speaker 2: You were really early in this space. What did you
[20:19] Speaker 2: see that are those miss and what do you think
[20:22] Speaker 2: a lot of commercial real estate investors don't quite understand
[20:26] Speaker 2: about this space?
[20:27] Speaker 3: It was the fragmentation again, the first fragment assets I
[20:30] Speaker 3: was focused on with the mobile home parks and RV parks,
[20:33] Speaker 3: which I saw starting to consolidate, and then obviously how
[20:36] Speaker 3: well storage did during those tougher times, which really led
[20:39] Speaker 3: me to the storage being highly fragmented. When I first
[20:42] Speaker 3: entered the asset class, even back in around twenty and
[20:45] Speaker 3: fifteen twenty fourteen, it was roughly eighty percent still owned
[20:49] Speaker 3: by mom and pops. Wow, so just the reach and
[20:52] Speaker 3: the institutionals only owned twenty percent of the the outstandings.
[20:55] Speaker 3: Today it's probably closer to seventy seventy five percent, So
[20:58] Speaker 3: there's been a lot of consolidations. But what's interesting about
[21:01] Speaker 3: storage is that the new supply coming online is being
[21:04] Speaker 3: brought online by what we call merchant builders. So there
[21:08] Speaker 3: are regional developers who have an extra piece of land,
[21:11] Speaker 3: they're shopping center developers who put a storage up on
[21:14] Speaker 3: that corner lot or that key lot they might have.
[21:16] Speaker 3: It's not the large institutions building the supply, so it
[21:20] Speaker 3: keeps it pretty fragmented. So they're the ones adding the
[21:22] Speaker 3: new supply to the market.
[21:25] Speaker 2: That's really kind of interesting. So a couple of years ago,
[21:28] Speaker 2: you did a raise a couple of billion dollars from
[21:32] Speaker 2: outside investors. Seems like that's a good chunk of money
[21:36] Speaker 2: to go out and start either buying or building. How
[21:39] Speaker 2: do you look at the two options?
[21:41] Speaker 3: So we don't like taking construction risks, so I like
[21:45] Speaker 3: that we buy cash looan so day one for an
[21:48] Speaker 3: asset to make it through our ic committee, we have
[21:51] Speaker 3: a very high threshold, and that part of that threshold
[21:53] Speaker 3: is cash flow. We pride ourselves on being able to
[21:56] Speaker 3: distribute free cash flow to our investors pretty early in
[21:59] Speaker 3: the fund is life, even during the investment period, which
[22:02] Speaker 3: is pretty rare. But the fun business started in actually
[22:06] Speaker 3: twenty fifteen as a smaller fund. Up until that point
[22:10] Speaker 3: I had only purchased on my own capital, and we
[22:13] Speaker 3: did a test fund that did very well. Was a
[22:15] Speaker 3: smaller fund. It was only one hundred and fifty four million,
[22:18] Speaker 3: and then the second fund we grew it to seven
[22:20] Speaker 3: hundred and twenty five million, and then the third fund
[22:22] Speaker 3: is when you're referring to, is roughly two and a
[22:24] Speaker 3: half billion dollar fund.
[22:26] Speaker 2: So why go to outside investors rather than go the
[22:29] Speaker 2: securitize route? Is it that much less expensive to do?
[22:33] Speaker 2: It was?
[22:33] Speaker 3: Basically it's a it's scale play. So I knew them
[22:36] Speaker 3: as a class was going to consolidate quickly once the
[22:39] Speaker 3: other the large institutions understood it better, or when the
[22:43] Speaker 3: origin investors did, and I wanted to have that foothold
[22:46] Speaker 3: in the market, and the best way to do it
[22:48] Speaker 3: was through the comingled fund way where and also by
[22:51] Speaker 3: doing that, I think we were able to disrupt things
[22:53] Speaker 3: a bit because we pride ourselves on delivering what we
[22:56] Speaker 3: call entrepreneurial type returns. We are operators, are in the
[23:00] Speaker 3: field on a daily basis, we're in the office grinding
[23:03] Speaker 3: this out. So we try to deliver direct property level
[23:05] Speaker 3: returns to our investors.
[23:08] Speaker 2: So not hands off like correct numbers. So let's you
[23:13] Speaker 2: mentioned your investment committee walk us through the typical acquisition.
[23:18] Speaker 2: How do you source these things? Is it still just
[23:21] Speaker 2: calling people up and saying hey, let us know when
[23:23] Speaker 2: you want to sell and following up and then what's
[23:26] Speaker 2: the process like through the investment committee.
[23:28] Speaker 3: So this is where it takes the correct personality to
[23:32] Speaker 3: be this part of the team. And these are what
[23:34] Speaker 3: we call our deal team members. So what we use
[23:36] Speaker 3: is our proprietary software we have developed in house that
[23:40] Speaker 3: we load our entire buybox into this software and it
[23:44] Speaker 3: projects it's an AI system every self storage that fits
[23:47] Speaker 3: that criteria in the country, and it has every data
[23:50] Speaker 3: point about that asset, the owner, how big it is,
[23:53] Speaker 3: the tax is, the rate, everything you can imagine. Then
[23:56] Speaker 3: we allocate that deal to the deal team member that
[23:58] Speaker 3: covers that area. Then he or she continues to call
[24:01] Speaker 3: that owner every thirty to forty five days until we
[24:03] Speaker 3: convert them to a seller. So some of these deals
[24:06] Speaker 3: that we're buying today we've been working on for a
[24:08] Speaker 3: decade and we finally got the seller to the point
[24:11] Speaker 3: to sell. So it's a very thick, skinned long relationship.
[24:15] Speaker 3: But it's a numbers game. So if we have thirty
[24:18] Speaker 3: six people with good information calling these owners, and the
[24:21] Speaker 3: reason why we do so much upfront information is we
[24:25] Speaker 3: want to know more about the asset than the seller
[24:27] Speaker 3: does in a way, because we want to separate ourselves
[24:29] Speaker 3: from anybody else calling them. We want to show that
[24:32] Speaker 3: we're sincerely interested in buying their asset when we were
[24:34] Speaker 3: able to tell them, you know, or even educate them
[24:37] Speaker 3: about their own asset.
[24:38] Speaker 2: At times, so I get calls from an emails from
[24:41] Speaker 2: private equity guys, Hey, do you guys want to sell?
[24:43] Speaker 2: Blah blah blah. It's like it gets annoying at a point.
[24:47] Speaker 2: What's the conversation like with a seller, Hey spoke to
[24:51] Speaker 2: you back in October, just checking in seeing if anything changes.
[24:56] Speaker 2: How receptive are people to this?
[24:57] Speaker 3: So it's more than And I get those same emails
[25:00] Speaker 3: and it drives me nuts. Or the phone call, will
[25:01] Speaker 3: you sell your property? I'm like, which property? What area?
[25:04] Speaker 3: So when we call, you know we're referring to an
[25:06] Speaker 3: exact asset. We've already been by the asset. We know
[25:09] Speaker 3: what the numbers are, we know the size of it,
[25:11] Speaker 3: we've done, and we might have spent already two weeks
[25:14] Speaker 3: researching that asset before we called the owner and instead
[25:17] Speaker 3: of somebody just blindly calling you Berry, but if they
[25:19] Speaker 3: called you and they knew a lot about you, know,
[25:21] Speaker 3: your business, and they knew the numbers are estimated, sometimes
[25:24] Speaker 3: you're more intrigued to say, hey, this guy spent the
[25:26] Speaker 3: time to learn about But then we visit them on
[25:29] Speaker 3: the holidays, we find out when their birthday is, we
[25:31] Speaker 3: sent them acart, but it's a constantly being in contact
[25:34] Speaker 3: with them, and then we try to solve that problem
[25:37] Speaker 3: what they do with the money afterwards? How do they
[25:39] Speaker 3: maximize their sale proceeds? And we hold their hand through
[25:42] Speaker 3: the process and they become one of our biggest referrals
[25:45] Speaker 3: our sellers.
[25:46] Speaker 2: Huh, that's amazing. Maximizing returns afterwards. I'm going to assume
[25:51] Speaker 2: that's some combination of it's obviously capital gains, there's a
[25:55] Speaker 2: bunch of depreciation that comes along. There's a lot of
[25:59] Speaker 2: different things a seller can do. I would not have
[26:03] Speaker 2: thought that a buyer is going to facilitate that process.
[26:07] Speaker 3: We hold there and through it because we want to
[26:09] Speaker 3: eliminate any kind of friction. We need to buy assets.
[26:12] Speaker 3: We need to buy that asset. Like you said, we're
[26:15] Speaker 3: not blindly taking a shotgun and just waiting for something
[26:18] Speaker 3: to come to market. We're specifically targeting assets that fit
[26:21] Speaker 3: our criteria, so we know which ones make sense until
[26:25] Speaker 3: we dive into the actual real you know, initially it's
[26:28] Speaker 3: all hypothetical. Until we get the actual numbers from that seller,
[26:32] Speaker 3: that's the only time things would change.
[26:33] Speaker 2: So this sounds like it's a really unique approach in
[26:36] Speaker 2: the commercial real estate is Are you concerned that someone's
[26:40] Speaker 2: going to say, Hey, these guys seem to figure it out,
[26:43] Speaker 2: let's do what they're doing.
[26:44] Speaker 3: Well, we have twenty five year headstart on them, so
[26:46] Speaker 3: we have, you know, decades of information gathering, decades of
[26:50] Speaker 3: conversations with these sellers. Moreover, it's a heavy lift, it's
[26:54] Speaker 3: a burdensome, it's a expensive what I carry on my
[26:56] Speaker 3: deal teams. But the reason we do it is because
[26:59] Speaker 3: there's no other way to buy assets the way we
[27:02] Speaker 3: do and create the value we do. If we were
[27:04] Speaker 3: buying them on the open market. You think about it,
[27:06] Speaker 3: if we weren't buying it this way, we would be
[27:08] Speaker 3: buying it like ninety nine percent of every other asset
[27:11] Speaker 3: where it gets brokered. Beautiful pictures are taken, it's presented
[27:14] Speaker 3: in its best color, its shot gunned around to one
[27:17] Speaker 3: hundred buyers. You go through multiple delayers of bidding, and
[27:20] Speaker 3: at the end you'll overpaid for the asset.
[27:22] Speaker 2: The winner's curse in an auction situation, exactly. The more
[27:26] Speaker 2: buyers there are, the more likely it is the winter
[27:29] Speaker 2: over paid hundred percent.
[27:30] Speaker 3: So we bypass all that and we go directly to
[27:32] Speaker 3: the cellar and we solve problems for them.
[27:35] Speaker 2: That's really fascinating. I would not have guessed that degree
[27:39] Speaker 2: of complexity, sophistication, and facilitation to the seller.
[27:45] Speaker 3: Here's the crazy thing. We're closing six to seven deals
[27:47] Speaker 3: a month, so one or two a week on average.
[27:50] Speaker 3: When you look at that way, you know we will
[27:52] Speaker 3: bundle them up so they all close in a certain
[27:54] Speaker 3: maybe couple quarters. But yeah, when you average it.
[27:56] Speaker 2: Out, so it sounds like just the prep for you
[28:00] Speaker 2: make an offer off if it's a few weeks, it
[28:04] Speaker 2: sounds like you're spending tens of thousands, maybe hundreds of
[28:07] Speaker 2: thousands of dollars easily.
[28:09] Speaker 3: Really, but you think about it, if I don't get
[28:11] Speaker 3: that asset today, I might get it in a month.
[28:13] Speaker 3: If I don't get it in a month, I might
[28:14] Speaker 3: get it next year. If I don't get it next year,
[28:15] Speaker 3: We're into this for the long run, you know. We're
[28:17] Speaker 3: building a I think, become the best operator of alternative assets.
[28:23] Speaker 2: And when you guys raised Fund three, that was the
[28:25] Speaker 2: largest dedicated self storage fundraise at the time. I think
[28:30] Speaker 2: that was two and a half billion dollars or something
[28:32] Speaker 2: like that. Is that still the largest? Have there been
[28:36] Speaker 2: other subsequent raises in the self storage space?
[28:38] Speaker 3: That's the largest I know if that might have been
[28:40] Speaker 3: one of the largest property specific funds raised as well.
[28:44] Speaker 3: I've heard that before.
[28:46] Speaker 2: And what's the total self storage headcount? That's over three
[28:50] Speaker 2: hundred Now.
[28:52] Speaker 3: We have over three hundred, close to three hundred and
[28:54] Speaker 3: fifty assets. We have around seven or eight hundred employees
[28:57] Speaker 3: around the country. We have two main three main offices.
[29:01] Speaker 3: Now we have one in Sara, Choga Springs, where we're
[29:03] Speaker 3: it's our main headquarters. Then we have one in Jupiter, Florida,
[29:06] Speaker 3: and we're just opening an office here in West Chelsea.
[29:09] Speaker 2: Really really quite fascinating. Coming up, we continue our conversation
[29:13] Speaker 2: with Bob Moser, founder and CEO of Prime Group Holdings
[29:18] Speaker 2: discussing the state of commercial real estate today. I'm Barry Ridholts.
[29:23] Speaker 2: You're listening to Masters in Business on Bloomberg Radio. I'm
[29:36] Speaker 2: Barry Ridolts. You're listening to Masters in Business on Bloomberg
[29:40] Speaker 2: Radio and watching Masters in Business on YouTube. My extra
[29:45] Speaker 2: special guest this week is Bob Moser. He is the
[29:47] Speaker 2: CEO of Prime Group Holdings, the largest privately held self
[29:53] Speaker 2: storage investment group in the United States. The over three
[29:58] Speaker 2: hundred and fifty locations across on eight states, the US,
[30:01] Speaker 2: Virgin Islands, and Canada. I want to talk a little
[30:05] Speaker 2: bit about the state of commercial real estate today, but
[30:08] Speaker 2: I still have a handful of questions I have to
[30:11] Speaker 2: ask you about self storage. You mentioned small businesses are
[30:18] Speaker 2: a big customer. I wouldn't have guessed that. What percentage
[30:22] Speaker 2: of your units are rented by small businesses and what
[30:26] Speaker 2: do they.
[30:26] Speaker 3: Use this for? It's a great question. It's probably one
[30:28] Speaker 3: of the most overlooked aspects of self storage. Self storage
[30:32] Speaker 3: has two demand drivers, which is very unique in real
[30:36] Speaker 3: estate in general. You think about residential, do you have
[30:38] Speaker 3: residential demand? An office has business demand? Self storage we
[30:42] Speaker 3: have both residential and business demand. A lot of people
[30:45] Speaker 3: think of self storage. They think of storing their grandmother's couch.
[30:49] Speaker 3: It's far from it. That might be one or two percent.
[30:52] Speaker 3: The rest is of thirty to forty percent or small businesses, contractors, landscapers,
[30:57] Speaker 3: a lot of pharmaceutical reps. So their warehouse. We're the
[31:01] Speaker 3: warehouse for that small business that employs the majority of
[31:04] Speaker 3: the US population. And what's nice about storage being on
[31:07] Speaker 3: a month to month basis the terms of the contract.
[31:10] Speaker 3: They can expand or contract as needed with their business.
[31:13] Speaker 3: They don't have to sign a long term lease with
[31:15] Speaker 3: an industrial or a warehouse. It's a perfect fit for
[31:19] Speaker 3: an entrepreneur or a starting business or even a mature business.
[31:22] Speaker 1: Huh.
[31:22] Speaker 2: Really really interesting, And we were talking previously about self
[31:28] Speaker 2: storage isn't covered by the traditional landlord tenant law. This
[31:32] Speaker 2: is a much easier set of rules to operate on there.
[31:36] Speaker 2: This is a lean lows system. Is that true in
[31:38] Speaker 2: all states? Most states?
[31:40] Speaker 3: One hundred percent? And actually it carries to Canada as
[31:42] Speaker 3: well in parts of Europe that we're looking at. But yeah,
[31:45] Speaker 3: and it's basically very similar to like a bank loaning money.
[31:48] Speaker 3: They're collateral or the lean against in a particular asset.
[31:51] Speaker 3: And that's the way they look at it. And remember,
[31:53] Speaker 3: we take, like you're saying, for no abailment risk, so
[31:56] Speaker 3: we have no idea what's being stored, what the value is,
[31:59] Speaker 3: so that is the collateral to their lease. If they
[32:02] Speaker 3: don't pay that, there's an auction process. Obviously, we don't
[32:05] Speaker 3: want to auction off anybody's goods. And if let's say
[32:08] Speaker 3: we send out fifty auction notices, maybe one or two
[32:11] Speaker 3: go because hopefully we can work with that tenant and
[32:13] Speaker 3: get them caught up. But it provides a way to
[32:16] Speaker 3: collect the rent that's owed. Unlike a multifamily where it
[32:19] Speaker 3: might take you a year if you're lucky to fix
[32:22] Speaker 3: somebody that's not paying. Self storage is a lot quicker,
[32:25] Speaker 3: easier process.
[32:26] Speaker 2: And you mentioned Europe. I don't think you have a
[32:29] Speaker 2: whole lot of exposure currently in Europe. How big a
[32:32] Speaker 2: push are you looking to make on the continent.
[32:34] Speaker 3: So we've been doing a lot of digging in figuring
[32:37] Speaker 3: out what the different aspects in different cities. You know,
[32:41] Speaker 3: it's interesting because some of the owners in Europe, let's say,
[32:44] Speaker 3: let's look at London, there will be two or three
[32:46] Speaker 3: owners that own the majority of that inventory. Our play
[32:50] Speaker 3: again is going out and buying from that one off owner.
[32:53] Speaker 3: I really haven't gove into that much, but it's an
[32:55] Speaker 3: important aspect to our business is we identify the initutional
[33:00] Speaker 3: asset that's still owned by mom and pop, So we
[33:02] Speaker 3: target that person that owns one or two facilities, and
[33:05] Speaker 3: the reason for that is that they're not a professional operator,
[33:08] Speaker 3: and the chances are that we'll be able to achieve
[33:10] Speaker 3: our returns, if not better than what we estimated based
[33:14] Speaker 3: on putting our systems and processes over that family operated asset.
[33:18] Speaker 3: So in Europe they've been consolidated into groups, so it
[33:21] Speaker 3: really doesn't provide us that ability to buy assets that
[33:24] Speaker 3: we think are highly undermanaged. So we're very risk adverse,
[33:29] Speaker 3: so we'd like to see exactly how the value is
[33:31] Speaker 3: going to be created. You know, we have a game
[33:34] Speaker 3: plan on every asset what levers need to be pulled
[33:36] Speaker 3: in order to create that value, and one of those
[33:39] Speaker 3: is a lot of the optimization of the rent role,
[33:41] Speaker 3: optimization of the actual unit mix, the layout of the facility,
[33:45] Speaker 3: and if it's a larger, more professional owner, the chances
[33:48] Speaker 3: are those low hanging fruit might not be there. So
[33:51] Speaker 3: we're still trying to find the markets that have that
[33:53] Speaker 3: fragmentation where they're still one often two off owners, because
[33:57] Speaker 3: that is really our bread and butter.
[34:00] Speaker 2: In US, laws vary somewhat from state to state, but
[34:04] Speaker 2: it's fairly uniform. How different is it country to country
[34:08] Speaker 2: in the EU even or the UK.
[34:10] Speaker 3: Yeah, but even in the States when it comes to
[34:12] Speaker 3: the actual implementation of the lean law, it does. There's
[34:15] Speaker 3: different timings, there's different fees that can be charged, There's
[34:18] Speaker 3: different things that you do with the proceeds from the auction.
[34:22] Speaker 3: Let's say you receive more than what the person owed to.
[34:26] Speaker 3: Some of it gets donated away, some of it gets
[34:28] Speaker 3: contributed back to that cellar. Depending on the state that
[34:31] Speaker 3: extra free proceeds determined and where it goes. So we
[34:34] Speaker 3: have a whole legal compliance team that works on this
[34:36] Speaker 3: on a daily basis to make sure that each state
[34:39] Speaker 3: law is being followed every municipality in the US, every
[34:43] Speaker 3: county or every territory in Canada. And that's the research
[34:46] Speaker 3: we're doing right now in Europe and in Australia, trying
[34:49] Speaker 3: to find the markets where we know we can go
[34:51] Speaker 3: in and consolidate get economies a scale out of it,
[34:54] Speaker 3: but by the assets the way we want to buy
[34:56] Speaker 3: them on this one off way.
[34:58] Speaker 2: Really interesting commercial real estates have seen higher rates of costs,
[35:07] Speaker 2: interest rates and inflation have been kind of stubborn and sticky.
[35:11] Speaker 2: What sort of refinancing stresses does that create? Or are
[35:15] Speaker 2: you sidestepping that whole interest rate chase these days?
[35:19] Speaker 3: So we're very fortunate being in real estate for as
[35:21] Speaker 3: long as we have. We have developed really deep relationships
[35:25] Speaker 3: with the large institutional lenders, from City Bank, the GOLOB
[35:28] Speaker 3: and the JP, the BMO to Northern Trust. You know,
[35:33] Speaker 3: I'm sure I'm missing one. I'll probably get a call
[35:35] Speaker 3: after this, but we have very deep rooted relationships and
[35:38] Speaker 3: we're relationship oriented, so we're there. We work with these
[35:42] Speaker 3: banks and it's a flight to quality during this time
[35:46] Speaker 3: where lenders are going to the lenders they have long
[35:49] Speaker 3: term relationship and track records with. But we spend a
[35:52] Speaker 3: lot of time making sure that we're hedging our interest rates,
[35:55] Speaker 3: We're making sure that we're you know, we're putting the
[35:57] Speaker 3: right debt on the assets at the right time, you know,
[36:00] Speaker 3: making sure we're not cross collaterlyzing too much. So a
[36:03] Speaker 3: lot goes into it.
[36:05] Speaker 2: I can totally imagine we've certainly seen shifts in demographics
[36:11] Speaker 2: with everything from migration and remote work and aging populations.
[36:16] Speaker 2: How does that affect demand for commercial real estate, both
[36:21] Speaker 2: self storage and other related real estate.
[36:24] Speaker 3: For it's a big demand driver for self storage. So
[36:26] Speaker 3: when you think about it, people now are living in
[36:28] Speaker 3: apartments more. I think I just heard the average the
[36:31] Speaker 3: first time home buyers now until like they're forty now,
[36:34] Speaker 3: so late forties. It's crazy when it was used to
[36:35] Speaker 3: be like twenty eight or twenty six. So obviously they
[36:38] Speaker 3: live in smaller apartments. They need place to put their stuff,
[36:41] Speaker 3: they need storage. Storage is almost like a trade off.
[36:44] Speaker 3: Is it that extra bedroom that might cost you five
[36:47] Speaker 3: hundred dollars a month or is it a storage for
[36:49] Speaker 3: seventy five dollars a month? You know, so it's always
[36:51] Speaker 3: a trade same thing with an office. Is it that
[36:53] Speaker 3: bigger office where you can have stuff on site or
[36:56] Speaker 3: do you supplement it with a less expensive at the
[36:58] Speaker 3: self storage. So this goes back to self storage being
[37:01] Speaker 3: a need based real estate and this is why during
[37:04] Speaker 3: tougher times, the aspirational real estate are the ones that
[37:07] Speaker 3: take the hit. Like we've seen an office lately.
[37:09] Speaker 2: Yeah, speaking of office, we've seen a lot of underutilized
[37:14] Speaker 2: office properties. Work from home continues, hybrid working continues. How
[37:19] Speaker 2: is that affecting what you're doing? I just related to this.
[37:24] Speaker 2: I just saw a piece in the Wall Street Journal
[37:26] Speaker 2: this week that there has been a sudden surge of
[37:32] Speaker 2: office to residential conversions in Lower Manhattan, which two years
[37:36] Speaker 2: ago everybody said, oh it's too expensive, it's true time consuming.
[37:40] Speaker 2: Do you track that sort of stuff? What sort of
[37:42] Speaker 2: impact does that happen.
[37:42] Speaker 3: We're actually working on one of those now, Oh really
[37:45] Speaker 3: it is. That's pretty interesting.
[37:46] Speaker 2: We so commercial office to residential real estate.
[37:49] Speaker 3: So what it was was there was a group of
[37:52] Speaker 3: assets in West Chelsea that we ended up buying that
[37:56] Speaker 3: one of them, by actually two of them by right,
[37:58] Speaker 3: could be self storage. We're converting into a high end
[38:01] Speaker 3: storage of the future, we're calling it, and I can
[38:04] Speaker 3: go into that more modern a lot of technology driven
[38:07] Speaker 3: self storage. And the other part of the project was
[38:10] Speaker 3: a ninth story building that's on the high Line that
[38:13] Speaker 3: we are going in to have it converted from office
[38:15] Speaker 3: to residential.
[38:16] Speaker 2: On the Highline. All those properties have become incredibly valuable
[38:20] Speaker 2: with some starkitech designers and that sort of stuff. It's
[38:26] Speaker 2: always fascinating. I'm sure that's going to be uh more interesting.
[38:30] Speaker 2: When you say high tech self storage, I can imagine
[38:35] Speaker 2: an app and an ability to have stuff brought out
[38:38] Speaker 2: to you or stuff brought into you. What does high
[38:40] Speaker 2: tax self storage look like?
[38:42] Speaker 3: So we have actually harnessed the free energy of your
[38:45] Speaker 3: cell phone to unlock the lock. So it's pretty interesting.
[38:49] Speaker 3: So it's almost like a PayPal I believe that our
[38:52] Speaker 3: Apple pay uses. So basically, if you look at the
[38:55] Speaker 3: lock is what controls this business. The actual lock that's
[38:57] Speaker 3: put on and you have this a physical key, you
[39:00] Speaker 3: can lose that key, you can you know, it's hard
[39:02] Speaker 3: to share. Like let's say your small business, how do
[39:05] Speaker 3: you give your employee access, I'll give multiple keys. So
[39:07] Speaker 3: we've devised and have built a lock that your cell
[39:11] Speaker 3: phone gets an electronic key sent to it and then
[39:14] Speaker 3: you can use that to open up the lock. There's
[39:16] Speaker 3: no batteries needed, there's no Wi Fi needed.
[39:18] Speaker 2: Some of the new evs are the same way where
[39:21] Speaker 2: you show up with the phone and it exactly unlocks
[39:24] Speaker 2: the car, it lets you start it.
[39:26] Speaker 3: So we're bringing this to the self storage business and
[39:29] Speaker 3: we have our first five thousand being deployed as we
[39:32] Speaker 3: speak right now. But what's really nice it's catering not
[39:35] Speaker 3: only to the residential the business. Consumer then can share
[39:39] Speaker 3: their key for one time use or coming use with
[39:41] Speaker 3: an employee. The other thing is if they're late and
[39:44] Speaker 3: don't pay, their electronic keys turned off. But they also
[39:47] Speaker 3: the customer gets a full audit at the end of
[39:49] Speaker 3: the month when their unit's been opened, what time it was,
[39:51] Speaker 3: so they know who's been in and out of their tracks.
[39:55] Speaker 2: That's that's really fascinating. If it's not Wi Fi, how
[39:59] Speaker 2: does the key operator? Is that Bluetooth or.
[40:01] Speaker 3: No, it's purely off, So your cell phone gives off
[40:04] Speaker 3: energy just sitting there, and it was enough to harness
[40:07] Speaker 3: to actually flip that solenoid. It's pretty amazing. So we've
[40:10] Speaker 3: been working for a couple of years to get this perfected.
[40:13] Speaker 2: I'm assuming there has to be a battery, no battery.
[40:16] Speaker 3: Your phone, no battery, no battery. That's the key to this,
[40:19] Speaker 3: and it's good that you brought that up because everybody
[40:22] Speaker 3: else has done it with a battery in.
[40:23] Speaker 2: The lock, and eventually that battery battery the digital type
[40:28] Speaker 2: digital safs have a battery. The first time the battery
[40:30] Speaker 2: dies on your safe. You know, they're like, oh my god,
[40:33] Speaker 2: and you call them up and say, just just replace.
[40:35] Speaker 3: This wasn't supposed to happen right now.
[40:36] Speaker 1: It is.
[40:37] Speaker 3: So if you think about it, one of our facilities
[40:38] Speaker 3: in the Storia, it's thirty three hundred units. Okay, it's
[40:42] Speaker 3: one hundred and fifty six thousand square feet. So first
[40:45] Speaker 3: of the month comes, if people haven't paid, that manager
[40:48] Speaker 3: has to leave the front desk, go around and double
[40:50] Speaker 3: lock those units. Right now. The electronic key just matically
[40:54] Speaker 3: freezes the unit. So it reduces our labor. It gives
[40:57] Speaker 3: the consumer a better product and easier product. You don't
[41:00] Speaker 3: have to worry about losing a key. They have a
[41:01] Speaker 3: lock for free on their unit, They get an audit
[41:04] Speaker 3: of their unit. It gives them everything they want to know.
[41:06] Speaker 3: It's a great win win, huh.
[41:09] Speaker 2: Quite fascinating. So giving your perspective and experience in all
[41:15] Speaker 2: sorts of commercial real estate twenty twenty six, there's a
[41:18] Speaker 2: lot of questions. People have no idea what's going on
[41:21] Speaker 2: in terms of rates, in terms of government policies and
[41:25] Speaker 2: tariffs and all these different things. What are you seeing
[41:28] Speaker 2: in the commercial real estate space? Circa twenty twenty six.
[41:31] Speaker 3: It's a good question. I was on the phone on
[41:33] Speaker 3: the way down here with some of my bankers talking
[41:34] Speaker 3: about this. You know, where's the curve look like in
[41:37] Speaker 3: the short term. You know, obviously I think SOFA is
[41:40] Speaker 3: going to be coming down. You know, obviously the race
[41:42] Speaker 3: of being lowered. I'm hoping to see that on the
[41:44] Speaker 3: five year treasury as well.
[41:47] Speaker 2: You know, is that your benchmark for surfees as opposed
[41:50] Speaker 2: to you know, ten years for mortgages.
[41:52] Speaker 3: Yeah, so I look at the five year quite a bit.
[41:54] Speaker 3: You know, we'll do ten year and some but the
[41:57] Speaker 3: length of the fund really the five years probably the
[42:00] Speaker 3: most conducive in a fun structure. It gives you the flexibility.
[42:04] Speaker 3: You know, you can refinance out of it, but you're
[42:06] Speaker 3: not locked into a point where at times the debt
[42:09] Speaker 3: could be a penalty. If it's under leverage, you eliminate
[42:11] Speaker 3: a lot of buyers at the end when you do
[42:13] Speaker 3: a roll up, or if it's too costly, then you
[42:15] Speaker 3: have defeasants and everything else that goes along with it,
[42:18] Speaker 3: you know, maintenance. But the five year works well.
[42:21] Speaker 2: So we've been hearing from various manufacturers. There's no sort
[42:25] Speaker 2: of clarity as to policy. Everybody is kind of frozen,
[42:29] Speaker 2: cap X in place and are a little reluctance of
[42:32] Speaker 2: builds or require I get the sense that's not really
[42:35] Speaker 2: an issue with your business.
[42:37] Speaker 3: Going back, it's need based real estate. People need it
[42:40] Speaker 3: to no matter what the life cycle is, whatever the
[42:42] Speaker 3: macro economy is. They need space for their products, goods, inventory,
[42:48] Speaker 3: their personal items.
[42:49] Speaker 2: Really really fascinating last question before we get to our favorites.
[42:55] Speaker 2: So what do you think commercial real estate investors aren't
[42:59] Speaker 2: thinking about talking about but perhaps should be. What's really
[43:03] Speaker 2: overlooked in terms of pick a subject, assets, geographies, policy,
[43:09] Speaker 2: that's getting overlooked, But what really deserves more focused.
[43:13] Speaker 3: And I really think it's about how to really create
[43:16] Speaker 3: value in real estate. Real estate is not a short
[43:19] Speaker 3: term investment, and a lot of people look, and I'm
[43:22] Speaker 3: not even talking three to five years is short in
[43:25] Speaker 3: real estate. I remember years ago this old timer told
[43:27] Speaker 3: me that, you know, real estate's boring for the first
[43:29] Speaker 3: thirty years. But it's true. It really takes a while,
[43:33] Speaker 3: not only to it not be boring, but to be actually,
[43:37] Speaker 3: you know, profitable, lucrative, and then you start really then
[43:39] Speaker 3: it starts to multiply on itself as the rents go
[43:42] Speaker 3: up and you stabilize those expenses, things start to grow rapidly.
[43:46] Speaker 3: But I think it's the longer term vision to really
[43:48] Speaker 3: create true value in real estate. I think the time
[43:51] Speaker 3: arise and needs to be a little bit bigger than
[43:53] Speaker 3: three to five years, because what happens and the people
[43:55] Speaker 3: are put in the situation where they have to sell
[43:58] Speaker 3: or they have to do something whereins instead. Real estate
[44:01] Speaker 3: has to live through those cycles and it's just the
[44:03] Speaker 3: best way to management just buying the right assets, defensive assets,
[44:07] Speaker 3: Like when we're buying an asset, one of the biggest
[44:10] Speaker 3: thing is traffic count. But it's not just traffic count,
[44:12] Speaker 3: it's traffic pattern. We want to make sure that on
[44:15] Speaker 3: our storage assets, you're driving past that facility every day
[44:18] Speaker 3: on the way to work, on the way to school.
[44:20] Speaker 3: It's location, location, location driven. People have to remember the
[44:23] Speaker 3: basics at times, and sometimes we get away from that
[44:26] Speaker 3: and we start to look at things that are too
[44:27] Speaker 3: sexy or you know, stay simple. You know, things that
[44:31] Speaker 3: people constantly need, and you'll realize when you buy assets
[44:34] Speaker 3: like that, there's inflation hedges built in. Like storage, I
[44:37] Speaker 3: can adjust rents on a thirty day notice. You know,
[44:40] Speaker 3: there's a lot of inflation heads built in those type
[44:43] Speaker 3: of assets.
[44:43] Speaker 2: It's funny the line real estate is boring for the
[44:47] Speaker 2: first thirty years. After sam Zell passed away, I read
[44:51] Speaker 2: a biography of him and one of the things that
[44:54] Speaker 2: kind of that's donne me was he owned some of
[44:57] Speaker 2: his properties for.
[44:59] Speaker 3: Half a century very ever, yes, forever.
[45:01] Speaker 2: That's just that's just an unbelievable number.
[45:03] Speaker 3: It's almost like the Warren Buffett way of a buying
[45:05] Speaker 3: real estate, and that's the way I and I think
[45:07] Speaker 3: that was probably the hardest thing for me to get
[45:09] Speaker 3: my head around doing the funds, because I know what
[45:12] Speaker 3: real estate can do. Over when you get past that
[45:14] Speaker 3: ten year period, that's when your values start to really
[45:17] Speaker 3: start escalating and really really growing, and it's really having
[45:20] Speaker 3: the right LPs understanding, you know, the asset classes.
[45:24] Speaker 2: Long term is really long term when it comes to
[45:27] Speaker 2: real estate.
[45:27] Speaker 3: I'm I'm God willing I'll be here when I'm ninety four.
[45:31] Speaker 2: So so let's jump to our favorite questions that we
[45:34] Speaker 2: ask all of our guests, starting with who were your
[45:37] Speaker 2: mentors who helped shape this obsession with real estate from
[45:41] Speaker 2: the earliest days and help shape your career.
[45:44] Speaker 3: I've had I've been very fortunate to have some great
[45:47] Speaker 3: partners along the way from some of my ken Lang
[45:51] Speaker 3: Go and founder from Depot is a really close friend
[45:53] Speaker 3: and mentor. And but along the way I've been I
[45:56] Speaker 3: think everybod you learn from everybody you meet along the way,
[45:59] Speaker 3: I think kind of and when you look at that,
[46:01] Speaker 3: anybody can be a mentor at any given point in time.
[46:04] Speaker 3: But I've been fortunate to have some of the larries
[46:06] Speaker 3: investors in the world, like the late Ira Harris, who
[46:08] Speaker 3: was absolutely amazing and taught me a lot, you know,
[46:11] Speaker 3: just life lessons speaking to them, knowing you know, the
[46:14] Speaker 3: long term look at assets, how to be patient, what
[46:18] Speaker 3: to look for you know, there's a lot that I've
[46:22] Speaker 3: added up over the years and hopefully now I'm passing
[46:24] Speaker 3: that long to others.
[46:25] Speaker 2: So let's talk about books. What are you reading and
[46:28] Speaker 2: what are some of your favorites.
[46:30] Speaker 3: I think probably my favorite was Remnants of a Stock Operator.
[46:33] Speaker 3: It was a great book.
[46:34] Speaker 2: What about streaming? What are you listening to or watching anything?
[46:37] Speaker 2: Keeping you entertained?
[46:38] Speaker 3: These days? Podcast why besides yourself? We were all in
[46:43] Speaker 3: listening to some of that on the way down. It
[46:44] Speaker 3: was just listening to at you your interview with lang
[46:47] Speaker 3: Stan's CEO.
[46:48] Speaker 2: Will Helm Schmidt.
[46:50] Speaker 3: Yeah, fascinating guy, really, really, I was a great interview.
[46:52] Speaker 3: By the way, I didn't realize how big into cars
[46:55] Speaker 3: he was.
[46:56] Speaker 2: Can I tell you there are worse places to be
[46:58] Speaker 2: than a beautiful sunny weekend?
[47:00] Speaker 3: Two port you sounded very happy.
[47:02] Speaker 2: I had a good time that weekend. So final two questions,
[47:06] Speaker 2: what sort of advice would you give to a recent
[47:09] Speaker 2: college grad interest in the career in commercial real estate investment?
[47:13] Speaker 3: I think it's in anything. Don't count somebody else's money.
[47:16] Speaker 3: I see a lot of younger people wondering what the
[47:19] Speaker 3: other person next to me is making and concerned about that.
[47:22] Speaker 3: Always do more than what you're paid for, and you
[47:25] Speaker 3: have to be enthusiastic. Enthusiasm is probably the biggest driver
[47:28] Speaker 3: of success.
[47:29] Speaker 2: I can think of enthusiasm that's really fascinating. And our
[47:32] Speaker 2: final question, what do you know about the world of
[47:35] Speaker 2: commercial real estate investing today? Would have been helpful back
[47:39] Speaker 2: in the nineteen nineties when you were first starting out.
[47:43] Speaker 3: I would say, it's more about managing people. It took
[47:46] Speaker 3: me a long time to learn how to manage people.
[47:48] Speaker 3: You know, I didn't have the benefit of working for
[47:50] Speaker 3: a company. I started my own business in college obviously
[47:53] Speaker 3: grew it straight through, never had that experience. It took
[47:56] Speaker 3: me a long time to learn how to manage different
[47:59] Speaker 3: I would say, a strengths of different people and I
[48:03] Speaker 3: wish I had and the ability to empower people. It took,
[48:07] Speaker 3: you know, obviously, it took me probably a decade and
[48:09] Speaker 3: a half before I really felt comfortable doing that. But yeah,
[48:13] Speaker 3: I think that was probably if I had done that earlier,
[48:15] Speaker 3: I'd probably be bigger.
[48:16] Speaker 2: Really, really quite fascinating. Thanks Bob for being so generous
[48:20] Speaker 2: with your time. We have been speaking to Bob Moser.
[48:24] Speaker 2: He is the founder and CEO of Prime Group Holding's,
[48:28] Speaker 2: America's largest privately held self storage investment funds. If you
[48:34] Speaker 2: enjoy this conversation, well be sure and check out any
[48:38] Speaker 2: of the five hundred and ninety two that we've done
[48:41] Speaker 2: over the past twelve years. You can find those that iTunes, Spotify,
[48:46] Speaker 2: Bloomberg YouTube, or wherever you get your favorite podcasts. I
[48:51] Speaker 2: would be remiss if I do not thank the crack
[48:54] Speaker 2: team that helps me put these conversations together each and
[48:58] Speaker 2: every week. Elect Marxist Noriega is my video producer. Sean
[49:03] Speaker 2: Russo is my head of research. Anna Luke is my
[49:07] Speaker 2: podcast producer. I'm Barry Ritolfs. You've been listening to Masters
[49:12] Speaker 2: in Business on Bloomberg Radio.

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