JLL Snags Self Storage ExpertBy Jennifer V. Hughes, Contributing WriterPenton Business Media
Jones Lang LaSalle welcomed Doug McCarron to thefirms capital markets platform as a managing director basedout of JLLs Los Angeles office.
McCarron specializes in the acquisitions and dispositions ofself storage portfolios, structured financings and commercialequities.
McCarron comes to Jones Lang LaSalle from HFF, where heserved as a managing director and leader of that firms WestCoast brokerage operation. During his career, he has been involvedin more than $2 billion of self storage transactions nationwide.Prior to HFF, McCarron was a partner at Storage InvestmentAdvisors LLP.
NREI talked to McCarron about where things are headedin the world of self storage, how the sector fared during therecession and what areas to watch next. An edited transcript ofthat interview follows.
NREI: Self storage exploded in popularity over the past,say, five to eight years. At what point do you reach saturation andwhat happens next?
Doug McCarron: The main trigger that can explain thesectors growth is the acceptance of the property type as a truecommercial asset class by capital providers. In the past, selfstorage was looked at as an operating business and lenders couldnot get their hands around underwriting a self storage deal made upof month to month leases and apply a realistic cap rate to theactual net operating income.
Once Wall Street took notice and started to research the trendsand performance of the asset class they began to provide realisticloan dollars that were eventually securitized via CMBS. Thistriggered the ability for a number of operators to have a capitalevent through re-financing or by disposing their assets, in turnunlocking more and more capital to the space.
This abundance of capital in the space as well as the easylending standards fueled a development boom in the sector. If youlook at the history of the asset class it took the storage industrymore than 25 years to build its first billion sq. ft. and justeight years1998 to 2005to develop its second billionsq. ft. Once the financial crisis hit, development in the sectorvirtually came to a standstill; as is still somewhat the casetoday.
The operating performance of the public companies in the space,currently the most reliable information source in the sector, overthe last few years has increased steadily with occupancies atall-time highs along with consistent year-over-year revenue growth.Most of these gains are attributable to the fact that virtually nonew meaningful supply has been built over the last five years. Ascapital continues to chase the asset class given the sectorsresiliency to recessionary times and positiveconsistent year-over-year performance, development will begin tomake sense in urban markets again.
From a supply perspective, the industry can withstand, and quitefrankly needs, some new supply in select core urban markets acrossthe country. However, from a saturation perspective, overbuildingis the industrys biggest headwind. As long as constructionlending stays in check, and personal recourse and completionguarantees are required for all new construction debt, the industrydoes not need to worry about reaching saturation in the mediumterm.
NREI: Why did self storage ride out the recession sowell, given how much people needed to cut back on non-essentialexpenses? Why did self storage remain on consumers' budgets whenthey gave up other things?
Doug McCarron: Self storage is a needsbusiness. The main factor that drives the performance in theindustry are life events, which including moving,divorce, job relocation, general consumption, moving to college,starting a new business, etc. As consumers were reviewing theirbudgets during the height of the financial crisis some consumersdecided to move out and cancel the use of their self storageneeds.
However, the loss of the budgetary constrained tenants wasbackfilled by need-based customers who wereunfortunately faced with downsizing their homes, moving back inwith parents, and storing items from failed businesses. Inaddition, the United States is a country that achieves 70 percentof GDP through consumption. Individuals within the United Stateshave a very hard time parting with their personal items and familyheirlooms.
NREI: What geographic areas have done well with selfstorage and where are the untapped markets?
Doug McCarron: Primarily the core urban markets, SanFrancisco, Chicago, New York, Washington D.C., Seattle, West LosAngeles, continue to perform exceptionally well with consistentoccupancy and rental rate growth. Where we see opportunities froman acquisition and growth standpoint are in strong suburban marketsthat are located roughly 10 to 20 miles from downtown urbanmarkets.
At this point, the most aggressive capital is chasing deals incore urban locations and that capital continues to drive day oneyields down to levels not seen since the peak in 2006/2007.Investors are still hesitant to move up the risk curve, resultingin higher yields for assets located in secondary locations.
As capital continues to search for yield and underlyingfundamentals continue to increase in the space, we feel that thecapital will begin to migrate up the risk curve over the next 12 to18 months. Investors that have the foresight to begin acquiringassets in these secondary locations may be rewarded considerably inthe near future.Rezidor Hotel Group Names New CEO
The Rezidor Hotel Group appointed Wolfgang M.Neumann as president and CEO.
Neumann currently serves as Rezidor's executive vice presidentand COO. He succeeds Kurt Ritter, who is retiring at the end of theyear and had been president and CEO since 1989.
Under Ritters leadership, Rezidor's portfolio grew tomore than 430 hotels with 95,000 rooms in operation and underdevelopment in 70 countries across Europe, the Middle East andAfrica.
Neumann joined Rezidor in May 2011. He spent more than 20 yearswith Hilton Hotels & Resorts and held variousoperational and corporate positions there including president,United Kingdom and Ireland and president, Europe and Africa.Davis Joins Taconic as CIO
Taconic Investment Partners named Kevin Davis thefirms chief investment officer.
In his new role, Davis is responsible for sourcing, directingand overseeing new investment and business opportunities and isinvolved in acquisitions, developments, dispositions, debt andequity financings, portfolio and investment management, transactionstructuring, overall firm strategy and investor relations.
Prior to joining Taconic, he focused on office, retail andmulti-family investments in the New York City and Washington D.C.metropolitan areas for AREA Property Partners, where he wasdirectly involved in or responsible for nearly $2.5 billion ofacquisitions.Johnson Capital Promotes Carnes to President
Cliff Carnes, the longtime COO of Johnson Capitalhas been promoted to president.
Guy Johnson, the founder and current president willcontinue with the company as its CEO.
As president, Carnes will continue to have operational andover-site responsibilities of the firm while exploring ways to growthe company by opening new offices and locating new business andfinancing opportunities. Johnson will continue to be active in thefirms growth and strategic direction.
Carnes joined the company in 2007 as its senior vice presidentof operations. Prior to joining the firm, he was an activatedreservist in the U.S. Navy with tours in Iraq and Camp Pendleton.Before that, he had several positions in corporate finance andoperations in Washington, D.C., New York City and SouthernCalifornia.A10 Capital Welcomes Former Goldman Pro
Former Goldman Sachs Commercial Mortgage Capital Co-CEOand Chief Credit Officer Jim Conway joined A10Capital as chief credit and risk officer.
Conway has nearly 35 years of commercial mortgage experience. AtGoldman Sachs he chaired the firms credit committee and wasresponsible for closing more than 1,500 commercial mortgagestotaling over $16 billion of loan volume.New President, Board Members at Steadfast REIT
Steadfast Income REIT Inc. named Ella Shaw Neylandpresident for the public, non-traded multifamily REIT.
The companys board of directors is also now comprised ofseven members with the appointment of two new independentdirectors, Kerry D. Vandell and Ned W. Brines.
Neyland succeeds Rodney F. Emery, who will remainchairman and CEO of the companys board. Neylands 30years of experience includes three years as executive vicepresident, treasurer and investor relations officer for UDRInc. While there, she served as a voting member of UDRsinvestment committee that approved the repositioning of over $3billion of investments.
New board members, Vandell and Brines have been appointed asindependent directors.
Vandell is the deans professor of finance and directorfor the Center for Real Estate at the Paul Merage School ofBusiness at the University of California-Irvine. Brines is thechief investment officer for the CitizenTrust Wealth Management andTrust division of Citizens Business Bank.Miller Named Chairman of the Board at McKinley
Eugene A. Gene Miller has been electedchairman of the board for McKinley, a move made at thefirms third quarter board meeting.
Miller is the retired chairman and CEO of Comerica Inc.and Comerica Bank. He is also a director of TriMas Corp.,Handleman Co. and DTE Energy Holding Co., as well as trustee andformer chair of the Community Foundation for Southeast Michigan andthe McGregor Foundation.NY Cresa Hires New VP
The New York office of Cresa hired Michael Plavinas vice president.
Prior to joining Cresa New York, Plavin was an associate atGrubb & Ellis Co., where he advised tenants andlandlords in the development of their real estate strategies. Oneof his most recent deals was the acquisition of 150,000 sq. ft. ofspace for Harbor Freight Tools.VP of East Coast Originations Joins WNC
WNC & Associates Inc. hired Michael K. Statonas vice president, East Coast originations. He will overseeWNCs work in New York City and New Jersey.
Staton joins WNC from the New Jersey Housing and MortgageFinance Agency, where he spent his entire career beginning in1985. Most recently, he served as director of multifamily programsand lending, where he was responsible for analyzing multifamilydevelopments to determine risk levels for primary and secondarymortgage financing.
Throughout his career, Staton has underwritten and closed morethan 200 multifamily development mortgages with a collective valuein excess of $1 billion.Passco Names VP
Passco Cos. LLC hired Darryll Goodman as vicepresident.
Goodman will oversee a portfolio of existing Passco propertiesin addition to providing new resources for Passcos growinginvestment, advisory and restructuring and recapitalizationbusiness.
Goodman comes to Passco from Thompson NationalProperties, where he handled $1.5 billion worth of commercialreal estate transactions.AY Expands in Florida
Avison Young expanded its Florida operations by bringingon 30 members of the brokerage and property management firmFlager Real Estate Services.
The move brings eight new principals from Flager to AvisonYoung: S. Pike Rowley, Keith ODonnell, Wayne Schuchts,Greg Martin, A.J. Belt III, Brian Mark, Michael Vullis andScott Auker.
Rowley, who will serve as managing director of AvisonYoungs Florida region, was most recently president ofFlager Real Estate Services. There he oversaw day-to-daybrokerage operations and property management of more than 12million sq. ft. of industrial, office and retail space forcorporate, private and institutional clients.
During the past decade, ODonnell has been responsible forthe completion of more than $3 billion worth of regional U.S.transactions, including 3.5 million sq. ft. of properties for IBMand Siemens.
Schuchts specializes in office and industrial propertytransactions for institutional investors and corporate users andhas negotiated the completion of more than $5 billion and 12million sq. ft. worth of transactions, including 50-plustransactions involving properties greater than 100,000 sq. ft.
Before joining Avison Young, Martin served as senior vicepresident with Flagler for two years and spent a total of 16 yearswith Cushman & Wakefield and CBRE.
Over the course of his career, Belt has been responsible for theacquisition, disposition and management of more than $2 billionworth of commercial real estate assets.
Since launching his real estate career in 1997, Mark hasfacilitated more than $2 billion worth of commercial propertytransactions.
Vullis has been responsible for the property management of morethan 24 million sq. ft. of commercial properties during his realestate career, which has spanned more than two decades.
Auker is a multifamily property specialist who led theacquisition, development, construction or management of more than5,000 multifamily units and 1 million sq. ft. of commercialprojects across the Midwest and Eastern U.S.Three Pros Join Access Point
Access Point Financial Inc. added three hires to thecompanys senior management team.
Dilip Petigara has been named chief risk officer, JonBurckin joins as managing director business development andJon Hellbusch assumes the role of managing director capitalmarkets.
Most recently, Petigara was the managing director of an advisoryservices firm where he was responsible for $250 million in loanclosings. Burckin was managing director for ScotiaCapitals real estate and hospitality group. Hellbuschcomes to Access Point from WestLB AG, a German state-owneduniversal bank, where he most recently was executive directorwithin the banks asset based finance group and also aninvestment partner with the Access Point Financial teamspredecessor firms.Real Estate Exec to Lead New Division at Balke Brown
Balke Brown Transwestern has formed a real estate owneddivision to assist banks with the management and disposition ofdistressed commercial properties.
Leading the new division is Robert G. Camenzind, who comes toBalke Brown from SecureAsset Services, a Kirkwood,Mo.-based, company that specializes in helping banks gainfullyresolve distressed property situations. Camenzind will also leadBalke Browns initiative to grow its third-party multi-familymanagement business.C&W Promotes Pro in DC and Welcomes Two New Execs forNYC
Cushman & Wakefield promoted Brian Dawson to lead thefirms Washington, D.C. area operations.
The firm also welcomed Frank T. LePera as a senior director inoffice brokerage and Matthias Li as a senior associate in thefirms strategic agency services group. Both LePera and Liwill be based in the firms Manhattan office.
As senior managing director, area leader, Dawson assumesoversight of the companys strategic business objectives,recruitment goals, day-to-day activities, and continued growth ofservices in the Washington, D.C. metropolitan area, includingVirginia and suburban Maryland.
Previously Dawson led the firms suburban Marylandoperations while continuing to service clients as a managingbroker. Dawson joined Cushman & Wakefield in 2007 as a seniordirector and partner in the firms institutional investmentsales group. He came to C&W from Spaulding & SlyeColliers, where he was a principal.
In New York, LePera will concentrate on office leasing. Prior tojoining C&W, he was a senior managing director at CogswellRealty LLC, where he directed the leasing and asset managementof the firms one-million-sq.-ft. office portfolio in Newark,N.J.
Li will serve as a liaison between brokerage teams and clients,responsible for researching, preparing and analyzing market reportsand assisting clients in structuring leases, lease renewals,assignments and subleases.
Before coming to the firm, Li practiced real estate law in NewYork City representing landlords and tenants in a broad range ofreal estate matters including leasing, litigation, buildingoperations, bankruptcy and construction disputes.Senior Managing Director Joins NGKF
Newmark Grubb Knight Frank welcomed Thomas MacDonald tothe companys Pittsburgh office as a senior managingdirector.
He brings to this position 22 years of experience in officeleasing, investment sales, corporate consulting and strategicplanning and will focus on assisting owners and occupiers withtheir real estate service needs in both the western and centralPennsylvania markets.
MacDonald comes to Newmark Grubb Knight Frank from CBRE,where he was a senior-ranked producer for 14 years.Lend Lease Names Regional Director
Lend Lease named Kelly Benedict regional director ofbusiness development for the Americas for the project managementand construction firm.
Benedict will remain based in the Chicago office. In her newrole, she will bring together business developers from the Americasregion of Lend Lease into a peer group and ensureconsistency of sales efforts, that lessons learned are shared andthat there is a renewed focus, where appropriate, on regionalclients.
Kelly Benedict has been in the commercial real estate industryfor more than 20 years. She has previously held the roles of vicepresident, director of business development for the Chicago officeand has also worked for the company in Washington D.C.Westhof Promoted to Director at Cronheim
Cronheim Mortgage promoted Anna Westhof to director ofthe firm.
She began as a real estate analyst and has grown into atransaction management role with more than $2 billion in closedreal estate capital transactions under her belt.
In her current role, a production partner to the firm's seniorbankers, Westhoff leads deal evaluation and capital procurementefforts. She consults with clients on capital structuring andtransaction feasibility. She also helps manage Cronheim's extensivelender relationships and has helped grow the company's servicingportfolio significantly.
Westhoff joined Cronheim in 2004 as a new graduate of the LondonSchool of Economics. She earned her bachelors degree fromNorthwestern University in 2001.CREC Hires Senior Leasing Associate
Continental Real Estate Cos. hired Chris Barney to thefirms retail tenant representation practice as a seniorleasing associate.
Barney will work with retailers of all sizes looking to growtheir presence in key submarkets across Florida.
His past roles include serving as director of tenantrepresentation at High Street Retail USA, where he wasresponsible for maintaining relationships with retailers andexpanding the companys client roster, and as a leasingassociate at Woolbright Development.Chambers Appoints Senior Counsel
Chambers Street Properties appointed Sarah Hinton to theposition of senior counsel, a newly created position at thefirm.
Hinton joins Chambers from the law firm of K&L GatesLLP. She was an associate at the firm from 2006 to 2012, whereher experience included the representation of Chambers StreetProperties in real estate and corporate matters.Summer Street Expands Offerings
Summer Street Advisors LLC is expanding their businessportfolio to include asset management and resolution services forboth new and existing clients.
These services will become a standard offering within alltransaction management proposals. Summer Street Advisors willcontinue to provide strategic business plan development andexecution, transaction underwriting and management, debtrestructuring, lease negotiation and contract administration.