Is This a Resilient Asset Class? Class-A Self Storage with Garland Benton-Season 3 Episode 10

SummaryIn this episode of Beyond Stocks, host Chihiro Kurokawa interviews Garland Benton from Direct Equity Source, who shares insights into the self-storage investment sector. As with many asset classes, in an industry of this size, not all self storage facilities are the same. Garland's firm specializes in Class-A self storage, meaning newly-built facilities with features like climate control and technology amenities. By contrast, Direct Equity Source doesn't do value-add or conversion projects intended to make improvements to existing facilities. Their business model involves raising capital for new self-storage developments, and selling those assets to nationally recognized brands such as Public Storage or CubeSmart. As the capital partner for a developer called AAA, Garland's job is to find investors to help fund these projects. TakeawaysSelf-storage is a strong investment sector due to its resilience during economic downturns.Direct Equity Source's model involves significant sponsor investment, aligning interests with investors.The company focuses on building Class A facilities to attract institutional buyers.Investors receive a 12% annual fixed dividend, providing consistent returns.Market saturation is a key risk in the self-storage industry, requiring careful site selection.The fund structure allows for diversification across multiple properties.Garland emphasizes the importance of understanding past performance when evaluating investment opportunities.The company has a strong geographic focus on Texas, with plans for expansion in other states.Investors have liquidity options after a 24-month hold period, unlike traditional syndications.The self-storage market is expected to benefit from reduced new construction in the coming years.Chapters02:45 Understanding the Investment Model05:18 The Resilience of Self-Storage in Economic Downturns08:27 Diversification and Fund Structure11:02 Market Dynamics and Consumer Behavior14:03 Building Class A Facilities16:47 Liquidity and Investor Returns19:25 Risks and Market Saturation22:19 Geographic Focus and Growth Areas25:09 Conclusion and Investor Engagementself-storage, real estate investment, private equity, economic resilience, investment model, diversification, market dynamics, liquidity, investor returns, risk management