City Line Capital has hired a new chief investment officer to continue the firm’s growth trajectory across the country.
Ben Carr comes to the job with more than 20 years of experience in the industry, most recently as president and CIO of Go Store It. Carr also served as president of MCSS Development and Investment for a time. Prior to that, Carr served as CIO at LifeStorage LP at the time of its acquisition by Uncle Bob’s Self Storage.
“We are thrilled to have Ben join our team as our new CIO,” said Rick Schontz, Partner and CEO of City Line Capital. “His impressive track record and reputation in real estate will be instrumental in helping us achieve our goals and continue our growth trajectory.”
City Line, based in Bala Cynwyd, PA, is a well-funded self-storage investment firm with various sources of equity including high-net worth individuals and small family office. It has more than 240 deals under its belt, and with Carr on more the firm is seeking many more across the full spectrum of market sizes and facility quality.
The Storage Beat spoke with Carr to find out more about his approach to the role and the trends he is seeing in the market right now. Read what he had to say below:
Looking ahead to the rest of the year, what challenges do you see ahead for the self-storage industry?
Ben Carr: “Everything ties back to property valuation and NOI. Effectively, the question is: how much can we charge? From an operational perspective, we are still seeing pretty sticky rate increases across our markets.”
What macro indicators do you look to when you are underwriting?
“Over the next six to 12 months, what I am keenly focused on from a macroeconomic perspective are household savings and credit card balances. Recently, we have seen savings deteriorate and balances increasing a bit, but not to the point of being outliers compared to historical levels. I’ll watch keenly to understand what the consumer might be willing to pay for the product type moving forward, and that ties into underwriting to forecast the next seven to 10 years.”
And how do you expect the industry to perform considering those headwinds?
“Generally speaking, we are in a similar situation to four or five years ago. There are still tremendous tailwinds in our space. We are still undersupplied when it comes to whatever form of housing we look at.”
What about the deterioration of pricing power?
“We might have a lull in pricing ability, but should there be no challenges to savings, credit card debt or inflation reemerging, I don’t see any challenges that come close to what the industry experienced in 2009 and 2010. Population growth hasn’t slowed, and we tie the need for storage to population growth.”
The recent big news story is obviously the acquisition of Life Storage by Extra Space. Are you seeing any ripple effects in terms of market activity as a result of that?
“There is a lot of chatter, people talking about the size of the transaction. I haven’t seen any change in pricing in the market. With the Fed’s quick and substantial increase in rate and its impact on debt, the valuations have moved lower. Not drastically for a portfolio or high quality assets, but they have moved. The interested buyer pool is smaller than it was a year and a half a go.”
“If I had to speculate about what that large transaction [with Life Storage] has done, it may have spawned more BOVs. Speaking with brokers all over the nation, what I’ve heard, more smaller owners in general have been calling for that. Look at the psychology of someone who has endured rate increases. They see other real estate types having challenges, and they are sitting in an investment that has done really well and ridden out those interest rate increases without a substantial move in value.They see a large transaction like Extra and Life, and it is logical to think, ‘Maybe I should take a look.'”