City Line Capital has been on a growth streak this year, acquiring 18 self-storage facilities through the first half of the year.
That brings the Bala Cynwyd, PA-based firm’s portfolio at mid-year to a total of 253 properties. The portfolio spans 15 million square feet across 29 states. The firm anticipates purchasing another 20 facilities before the end of the year.
The firm recently opened a second office in the western portion of the commonwealth, located south of Pittsburgh in the Southpointe business park. Pete Veltri, COO, will work out of the new office, along with a handful of associates that had been working remotely up until this point.
The Storage Beat caught up with Veltri recently to chat about the new office and the company’s recent growth spurt. Check out the convo below:
How many folks working out of the new office?
Pete Veltri: Right now we are making a new hire, so there will be five people working out of the Pittsburgh office.
A lot of companies have been calling their employees back to the office, why join them?
As a company we had a focus of being in the office as soon as we could after the pandemic, it was important to us. That said, with technology these days we’ve really opened up the ability to hire some people that aren’t local to Philadelphia, so we have more remote workers than we did pre-pandemic.
When I joined from Pittsburgh, I thought it would be great to have a team out here, and we’ve been able to build talent out here. With the new office, I think the goal would be to continue to do that.
Any benefits you’ve noticed?
I came from a law firm where in person collaboration is important. It’s been really interesting. We’ve been in the office three to four weeks now. People will be having a conversation and someone else overhears and chimes in with some good ideas. It is things you really didn’t think about pre-pandemic, but after not being in that environment for a while, it is really a stark contrast. I didn’t realize how much I missed it.
Speaking of remote, what has been your firms approach to remotely operated facilities, what success have you had in that area?
That is something we are intently focused on approaching in an intelligent way. We work with a few different third party management companies, so we have the ability to see how different management companies approach those things differently. We have been testing out different options to see what works. At the end of the day, some sites are readily managed remotely. I think other sites are more difficult.
One thing that is certain is that technology provides substantial benefits when working alongside people. We’ve done a lot of hub and spoke deals. We probably have 10 to 15 facilities that are fully remote, not counting hub and spoke. There are a number of sites that were manned that we rolled into an existing hub and spoke.
Storage Asset Management manages a majority of our sites, plus a handful of others.
So far this year you’ve acquired 18 properties, and plan to buy 20 more before the end of the year. That’s seems like a strong pace considering the market, how do you do it?
It is definitely a more challenging environment, there are fewer deals in the market for sure. We are seeing a lot of off-market deals and pocket listings. Those two pieces of transactions are up significantly compared to previous years when we saw a lot of marketed deals.
What is allowing us to excel, we have a good track record of being a reliable buyer. We take our reputation very seriously, not just as an operator but as an acquirer.
Are sellers becoming more willing to negotiate do you think?
I think when interest rates first start spiking early last year, people were slow to react thinking it was a blip. Here we are 16-ish months later and I think the interest rate environment is sinking in. I think you see people are coming to accept the new normal.
Nationwide street rates are down about 15 percent compared to last year. What type of trends are you seeing in your markets and how are you managing that?
I think from a macro perspective, we are seeing things get back to the pre-Covid demand cycles as far as seasonality, so demand and occupancy are a bit lower than where they were a year ago. At same time we are seeing existing tenants are staying longer, and we are still able to see the benefits of those rents.
Our perspective is we look at these storage investments as long term holds. Sure we focus on the short term bumps, but in the long run we are very bullish on the storage sector.