Storage REITs: From Buying Buildings to Becoming Lenders?

THE SELF STORAGE REPORT — EPISODE TRANSCRIPT Episode: Storage REITs: From Buying Buildings to Becoming Lenders? Co-host: Thaddeus Campbell — Director of Business Development, S3 Partners Host: Chris Berg — Abernathey Development Recorded: August 28, 2025 Video: https://www.youtube.com/watch?v=KVGT6D3sADQ Key topics: Extra Space's $800 million note raise at 4.95%; bridge lending at near-double-digit rates; the existing $1.5 billion bridge book; SmartStop's $500 million maple bond; Joe Margolis and stock buybacks; the Madison Capital-Snapbox consolidation; Powell's Jackson Hole speech and a possible September rate cut; the 10-year Treasury moving 3.72% to 4.63%; border encounters falling from 3.2 million to roughly 700,000; Yardi Matrix data and Maurice Pogoda; the Cerritos City Council's 4-facility cap and self-storage oligopoly; the $91 million Cerritos facility sale; storage as a small business incubator; SSA Fall Conference at the Aria in Las Vegas Note: Speaker attribution reconstructed from raw captions. Light cleanup of transcription errors only; wording preserved. Timestamps and YouTube chapter markers removed. Turns marked [attribution inferred] could not be attributed with certainty. ————————————————————————————— Chris Berg: Kicking off the show today with a big number, $800 million. That is what Extra Space is raising in notes to go out and deploy some dry powder. I think the big question is what are they seeing that many of us maybe aren't? We're going to lay that out for you today and why it's very very important to you. Also, a Cerritos California city council meeting that is Mustsee TV. Welcome to the Self Storage Report, the only new show committed to self-storage. I'm your host, Chris Berg. Also do land acquisition for Abernathey Holdings with my co-host today, the one and only Rad Thad, Thaddeus Campbell. Thad, great to see you, my friend. Thaddeus Campbell: Great to see you as well. Director of business development at S3 Partners, working to build self-storage and small bay flex around the country. Also a person who spends at least 10 minutes trying to make my hair look as good as my co-host when we come on for the self-storage report every week. Chris Berg: Dude, is that just a mic drop right there? Like, hey, we're done. Thaddeus Campbell: That's it. I'm done. I can I can sign off for the rest of this show. That that's it. I will say this guys, if you are in self-storage and you're investing in self-storage, you this whole thing with Extra Space goes to the point that this is a show you should be watching, right? What's happening with this $800 million I think goes to something we've been talking about now for 12 weeks. Chris Berg: That is not where I thought you were going to go after the haircut. Thaddeus Campbell: It's been too long on your hair, Chris. I'm going to make you get a big ego. I'm not doing that. Chris Berg: So, $800 million extra space goes out. They're they're raising some notes at 4.95%. I think what's important for us in the storage business understand is that they've got 800 million and I and I I share this because I will never forget when I was at CSSA in Newport, the gentleman from Talinst, they do some amazing financing for self-storage. He goes, "Look, we're not only just doing bridge loans now, we are doing bridge to bridge." And I remember Michael Schwartz from SmartStop. He's the CEO there. They've raised $500 million Canadian money and maple bonds. He's like, "Let's see bridge to bridge. I got money less than 5%. Maybe I'll get into the lending business, right?" Like it was just in my opinion, there's a couple things happening. They are loading up the guns, their gunpowder, I should say, to go out there and buy some of these assets they know are going to struggle that came in on the 2021, these high marks. They all underwrote it at X and now it's 25% below that. So, I think that's one thing. One other interesting thing I want to hear from you and and this is a big capital allocation conversation is that I remember also on the recent Extra Space earnings call, you know, the Extra Space and public storage uh stocks have not been doing well, well below the 200 day moving average. And one of the uh guys on the call was like, hey, is there any like thoughts about stock buybacks? And um Joe Margolis is kind of like, you know, we we get a number that we'll we'll definitely buy back at. And so they're going to go raise 800 million, 4.95%. If the stock continues to go in the wrong direction, that just seems like an obvious capital allocation strategy. What say you? Thaddeus Campbell: Two things I think are are going to be strong outlets for them. Listen, they're doing bridge loans at almost double digits, right? So, if they have $800 million at under 5% and they're able to go out to some of these distressed developers, we've talked a lot about 2023 2024 being the highest deliveries we've ever seen. A lot of those deals underwritten in 2020, 2021, not performing to what their pro forma suggested in need of that bridge money to get through. You have extra space here who's not upset to end up with the asset if for some reason the bridge loan doesn't work. And yet they're able to get that bridge loan at double digit or near double-digit interest rates. Chris Berg: Well, listen, if I borrow at 4.95 and I lend at 9.95, that's a 5 BIP spread. That's a pretty nice return on that that money. Flip to the next one, which is we're starting to hear a lot about cap rates across this asset class starting to rise. If you have uh capital at 4.95% and you can go buy assets at a 5 and a half or a six cap or even 6 1/2 cap, there's a nice spread on an asset you're going to own for the long term. So, I think it's a masterful play by Extra Space. And if everything is going in the direction that the tea leaves seem to be suggesting it is, and not just tea leaves, the data suggests that it's going, then, you know, they they're setting themselves up in a position to really take advantage of a shift in the market. Thaddeus Campbell: But I I guess let's lay this out and make it very obvious when you say the data. I'm curious what you're interpreting there. Here's what I mean specifically just adds more context. Like if you're Extra Space, how many how many um sites do they third party manage now? 1,500 3,000 Chris Berg: They they've all told I think they have a like 3,00 2,800 something in that number. I should know that number off the top of my head. I don't. Thaddeus Campbell: But bottom line, it's a gargantuan amount, right? Chris Berg: The amount of data that they have in each area of the country to be able to say, "Wait a second. These are the rates that we're seeing. We know this guy loaned it in 2021 at X. We know he's going to have to refi at Y. Like he's probably going to need some help." And they can step in with 800 million bucks and just go, "Yeah, we'll do that. We'll do that. We'll do that." And I think what's really important for people to know because you've been talking about this for a while and kudos to you. I'm giving you a big virtual pat on the back is you've been talking about hey there's there's going to be a lot more consolidation in this industry. Thaddeus Campbell: I think your point is so well placed. Uh somebody who I speak to a lot Bo Aello is the chief operations officer for go store it. When Madison Capital and Snapbox combined, they had a combined about 140 assets between the two of them. Um a little more on the Madison Capital side than Snapbox, but they combined because they understood that going forward in order to compete with public and with Extra Space and to a lesser extent NSA and Cube and now Smart uh Snapbox, SmartStop. There we go. They had to have an economy of scale when it came to their ability to collect data. So to your point about Extra Space, they know exa exactly what's going on in nearly every market in America because they have stores there that they have the income numbers for. They understand the reality of what the achieved rents are in these stores. So when you see them load up $800 million at sub5%, it's because they have data to show them what's likely to play out. And as I said, I think those two outlets for them are do they go and lend to people that are in some level of distress where it makes sense to lend knowing that they could end up with the asset or do they just simply go and buy the assets? Either way, it's it's a a great situation for them to be in. And quite frankly, a a testament to how strong the REITs have been able to do given the headwinds that are going against storage, which is another thing we've been talking about for a few weeks. The fact that they're in a position to go raise this amount of money says a lot about the long-term prognosis of storage, although the short-term prognosis may not be as rosy. Chris Berg: Well, and I think right now they're doing what $1.5 billion in bridge loans already. And then just to be fair to extra space, you know, within the press release it does talk about, hey, we're going to pay down some paper and you know, different things like so I don't want to have everyone interpret, hey, it's $800 million of gunpowder just to go do acquisitions, but we all know money is fungible. So you could you make that argument. Again, I go back to I think what's going to be really fun to watch because I'm big begging to watching people uh allocate capital is what's going to be their capital allocation strategy. Does there come a point in time in a future earnings call where it's like, oh yeah, by the way, we bought that x amount of, you know, stock and did this and that with this money as well cuz again at 4.95% that becomes a no-brainer capital allocation strategy as well, unless they're just seeing that much better returns like you mentioned with cap rates rising and things like that. So, I would encourage people listen to those earning calls and watch. I think Joe Margolis is a super sharp man. Watch his capital allocation strategy. But the other thing I want to I'm wrap this up with for you Thad and just to talk to is like you look at 800 million here. You've got as you've mentioned very well it's $500 million in maple bonds which is 350 million US. But that's over my point is over $1 billion potentially just sitting there waiting to go, you know, just buying up assets from from two of five REITs, right? And not even accounting for some of the massive, you know, uh, Smart, uh, Storage Mart, I'm having trouble with names today. Too many similar. Storage Mart, the largest private REIT, you know, and then other private equity groups. There's a lot of money that's trying to get into self-storage and and it's one of the reasons we haven't seen cap rates go up as quickly as we thought they might. Thaddeus Campbell: Um, but I I feel like we talked briefly about this. I was on a call yesterday with Maurice Pogoda and he brought up the Yardi Matrix uh group call yesterday. Um Tyson Huebner who does a a great job of providing data. Um the the outlook of the data Maurice was like this is not good, right? It's like what the short-term prognosis is based on the data. We've talked a lot about are we at the bottom as far as rates? Are they going to start climbing back up steadily? You know, based on my I didn't get a chance to watch Tyson yesterday, so I I can't really speak to it myself, but Maurice Pogoda, who's the owner of National Storage in Michigan, the largest owner of facilities, they have 70 stores across m Michigan and Ohio. Um, no, the the data that's presented does not paint a rosy short-term picture. I'm going to get into a little bit more info as we go forward in the show as well. Again, you know, maybe we're not fully on the other side of what's going on. Chris Berg: You know, I'm glad you brought that up and I do want to share those with you because this is a conversation we had last week where we've had a record now um level of people not moving. So, just want to repeat, not moving in the United States of America, which obviously does not bode well for storage. And so, one of the things I didn't bring up last week that I wish I would have was more of a conversation because I did get a chance to watch the Yardi matrix yesterday. If you want to check it out, go to the CRE Report, go to my LinkedIn page. You can see that there because I did live stream it. But I think an important Thaddeus Campbell: Sent me, by the way, and thank you. I just didn't get a chance to watch it yet, so I appreciate that. Chris Berg: No, all good. But I want to share this with everyone. Um, and hopefully you can see this as I'm doing this on the fly because I just think it's a a very I mean, let's just talk about the straight up demand, right? I mean, demand right now is what is within our industry because people simply aren't moving. Well, obviously a big part of demand and you talk to anybody, they're looking at immigration trends. As you look at what was going on in Canada for a while and things of that nature, this is what's been happening over the past, let's say, three fiscal years in the US government as far as these are just border encounters. I'm not talking all the people that we don't even get a chance to encounter within the border crossings. But my point is in 2022 fiscal year, you had 2.7 million. 2023, 3.2 million. 2024, 2.9 million. You extrapolate this out, you're looking at maybe 700,000 people in 2025. That is a reduction of over 2 million people coming into this country. To me, that's a big demand driver. Thaddeus Campbell: Yeah. You you'll see under there where it says one repost, and that one repost was yours truly. And my comment on that was that that's the city of Boston in two years, right? You're talking nearly 5 million people less coming into our country over the course of the next two years. And of course, the 2023 and 2024 inventory that came into self-storage is not fully leased up yet. And and a lot of the 2024 is not even near fully leased up yet. And that new storage requires people coming to be able to moving and coming to communities to be able to lease up. And and to your point, you know, uh a piece of the the puzzle that maybe helped keep storage occupancy high over the last couple years even with the poor housing market and it's being curtailed. Does that have another negative headwind against the self-storage industry? Chris Berg: Yeah, I just think it's fascinating because like you and I have said hey long we're very excited about where this thing is going over the next, you know, 5 to 10 years, but right now it definitely is kind of churning through and and making its way. So, um, I want to move on to obviously what you've got in store for us as well. Before we do that, I want to say thank you to TractIQ, TractIQ for being our data partner here on the self-storage report. They do an outstanding job of bringing you great data, great opportunities to look at, hey, what's happening from development standpoint, obviously, demographics, um, all kinds of things. So, thank you to TractIQ. We're excited. We're going to be with them next week at the 50th SSA. So, it should be a fun time. Um, but go check them out. Tractiq.com. Uh, moving on, my friend. You want to talk a little bit about last week's uh Were you in Jackson Hole? I think you were, weren't you? Thaddeus Campbell: I I have never been to Wyoming. I'm working on that. That's on the list. I lived in Nebraska for many years. I don't know why I didn't get to Wyoming at least once, but I didn't. It's on my list of states I haven't been to. That being said, the chairman of the Federal Reserve, Jerome Powell, was in Jackson Hole and his speech last Friday was very closely watched because it was the first time he was speaking after their July meeting. 2 days after their July meeting ended, the jobs report for July came out and not only was the jobs report poor, but they amended May and June as well. So, and and took the numbers from north of 200,000 jobs per month to lower than 50,000 per month. So, a massive uh redrawing of what those numbers look like and shed a very poor light on job growth overall. Now, Chairman Powell, one of his two mandates at the Fed, they want to keep inflation low and they want to keep employment low. Employment is low, but as he said in his Jackson Hole speech, I'm going to play a clip for you. There's some reason for nerves there. Jerome Powell (Jackson Hole speech clip): This unusual situation suggests that downside risks to employment are rising. And if those risks materialize, they can do so quickly in the form of sharply higher layoffs and rising unemployment. At the same time, GDP growth has slowed notably in the first half of this year to a pace of 1.2%. Roughly half the 2.5% pace in 2024. Thaddeus Campbell: So, forgetting about the GDP growth right now because that's starting to come back up a little bit. I didn't mean to make you laugh, but talking just purely about the jobs, that's a a distinct difference. And and when he said unusual, the unusual is you usually don't have really low job growth with really low unemployment. I think we're right around 4% right now. Um so they're not worried about unemployment as far as the percentages is, but there is fear now that if there's some type of a a bigger layoff situation going on. And we talked earlier this year, uh, and we've talked many times about what's going on with software engineering, some of the large companies, with big layoffs. I think Microsoft's at 15,000 people already this year. They're now worried about that. Flip that with his conversation during that speech about them seeing uh tariffs starting to cause higher inflation. And we're in a spot where maybe there's a rate cut coming in September. I'm going to play clip number two. Jerome Powell (Jackson Hole speech clip): Risks to inflation are tilted to the upside and risks to employment to the downside. A challenging situation when our goals are intentioned like this, our framework calls for us to balance both sides of our dual mandate. Our policy rate is now a 100 basis points closer to neutral than it was a year ago. And the stability of the unemployment rate and other labor market measures allows us to proceed carefully as we consider changes to our policy stance. Nonetheless, with policy in restrictive territory, the baseline outlook and the shifting balance of risks may warrant adjusting our policy stance. Thaddeus Campbell: I don't know what you read into that, Chris. I'll let you tell me what you think you heard there, but I know what I think I heard. Chris Berg: Well, Thaddeus, I think I heard I'm trying to do my best Jerome Powell impression. It's like, man, can I tried to keep the as short as I could? Uh here's the thing again. The GDP number he touted between uh the first half of the year just came out today for the second quarter it was above it hit 3.3% was supposed to come in at three. If you're going to go and cut rates in September with GDP on an upward trend inflation going up. I just think you better be in hard assets. That's all I'm going to say. I think the tenure is going to go up because you're going to start to lose credibility with the Fed. And I I wouldn't be a bit surprised because of the way Trump has played this uh quote unquote art of the deal if Jerome's like, "Okay, you want me to cut the rates? You're gonna refy the debt? Watch this. I'll cut. Let's see what happens." And I just I don't think it's the right move for the Fed. I don't think assuming that the GDP's numbers are accurate. Assuming that the tariffs are going to start to impact inflation like many people are thinking, I just don't know if cutting rates is going to be the best move for the economy right now. Thaddeus Campbell: Well, forget about best move for the economy because this is the self-storage report and let's strictly talk about how this impacts self-storage because a lot of people that I talked to, in fact, I talked to someone earlier this week where they said, "Hey, you know, we're going to see rates get cut and it's going to open up the market." Well, be careful what you wish for, right? Because the last time we saw the Fed cut rates last September, and I'll share this graph with you. Last September was the last rate cut, right? Look what happened to the 10-year Treasury. And this is wildly important because mortgage rates are based on the Treasury, not on the Fed rate. Right? So, look what happened to 10-year Treasury bonds in the wake of that rate cut last September. They went from 3.72 to 4.63, almost a 1 point increase, which is then going to translate to the cost of getting a mortgage on a house. We're already seeing historically low movement in the housing market. The last thing we need is to have it get even worse because mortgage rates go back above 7% again, Chris. So, be careful what you wish for is what I'm saying here. I think that a quarter uh uh quarter point rate cut, I'm trying to talk too fast, is on the table based on how I hear him talking. I don't think that's going to be a good thing for the self-storage industry at all. If it does happen, I I would be much happier if my last week's prognostication hold true and there is no rate cut. They just hold steady. Chris Berg: Yeah, it's going to be fascinating to see how the markets respond to that. And as you're saying, of course, just self-storage and and the the mortgage and real estate market overall. So, again, we'll see what happens there. Who really knows? But it'll be obviously you can count on us to have our eye on it and uh and keep watching it. So, I want to move. Thaddeus Campbell: By the way, let me interject real quick before you move on. That's twice on today's show I've made you double over in laughter. So, I'm happy. Chris Berg: There has been a few. I mean, yes. Well done, Thad. So, I I want to get into this. I think this is a really interesting story and I'll give us some context and then you and I can sort of play around with some of these clips. Um, so being your AI storage guy, I've set up alerts within chat GTP to, you know, alert me about certain things that are happening in storage. So, earlier this week, it sent me an alert about a big conversation in regards to storage in Cerritos, California. So, clicked on it. And I think what's really powerful about what I want to share with you is I want to I want you to hear from these city leaders. If you've been out and doing development or acquisitions and you want to add on, I think we all know that, hey, storage is not a really a beloved asset. When you talk start talking to planners, city council people, mayors, and I think it's important that we begin to educate city leaders around, hey, this is why this asset's really, really important. This is what you can be doing as a city leader to ensure that you're helping your constituents, meaning lower the cost of storage, and also, which you're going to hear from Cerritos, um, ensure that you give yourself the best opportunity to get reelected. One thing you're going to hear in this clip that I think is important to know with some context is that it was in October, I think 2024 or within 2024, the single largest self-storage sale ever happened in Cerritos, California. One self-storage uh site transacted at $91 million. And so I want to play this for you um Thad. And if anytime during these clips that you're like, "Hey, wait, wait, wait. I want to comment on that." like please do so because I think there's some really really fascinating stuff going on in this conversation and I will do my best to make sure that I uh hit these right. So the other thing I want to share with people is that some of these clips they're a little bit longer than what we normally would want to play. So I want to give you that context and the reason being again I really want this that for you cuz you haven't seen these yet but for this to really be an educational opportunity for us to say hey this is what's going on inside the minds of these city leaders hear what they're saying and how can we better communicate about storage to ensure that we're giving ourselves the best opportunity to build great assets within cities. So this is the mayor um of Cerritos, California. For this first clip, Mayor Yokoyama (Cerritos City Council clip): Under our municipal code, the city of Cerritos uh restricts the city of Cerritos to have a maximum of 4 self-storage facilities and that's how many we have in Cerritos as it shows on page three. So the city of Cerritos is allowing an oligopoly to exist in our city for self-storage businesses and an oligopoly does not allow the free market to work. So my question Kristen is in light of the city of Cerritos. Thaddeus Campbell [attribution inferred]: This is good. This is good. Mayor Yokoyama (Cerritos City Council clip): Um enforcing an oligopoly of self-storage businesses on the residents of Cerritos. What other businesses in the city of Cerritos? Do we restrict the number of businesses? Kristen, Cerritos city staff (clip): Thank you, Mayor Yokoyama. Um I am not aware of businesses where we restrict quantity um through uh minimum distance requirements between two like businesses. Uh the city uh has ways of limiting the quantity of businesses, but I'm not Mayor Yokoyama (Cerritos City Council clip): What what businesses do we have a do does our municipal code specifically limit the quantity of that type of business? Chris Berg: I love that the mayor is like, "Hey, look, let's just cut to the chase. I ask you a question. I don't need you run around. Like, let's get to it." I want to get your reaction to what what this mayor is saying right here. Thaddeus Campbell: This just reminded me of the interaction with Matthew McConaughey and Joy Behar on The View when she was asking him if a person who believes in gun control can win an election in Texas. That that's what that that interaction just made me think of. I I also love the fact that the mayor's uh template is blue. It's kind of ironic that he's asking these questions with a big blue banner behind his his name sign. Um, you know, it's it's it's nice as a self-storage developer to see these kind of things being discussed at a city level, right? Because at the end of the day, when you create a restriction on the the development of self-storage, who ultimately pays for that is the consumer of self-storage. Chris Berg: Yes, very well said. And so, I think it's fascinating he's talking about this oligopoly. So, here's another city council person. Thaddeus Campbell: I also thought it was awesome he used the word oligopoly correctly in a sentence. I had to look it up just for any of you. And I'm not going to tell you what it means. Go look it up. But he used it correctly. I'll say that. Chris Berg: Oh, see I'm just presuming. So oligopoly obviously is where you've got a monopoly which is one and an oligopoly is few. And so what the Cerritos is talking about is, hey, why have we capped only 4 self-storage sites in the entire city? Like what's going on here? We we are actually allowing these self-storage guys to become extraordinarily wealthy and run an oligopoly because we've restricted it on ourselves. Which is why I want to play this next clip. This is a city council person here from Cerritos that says, "Wait a second, what are we doing in Hawaii?" Cerritos City Council member (clip): And then all of a sudden we put a moratorium and then suddenly we stop getting uh inquiries. Cerritos City Council member (clip): I mean, it seems pretty obvious to me that maybe those who are interested in developing, opening up Chris Berg: And what I want the city leaders to understand, I hope people will see this and start sending these this information to city leaders, is that it may sound cool because it's kind of been the trend across the country with cities to put a moratorium on storage. What I'm hoping you're going to take away from this conversation today is all you're doing as city leaders is hurting your constituents. That's it. Like we all know basic supply and demand. It's basic economics. So I would encourage cities to sort of rethink about, hey, what's the best use here? Do we have a need for storage? And if so, then let's bring it in so we can actually lower those costs for our constituents. And you're going to hear another city council woman here in a moment talk about what storage can actually do, not just for your constituents, but also to beautify your city. We'll get to that in a moment. Cerritos City Council member (clip): Uh storage facilities um won't go to cities that have moratorium on it. So, not only are we supporting an oligopoly, we're also uh it's kind of a self-inflicted wound where we're um missing out on potential business opportunity uh bringing new businesses to our community and also um probably uh punishing our own consumers. I would imagine that uh people or yeah people who want to use Cerritos based storage sorts facilities probably live close to Cerritos if not in Cerritos. Um Chris Berg: I think this is such a powerful comment. What say you my friend? Thaddeus Campbell: I I you just hit the nail on the head. They're punishing their own constituents by making this happen. And and look the flip side of this equation is let the free market economy play itself out. And there are going to be some times where developers overdevelop in a certain market and the developers get burned. But the constituents get a great deal on having storage for less than what market value should actually be. So the opposite side of this equation is that you let your constituents actually get access to a product that clearly people use um at a at a much better rate. Chris Berg: So this is another city council woman. And I want to play this for uh our audience so that again you can start to use some of these snippets to go out there and educate other city councils around why self-storage makes an impact. And what you want to notice from this woman as she talks about and like there's a there's a lot a lot I could play here. I I only want to limit it to a few clips here. But she talks about man I go out to my garage. I got to park my car in the street because half my garage is filled with stuff. That's why I want more storage here so I can go actually store it. And she talks about the impact. Hey, if we have more storage, what could that do to actually uh clean up all the cars on our streets? Here's what she had to say. Cerritos City Council member (clip): That we're not really focused on the residential storage. Look at the parking overnight. How many cars are parking in the street? And most of us, I mean, I I don't for me as a sample, we use half of the uh park uh the uh parking lights in our house. I mean, the garage and halfway some of the food taken by the our own thing because we all been here living 40 50 years already there. You know, it's lots of junk and then we didn't want to throw away. I even have my son's the favorite shoes and hanging there by the door. So, I'm hoping if we can if we reasonable the price, if we increase the height, they can make a loft in one storage room, another storage room, another storage room. So, that make convenient for the residential use if price reasonable and we encourage people to store their thing in the storage room and of course there was some payment that if reasonable for the resident that would be really great. So that way we can really see a clean street and like my one of my house areas almost 10 12 on one side and in the future maybe you should look for what's the best interest for the business too. Chris Berg: I mean what a novel idea right as a leader you're going to look after your constituents a number one but I love the fact she's saying hey the other beautiful thing that can happen in restored is actually beautify our city because now we don't have a bunch of cars jam-packed on the streets and lighten things up and let the city be the city again. It's the law of unintended consequences that always plays out when you start legislating. It's 100% why I'm a libertarian and I think we need less legislation because what actually happens based on legislation is almost never what's intended from that legislation. Right? So to her point, what an amazing uh intuition on her point to see part to see, hey, you have people that can't afford to go store their stuff, so they put it in their garage, which means their car is now on the street, which is making our city not look as good. I want to play one last clip, and I think this one's really, really important. There's a bunch I could play. If you want to go and see more of this, just, you know, as you can see, city council meeting August 14th, city of Cerritos, but I really encourage you to watch it if you want to educate city leaders about the importance of this asset class. Here's one though that I think is really important because I I think Gary Sugarman and people at the CSSA did an amazing job bouncing up against the legislation in California say, "Okay, if you want to put, you know, caps on our rental rates, then obviously you're going to start losing tax revenue." Well, that obviously drives a lot of the decisions for these city leaders is, hey, what's going to be my tax revenue? Sales tax, property taxes, things of that nature. So, knowing that, it's probably important that you understand what are those revenue drivers for your city. This clip I want to play for you, not to to say anything negative around the city council person. The point is that I want you to understand is that as you're speaking to these city council leaders, realize that they got a lot going on. They can't know everything about everything. So, it's our job as developers, as people that are going to go in and be neighbors in that city by buying maybe an asset to help educate them about the impact that our asset can have on their bottom line. Again, I know there's a lot lot of sales tax and self-storage and you've got property taxes that are funding a lot of K through 12 education. So, help these people understand that. Why do I say that? This is why this is a city city council woman, don't know her name, but again, in Cerritos, and just listen to what she has to say. Cerritos City Council member (clip): The self-storage facility. Um, if we cumber or added more of the self-storage, my question is then we're not getting the actual use of the warehouse and it's not generating any property tax or even sales revenue. Am I right? Chris Berg: So, there you go. To hear an actual You're chuckling. What's What do you want to say? Thaddeus Campbell: All I'm thinking of is friends of mine that have a $400,000 a year property tax bill from their self-storage facility, you know? Yeah. No revenue being generated here. Don't mind us. We're fine. Chris Berg: Well, and again, like I'm sure that woman's got a lot going on in her life and but I want to play that for people so you can say, "Wait a second." Like I just assume everyone on that city council is going to know, "Hey, I've got a big tax bill." And they and they don't. And so it's really important for us to say, "We want to be a good neighbor. We're going to definitely pay our taxes. It's going to be a lot, trust me." And that way it'll help them say, "Okay, I see this asset through a much different lens now because you can pay some of our K through 12 funding, plus you can help clean up our streets." The other piece that they didn't talk about that I think is really really important for us just to share real quickly that because I want to be able to help city leaders better appreciate what we do is that I think self-storage is an amazing amazing small business incubator. Like if you're a solopreneur and you're kicking off an Amazon business or whatnot like this is a great opportunity to test and try some things with very low overhead so you can take some risk that otherwise you normally wouldn't take. Thaddeus Campbell: 20 to 30% of facilities now you know that are small business owners. That's really been what's keeping storage alive in the wake of the slowdown in the housing movement um is that this small business owner, someone who's selling stuff on eBay or on Etsy or whatever whatever site it might be where they use a storage facility to keep their goods. And so not only are you getting a massive amount of tax revenue from one facility, but you're also then giving citizens in your city a way to make income that then allows them to buy a house, to pay property taxes, you know. So yeah, it's if you happen to have a city tax to pay a city tax on their income. So there's so many levels where it's helpful to a local economy. Of course, the the push back has always been there's only one or two people working at the facility. It doesn't create a ton of jobs. That is an old way to look at storage because while it doesn't have people working in the facility all the time necessarily to your point, which is fantastic, it is an amazing small incubator space for people getting into small businesses Chris Berg: And that business is going to have sales revenue and so it's going to just add to the bottom line for those cities. So, uh hopefully that is helpful for people that are out there in the self-storage space and also for city leaders to get a chance to watch us. I want to encourage you, please take this video, send it to the city leaders that you're dealing with. I know we're going to cut this into some clips or take those clips and send them to city leaders as well. And then of course, next week, SSA coming up in Vegas. Want to invite you to come out and uh just come up say hi to Thad and myself and talk about uh maybe got some feedback for the show. And where are we going to be Thad next week? Thaddeus Campbell: Aria Resort Hotel and Casino. One of my two top spots in Vegas. So really excited. The SSA is moving up. We we were always in the MGM Grand, which is a little bit of an older casino, but Aria is one of the newest places in town. Really excited the next time we do the show, Chris, you and I are going to be in the same building together at the same time. Looking forward to spending some time. Chris Berg: Also excited. I'm going to give another shout out to our data partner. We're going to be live with Noah Starr as well next week when we go on the show. So, shout out to the guys at TractIQ. They've been so supportive of the show. Noah obviously was our guest a few weeks back. He's going to be on again next week in Vegas and just it's going to be the biggest SSA show that's ever been. Obviously, we're talking about maybe some tough headwinds for the industry over the next, you know, two quarters to a year. But that being said, there's still no other industry I'd rather be in and and the people that make up that this industry are unparalleled and and so really excited to get out there, see you, see a bunch of the other great people in the self-storage industry. What I'm excited about next Thursday's show, it's going to be obviously Thursday and so Wednesday is a big day of a bunch of leaders in the industry talking about what's happening in the space. So, we'll have some I mean fresh fresh brand new information to share with you about what the top people in this industry are saying about what they see happening for the rest of 25 and into 26. I think what's going to be fascinating if this is the first time joining us here on the show, Thad and I talk a lot about the 18.6 year real estate cycle. There's definitely signs now of our thesis bearing and holding out to have some validity. Again, you never know. We'll see. But pay attention in the middle of 2026, end of 2026. Things may be uh different than they appear today, which already is kind of tough for many, many industries and people. So, this is the self-storage report. Uh please share this with colleagues, friends. Want to say thank you for joining us here and we'll see you back here next Thursday live from Las Vegas. — END OF TRANSCRIPT —