The AAA Storage Podcast

Welcome to the AAA storage podcast,
your integrated real estate and

development partner, exploring all
things, self storage investing to

bring you diversified success.

Let's dive in.

Brandon Giella: Hello and welcome
back to another episode of

the triple A storage podcast.

I have again with me, Paul Bennett,
managing director of triple A storage,

and you have 30 years, 40 years
experience in the storage industry and

real estate in general and investing.

I know you've got a lot of
expertise and we drug some of

that out in the first episode.

in the first episode we talked about why
invest in self storage and in real estate.

we talked a lot about the mechanics
and things that you guys are thinking

about when you're analyzing deals and
why self storage is such a great asset

to own within the real estate class.

now, what I want to get your insight
on this week is, what do I do?

So, okay, I agree with you, let's
say, from episode one, that self

storage is in fact a great investment
and there are different ways to

get involved in that investment.

Paul, what would you recommend?

You've got a high net worth
individual who's interested

in investing in self storage.

What do you, where do you start?

Where do you go?

What would you point them to?

Would you give them recommendation,
wisdom, you know, that sort of thing.

Paul Bennett: Okay, good Brandon, so
let's start, you know There are a lot

of a lot of people and and in particular
a lot of high net worth individuals

that invest in real estate And and when
they do it directly on their own is

typically in residential real estate
We all know ten people that are either

buying rental houses in retinam or or
buying and flipping houses Once you

cross over out of that sort of segment
of the market into true commercial

real estate, whether it's self storage
or, you know, office industrial flex

or retail or office, you're generally
getting into an area where, number one,

there's a lot more capital required.

And number two, the markets are more
sophisticated in terms of understanding,

what the value of a property is or isn't
and, what its future might look like.

Typically, when people cross over from
doing residential real estate, rental

houses and that type of thing, they
will look to partner with a sponsor.

the whole reason that a fund vehicle as a
concept was created was to give Investors,

a couple of different advantages
that they don't have on their own.

first and foremost, it allows
them to combine their capital

with other investors, which
allows them greater diversity and,

sort of spreading risk around.

the average self storage facility costs
five to eight million dollars to build.

you know, even if you're a very
wealthy high net worth individual,

you probably would be limited
to maybe doing one project.

so you've got all your
eggs in that one basket.

The second benefit that you get from a
fund is, particularly if you pick the

right sponsor, is getting somebody with
experience in that asset class, that's

focused on it on a full time basis.

and, hopefully has a track record
that sort of indicates that their

likelihood of success is greater
than yours would be on your own.

and those are the two principal
benefits of investing with

a sponsor in a fund vehicle.

And then lastly, not only are you
diversifying by leveraging other investors

capital who are investing alongside
you, but typically a fund, like in

the case of our Growth Fund One, is
invested in eight different properties.

It's actually a total of about 80
million worth of real estate that

an investor who invests in the fund
today can spread across, 80 million of

capital and eight different projects
with a simple 100, 000 investment.

So.

those are the real key benefits, if you
will, to investing, via a fund vehicle.

the other alternative, is, our single
property investment vehicles, where

you have a sponsor, a smaller group of
investors that's invested in one property.

And that's what we did
for more than 30 years.

But we went to the fund model
because it provides greater diversity

across those dollars deployed
for our investors in the fund.

Brandon Giella: That's great.

So if I'm tracking with you you
have a high net worth individual,

probably several million
dollars to put to work somehow.

And they've got, 401k, IRA, different,
vehicles that they can invest their money.

They want to pick real estate and
a lot of people pick up homes or

do flipping, things like that.

But if you want to get into
commercial, if you do it yourself,

it's very expensive, lots of money.

And if you want to pool together
funds, it's very complicated.

But it's better to go with a sponsor
because you get diversification of

your assets and things like that.

But you also get the expertise
that I know a firm like yours

would bring to the table.

There's a lot of things to analyze.

So what kinds of things are you
doing on behalf of an investor

like that when you're thinking
about building self storage?

So what I mean by that is, what
does it look like to engage a firm?

Not necessarily your firm, maybe,
but what are some things that

I should be looking out for?

What are some things that,
would, come with investing in a

firm that I should be aware of?

Anything like that?

Paul Bennett: to invest in a passive
environment, a fund or a single property

deal, how do you do your due diligence?

what are the things you want to
know and understand both about the

sponsor and the opportunity that
will help you make better decisions?

Brandon Giella: Set it
better than I could say it.

Paul Bennett: so I think it starts
first and foremost with the sponsor.

you know, what is their longevity?

What is their history?

What is their track record?

you know, the old saying is,
past performance is the best

indicator of future, performance.

So, I think really understanding
the sponsor, and the strategy of the

particular investment that you're looking
at, for example, our focus, our strategy

is to really grow people's equity, we
are not an income oriented investment in

terms of monthly or quarterly dividends,
so it sort of starts with determining what

your investment objectives are and does
the opportunity meet those objectives.

If you're, near retirement or
at retirement and you're really

investing for income, our growth
fund probably isn't the ideal vehicle

for you because we're not going to
distribute cash on a regular basis.

we're doing ground up development
and we're going to sell those

properties and distribute lumps of
cash, as the fund exits each property.

So, I think your own investment
philosophy and, requirements combined

with understanding the sponsor.

do they have a track record?

Do they have the experience and expertise?

are the first two steps in that process.

Once you've cleared those, okay, the
opportunity appears to meet my investment

objectives, and the sponsor's track record
is, if not impressive, at least solid.

Then it gets down to looking
at the individual opportunity.

You know, what markets
are they investing in?

what is their overall strategy?

What is the supply and demand
balance in those markets?

what's the assumption?

one of the key assumptions that
drive the investment returns.

For example, in our
world, we're developers.

we're looking at the value that we
can create in the development process.

If you're investing in a fund or a
vehicle that's acquiring existing

facilities, what are their projections
in terms of rate growth, and occupancy?

And do the dynamics in that
market support those assumptions?

Sort of doing a reasonableness check,
if you will, to make sure that the

underlying assumptions that they've
predicated their projected returns

on are realistic and achievable.

Brandon Giella: And this information, I
understand is in a prospectus, like if

you work with a firm, they've got a fund,
they're going to have a report basically

on their assumptions and where they're
kind of trying to go with the fund.

Is that the way to
understand this information?

Paul Bennett: Yeah, and forgive
me if I kind of leapt over that.

Maybe I just assumed people
understood that, but yeah, so no

conversation, including this one.

if we were trying to give you
information about our fund, is ever

complete enough to really give you
all the information that you need and

a one page or four page summary of
an opportunity is great to kind of.

Those early stage parts of the process,
do I like the sponsor, do I like the

track record, does the strategy match
my investment objectives, can be

accomplished in a four page summary.

but beyond that, the things I was
talking about just a minute ago

are really found in the offering
memorandum, the private placement

memorandum, or PPM as it's referred to.

Typically, an entity like this would be
structured as an LLC in today's world

and there's an LLC agreement that would
have some pretty practical information

in it in terms of governance and how some
of the really specific aspects of that

entity are going to operate over time.

So, once you sort of pass the initial
phase of, yeah, this seems to line up

with something that makes sense for me,
then you really have to dig into the

private placement memorandum and the
LLCA to get to the nitty gritty details.

and then behind that, I strongly
suggest before you make the decision

to invest that you schedule a call
with a sponsor, so that you get to

meet them face to face, you get a
feel for how responsive they are.

And in that call, you need to have
some well thought out questions.

Maybe areas of the private
placement memorandum that

you didn't fully understand.

Or, or maybe there's information
that wasn't disclosed in the

PPM that you'd like to know.

For example, we have a, secure
data room, to support our fund.

And we have, when we have investors
who want to dig a little deeper,

for example, they want to see the
underwriting on each of the properties.

And they want to see, The proformas
and the assumptions in those proformas,

we don't send those out to folks, but
we have them in a secure data room.

We provide them with a log in.

They can go into that data room
and study that data, and then

come back with questions for us.

if somebody won't that
level of information.

That would be a red flag for me.

but digging as deep as your expertise,
and interest will allow you to.

And even I've had multiple situations
over the years where, someone's personal

attorney or CPA, might engage depending
on how much you're investing and, the

process you want to run, you can certainly
engage your CPA or attorney, to look at

the legal documents and the financial
projections to kind of give you some

third party comfort that they're within
reasonable bounds and seem to make sense.

Brandon Giella: Yeah, I was going to ask.

let's say you get all this
information and somebody is not a

financial expert, but they have,
capital that they'd like to invest.

do you see, folks take that data and
go to their financial advisor, their

CPA or attorney or whatever, and kind
of vet it I'm just wondering how does

somebody make sure that they know what
they're getting themselves into, I guess,

is the question, but you answer that.

Paul Bennett: Yeah, and the other thing
that we do, I can't tell you right now

off the top of my head how many investors
we have in the current fund north of 100.

I've talked personally with every one
of them at one point or another, and

we pride ourselves on offering a call.

to everybody that has interest
and spending the time to

answer any questions they have.

And in some cases, educating them
because they don't understand, something.

obviously there's a conflict or
potentially a conflict of interest there,

so it's always a great idea if you've got.

an advisor, whether it's an investment
advisor, CPA, attorney, or a close

friend that may have more financial
acumen than you do, it's never

a bad idea to get their opinion.

we try to provide as much information as
any, you know, somebody would want to look

at and give them as many opportunities
as they'd like to get questions

answered or get additional information.

Brandon Giella: that's so important.

Okay, so you're looking for these firms,
that you're understanding their track

record, you're understanding where they're
investing, why they're investing, and

then the next step is really do reach out
to the team and try to find that this is

a good fit, because if you are investing
that amount of money, it's good to know

that even relationally there's good fit.

So once you get started, what
is that process, like if I,

go to AAAstorageinvestments.

com right now, And I get
in touch with your team.

We talk through it.

What does the next, 30
to 90 days look like?

and I know this isn't supposed
to be a hard pitch for AAA.

You guys do fantastic work,
but I want people to know

what the process looks like.

what does it look like?

Do I get, statements?

Is there, quarterly reports
and that sort of thing.

Paul Bennett: Yeah, so I'll
get real granular for you.

let's just say that.

You contacted us.

You went through the process that
we've just talked about at whatever

level you need to have comfort.

You make the decision to invest.

obviously before you made that
decision, we've provided you with a

copy of the offering memorandum and
you've had a chance to review it.

At that point, for Triple A Storage, we
have a, secure online subscription portal.

Andrew Froh our head of investor
relations, would send you a link.

and invite to that portal.

You would log in, and all the
documentation that you need to complete

to subscribe to the fund would be there.

You do it all online, sign it
electronically, and then we'll

send you a capital call notice.

And within two weeks of receipt of
that notice, your capital has to

be wired into the fund's account.

so now you're officially an investor.

You've been admitted into
the fund as an investor.

From there, we also
have an investor portal.

It's a secure portal.

All of the information related to the
fund will be posted in your portal

and you'll get an email notice.

for example, we do a quarterly update
on the fund property by property

and sort of do a little discussion
about the capital markets in general

and then the self storage and office
industrial flex markets in particular.

and then go through each property where
it is in this development process.

If it's in Lisa, What's the occupancy?

How are things going?

And we send that out on a quarterly basis.

In addition, you're going to get an annual
K 1, which is reporting your share of

the income and loss from the investment.

That will be placed in your investment
portal, and you'll get a notification.

the fund publishes its financial
statements every quarter.

those are posted, in the investor portal.

And then at the end of the year, the fund
is audited by Cherry, Beckert Holland.

And those audited financials are posted.

in the investor portal as well.

So everything moves through
the investor portal.

You can download it.

It's saved there for you, so you
don't have to download it, but you

can download and save on your own
PC or laptop, any of those documents

or information that you want.

But the investor portal really
serves as our key communication link.

once somebody is in the fund
and we go through the process.

Brandon Giella: Okay.

Very, very helpful.

Thank you.

That paints a picture of what this
process looks like, because the point

is, again, you agree to You know,
self storage is a great investment.

Now what?

And I think you've given us such
clarity on that process or for anybody

involved and there's going to be a
ton of information on our website,

frequently asked questions, things
like that to help people understand,

wrap their minds around why this is
a such a great firm to work with.

So thank you Paul for that.

And I would encourage anybody listening
to reach out to the AAA storage team.

On social media on the website and
this is a great team to talk to.

This, we won't get so granular in
the process and, and things like

that about AAA, but I, I really
wanted to get people wrap their

minds around what it looks like.

From here, we're going to be talking
much more about market trends and future

trends, things like that, that you
guys have stored up in your big brains.

I'm glad you told us about that.

So thanks Paul.

Paul Bennett: Yeah, I enjoyed it, Brandon.

Hopefully I didn't, I don't know that
I sequenced everything perfectly in the

very beginning when you sort of asked me
about the investment decision process.

But, it's pretty logical.

you know, if you're going to buy something
that, that's relatively expensive.

So it's getting a, an important
allocation of your personal capital.

You're going to do some research
to make sure you're buying the best

one from the best manufacturer.

and it's going to meet your objectives.

And looking at a real estate investment
at the end of the day, really in

a whole lot different than that.

So.

Brandon Giella: That's perfect.

Well, thank you so much, Paul.

I'm excited to get to the next episode
next week and hopefully you're not

drowning in too much snow at the moment.

we will see you next week.

Thanks so much, Paul.

Paul Bennett: you got it, Brandon.