CrowdStreet’s Darren Powderly is joined by Cliff Minsley, co-founder of 10 Federal Companies, to discuss his 2020 financial forecast in the wake of COVID-19, how self-storage leasing rates have changed, and 10 Federal’s plans for the future.
Darren Powderly, Co-Founder & VP Capital Markets
CrowdStreet
CrowdStreet
Darren founded CrowdStreet in 2012 after identifying the need to radically improve people's access to commercial real estate investments via technology. Over his 20+ year career, Darren has transacted billions of dollars’ worth of commercial real estate investments and enterprise software contracts. Darren is a driven leader who loves building relationships based on mutual success. In addition to building businesses, leading teams and advising a prestigious list of national clients, Darren has personally owned commercial real estate, syndicated investment groups and developed properties from the ground up.
00:00:04 Hello everybody. I'm Darren Powderly, co-founder and VP of Business Development with CrowdStreet. Welcome back to StreetBeats. It's our short video series Keeping you informed of, with updates from various aspects across the country. From our investors to our sponsors to capital market participants. Today I'm here with one of our sponsors, cliff MinsFormigle, co-founder of 10 federal companies in Raleigh, North Carolina. Cliff is gonna update us on how self-storage properties overall, as well as how his portfolio is performing today, and where he sees opportunities to invest in self-storage in the future. Cliff and his brother Brad, have been, uh, customers of CrowdStreet for quite a while now, since late 2016, and we've seen some really impressive demand for his, uh, two fund offerings. To date, they've raised 18 million from over 358 CrowdStreet investors, uh, out of a total of 35 million that they've raised on those funds.
00:01:02 And as a primer for the self-storage industry. Just a bit of a background. Uh, we're big fans of the self-storage industry and obviously Cliff is as well. Um, and you know, experts, uh, like to describe this self-storage industry, uh, according to the four Ds, and I'll explain those here. Uh, downsizing is the first d divorce, dislocation and death, and unfortunately in this Covid 19 impacted, uh, economic environment, we're likely to see an uptick in all four of those Ds. As such, self-storage facilities are positioned really well, uh, for a downturn, uh, in most cases. And in fact, another, uh, data point here is that self-storage publicly traded REITs are performing exceptionally well. Right now. The Nay REIT self-storage index is only down 4.7% year to date versus the s and p 500, which is down 12.7% year to date. So with that, uh, cliff welcome, uh, to StreetBeats. Thanks for joining us. Very happy. Thank you for having you. We've got a great relationship. And, uh, why don't I just launch into the first question for you?
00:02:13 Sure.
00:02:13 So let, let's take a moment, uh, to look at the current portfolio. Uh, what are your March and April financials telling you as you look at the data, as, as we all do on a daily basis right now, you know, what do the financials tell you and how have the current financials impacted your 20 financial forecasts?
00:02:35 Well, uh, first off, thanks again for having me. Uh, excited to be here and we're, uh, you know, been very happy to be on the CrowdStreet platform and, uh, I've really enjoyed it and have found it to be a fruitful relationship. Um, as far as the financials go, um, thankfully things look to be, um, kind of business as usual, um, 10 federals or one of a big value proposition for 10 federals that we manage our stores in an automated fashion. We don't have onsite personnel, we don't have onsite management. We do have maintenance men that, um, you know, visit the properties on a roving basis. But, uh, as far as it relates to covid 19, um, it's been business as usual for 10 federal. So thankfully the financials look fine. Um, what we started doing, uh, you know, starting in March and, and really we've kept a very close eye on it in April, is looking at what our delinquencies are.
00:03:28 We think that will be something that would shed light on, uh, whether or not we've got any sickness in the portfolio. And we compare that on, you know, January, uh, February, February to March, March to April, um, but also doing that for year over year because our first fund, um, you know, it started buying properties back in 2017 and thankfully we're pleased to report that delinquency, although their delinquency exists, um, we haven't seen it, uh, in any sort of, uh, realm that would cause us great concern. We haven't really seen an uptick. Um, the biggest thing that we're noticing currently, the leasing has been a bit slower than what we normally see. Um, the good news is we continue the lease units, which, um, I think when you compare that to other asset classes, that's unique in the covid situation, but it certainly isn't where you would expect it to, to be at this timeframe. But that's also not no surprise given. I think the majority of the nation is at shelter, at home orders, so, um, but overall, I would say that we are, are happy with the way things are going so far, everything. Well,
00:04:38 That's, that's good. You guys, I know that you have a very tech enabled soft storage platform with no, uh, humans actually at site. Correct. So the, the payoff in your technology investments from the beginning of your firm, uh, seem to, to really be paying off at this time.
00:04:56 Yeah, and, and we, the, um, technologies that we implement, you know, they're tangible on the, on the properties in the sense that we have kiosk and we have AI cameras and things of that nature. We've also developed a lot of things that we use on the financial side, um, that allow us to track data, allow, allow us to track trends. We feel good knowing that we've got data and, and, you know, we've been at it for a long time.
00:05:18 Good. Well, let's shift there. Uh, let's talk about the future. Uh, almost all investors have a new view. Uh, when I say investors, I mean both individual investors on our marketplace as well as the real estate owners, operators, developers, otherwise known as sponsors. So how has your outlook changed for, say, the rest of 2020? Uh, you know, how has your investment thesis adjusted in the post covid, uh, 19 environment?
00:05:46 If I was gonna characterize it, it's gonna be cautious. Um, we're optimistic that things will, will rebound. Uh, the things that we're doing to shore up our portfolios is we're gonna look to Dele, uh, at least going forward on the new acquisitions for the second offering. Um, we bought a property, or rather two properties last week. We're closing on another one today. Um, those are properties that were in the, uh, pipeline, you know, as Covid was, uh, was sort of, um, you know, taking hold in the United States. Um, we believe those are great assets. They are, we believe they're gonna be great performers in the long run, you know, as far as it goes into the longer term. We're also looking to refinance with some of our existing or refinance away from some of our existing lending relationships with, uh, the likes of, of some life companies that we know
00:06:39 Couldn't agree with you more. Well, cliff, thank you for the summary from what's going on at the 10 federal companies and, uh, at your properties and the two funds that we've worked on already in your view of the future. So, uh, it's been a real pleasure having on StreetBeats today. Uh, we're gonna wrap it up here. Thank you again, cliff. Uh, and thank you all for joining us. We hope that it was informative and you learned a little something. Don't, uh, forget to register for StreetBeats mailing list if you haven't already done so, so you can get these updates two times a week. And we appreciate you being part of the CrowdStreet community. Thank you. And stay healthy.
00:01:02 And as a primer for the self-storage industry. Just a bit of a background. Uh, we're big fans of the self-storage industry and obviously Cliff is as well. Um, and you know, experts, uh, like to describe this self-storage industry, uh, according to the four Ds, and I'll explain those here. Uh, downsizing is the first d divorce, dislocation and death, and unfortunately in this Covid 19 impacted, uh, economic environment, we're likely to see an uptick in all four of those Ds. As such, self-storage facilities are positioned really well, uh, for a downturn, uh, in most cases. And in fact, another, uh, data point here is that self-storage publicly traded REITs are performing exceptionally well. Right now. The Nay REIT self-storage index is only down 4.7% year to date versus the s and p 500, which is down 12.7% year to date. So with that, uh, cliff welcome, uh, to StreetBeats. Thanks for joining us. Very happy. Thank you for having you. We've got a great relationship. And, uh, why don't I just launch into the first question for you?
00:02:13 Sure.
00:02:13 So let, let's take a moment, uh, to look at the current portfolio. Uh, what are your March and April financials telling you as you look at the data, as, as we all do on a daily basis right now, you know, what do the financials tell you and how have the current financials impacted your 20 financial forecasts?
00:02:35 Well, uh, first off, thanks again for having me. Uh, excited to be here and we're, uh, you know, been very happy to be on the CrowdStreet platform and, uh, I've really enjoyed it and have found it to be a fruitful relationship. Um, as far as the financials go, um, thankfully things look to be, um, kind of business as usual, um, 10 federals or one of a big value proposition for 10 federals that we manage our stores in an automated fashion. We don't have onsite personnel, we don't have onsite management. We do have maintenance men that, um, you know, visit the properties on a roving basis. But, uh, as far as it relates to covid 19, um, it's been business as usual for 10 federal. So thankfully the financials look fine. Um, what we started doing, uh, you know, starting in March and, and really we've kept a very close eye on it in April, is looking at what our delinquencies are.
00:03:28 We think that will be something that would shed light on, uh, whether or not we've got any sickness in the portfolio. And we compare that on, you know, January, uh, February, February to March, March to April, um, but also doing that for year over year because our first fund, um, you know, it started buying properties back in 2017 and thankfully we're pleased to report that delinquency, although their delinquency exists, um, we haven't seen it, uh, in any sort of, uh, realm that would cause us great concern. We haven't really seen an uptick. Um, the biggest thing that we're noticing currently, the leasing has been a bit slower than what we normally see. Um, the good news is we continue the lease units, which, um, I think when you compare that to other asset classes, that's unique in the covid situation, but it certainly isn't where you would expect it to, to be at this timeframe. But that's also not no surprise given. I think the majority of the nation is at shelter, at home orders, so, um, but overall, I would say that we are, are happy with the way things are going so far, everything. Well,
00:04:38 That's, that's good. You guys, I know that you have a very tech enabled soft storage platform with no, uh, humans actually at site. Correct. So the, the payoff in your technology investments from the beginning of your firm, uh, seem to, to really be paying off at this time.
00:04:56 Yeah, and, and we, the, um, technologies that we implement, you know, they're tangible on the, on the properties in the sense that we have kiosk and we have AI cameras and things of that nature. We've also developed a lot of things that we use on the financial side, um, that allow us to track data, allow, allow us to track trends. We feel good knowing that we've got data and, and, you know, we've been at it for a long time.
00:05:18 Good. Well, let's shift there. Uh, let's talk about the future. Uh, almost all investors have a new view. Uh, when I say investors, I mean both individual investors on our marketplace as well as the real estate owners, operators, developers, otherwise known as sponsors. So how has your outlook changed for, say, the rest of 2020? Uh, you know, how has your investment thesis adjusted in the post covid, uh, 19 environment?
00:05:46 If I was gonna characterize it, it's gonna be cautious. Um, we're optimistic that things will, will rebound. Uh, the things that we're doing to shore up our portfolios is we're gonna look to Dele, uh, at least going forward on the new acquisitions for the second offering. Um, we bought a property, or rather two properties last week. We're closing on another one today. Um, those are properties that were in the, uh, pipeline, you know, as Covid was, uh, was sort of, um, you know, taking hold in the United States. Um, we believe those are great assets. They are, we believe they're gonna be great performers in the long run, you know, as far as it goes into the longer term. We're also looking to refinance with some of our existing or refinance away from some of our existing lending relationships with, uh, the likes of, of some life companies that we know
00:06:39 Couldn't agree with you more. Well, cliff, thank you for the summary from what's going on at the 10 federal companies and, uh, at your properties and the two funds that we've worked on already in your view of the future. So, uh, it's been a real pleasure having on StreetBeats today. Uh, we're gonna wrap it up here. Thank you again, cliff. Uh, and thank you all for joining us. We hope that it was informative and you learned a little something. Don't, uh, forget to register for StreetBeats mailing list if you haven't already done so, so you can get these updates two times a week. And we appreciate you being part of the CrowdStreet community. Thank you. And stay healthy.