Partnering With the Giants: Why Spartan Uses REITs

What happens when a pilot trades the cockpit for a climate-controlled unit?  

In this episode, Scott sits down with Ryan Gibson of Spartan Investment Group for an in-depth look at the evolution, strategy, and future of self-storage investing. Ryan shares his fascinating journey from the airline industry to managing a self-storage empire valued at over $800 million.  

The two discuss how speed, adaptability, and vertical integration are the engines behind Spartan’s exponential growth, and why partnering with REITs (rather than competing with them) is a game-changing move.  

They dig into how current market dynamics—from inflation to sluggish home sales—are reshaping investment strategies, and why a flat market isn’t necessarily a bad thing.  

Watch For

2:24 Why Speed Is the New Currency in Storage
3:28 Vertical Integration Meets Strategic Agility
8:46 The REIT Pivot: Strategy or Survival?
13:56 The Built-In REIT Exit Strategy
19:13 How REITs Use Third-Party Management as an Acquisition Funnel
21:03 Building REIT-Ready Properties for Premium Exits
22:56 Are REIT-Managed Deals Lower Return? 
32:51 Where Spartan Is Buying Now: Growth Markets with No Pipeline
  

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Chapters

• 3:36 Speed: The New Currency in Storage
• 6:31 Vertical Integration vs. Strategic Outsourcing
• 8:54 Partnering With REITs: A Bold New Strategy
• 15:35 REIT vs. Operator: Why Investors Still Choose Us
• 20:44 Why REITs Really Do Third-Party Management
• 29:16 Market Sentiment at the ISS Show

Transcript

Big Announcer (00:03)

This is the Self Storage Podcast with the original Self Storage Expert, Scott Meyers.

Scott Meyers (00:12)

Hello everyone. And welcome back to the self storage podcast. I am your host at Scott Meyers. And today in the studio, we have Ryan Gibson with all things Spartan self storage. Ryan, welcome to the podcast.

Ryan Gibson (00:23)

Thanks for having me, Scott. Good to see you.

Scott Meyers (00:26)

It's good to see you again as well. been a while since we've been in the same room together. It seems like most of the time we've been chatting and catching up has been by way of a Zoom call and now here on the podcast. But looking forward to today and sharing a little bit about what is happening over at Spartan. So before we begin, I know there's a number of folks that aren't familiar with you and what it is that Spartan does. So if you would give us a little bit of background about your bio and your journey in self storage.

Ryan Gibson (00:50)

Yeah, so, know, I really fun background, you know, I was an airline pilot actually for 17 years and ⁓ bumped into my neighbor, Scott, who's my business partner, another Scott, and ⁓ we ended up started, we started to flip houses and do residential development, but quickly kind of said, Hey, this is, know, this is not for us. We want to do something else. And so we, got into self storage and you know, about the same time I was, you know, kind of working in the airlines applying

for Alaska Airlines and Delta most recently and We said hey we want to we want to learn everything we can about self storage and you know We found you Scott which was great. So we we ⁓ kind of joined the education learned a lot from the Scott Meyers group and And eventually kind of started buying our first self storage properties We bought we built our first one in Washington here and we bought one in Colorado

And since then, we've scaled to about $800 million in self-storage properties across 15 states and since retired from the airlines and kind of focused on self-storage investing now full-time. And we've done everything from build it to buy it and operate it, the whole thing now. So it's a really fun story kind of transitioning from another career ⁓ into the self-storage world.

Scott Meyers (02:09)

Well, some folks may remember having Scott Lewis on here and he painted a little more colorful picture about your first project, the residential project. ⁓ folks can go back and listen to that one. But I think at the end of the day, most of us get into self-storage with a very similar story. know, mine is roughly the same and that is that we just didn't care for the tenant, told it trash world. And I needed to pivot into another asset class in real estate before I just got burnt out or just really didn't like.

my fellow man anymore. So that was the onus that I put on myself to move into this. ⁓ since then, ⁓ you've grown and have been ⁓ exponentially and at breakneck speed and made the Inc. several times as well. So let's talk a little bit about Ryan.

promote this a lot at the mastermind, which you've been to and which Scott Lewis spends a lot of time in. We talk about speed. Speed is really the new currency, I think in any business, but especially in self-storage. We've gone through a season in which inflation has just taken hold and that has caused a recent pause on many projects. ⁓ The lenders are sitting on the sidelines, private equity is sitting on the sidelines, and that, just the lack of speed has caused, ⁓ and the delays associated with it have caused more budgets to go over, more projects to stall or be killed than any

budget overrun itself. so talk a little bit about, you know, the speed at which you operate over there at Spartan and how that's been a part of your culture, because I've been watching from the outside and you guys are moving fast.

Ryan Gibson (03:36)

Yeah, so I think one of the major advantages is the vertical integration, know, having the construction company in house and having the own property management in house and not being afraid to go, ⁓ you know, partner with a, with a REIT, you know, has been a new strategy that we've had in the last couple of years where, you know, we, actually have some of our assets in markets where it's re saturated with tons of competition. There's great deals to do in those markets. And I think what's

kind of interesting is that some of the REITs aren't buying right now, like Public and Extra aren't buying as much per se. And so you can go kind of scoop up those properties and it really helps us to partner with them because they've already got control over a market. So I think kind of fine tuning our approach over the years and being nimble on not saying, okay, we're going to do it this way and this way only. And that's what we're going to do. We're going to stick to it and not deviate from the plan.

I mean, having a plan to focus on, but also not being afraid to revisit that plan on a frequent basis to say, okay, you we used to stay away from primary and core markets and do secondary tertiary where the REITs don't play and do that whole value add strategy. And that worked for, you know, for a period of time where, you know, you could go and buy a property and expand it. And it was a great result for us. But, you know, when, inflation hit and costs went up and budgets broke and, you know, some of the rents maybe in those markets weren't as strong.

You know, we could say, OK, maybe these expansion projects aren't working as much. So what what's the next frontier? And so we kind of picked up on a flight to quality where tenants were looking for more three story multi story glass main and main properties. So, OK, well, how do we get into that and compete with the rate? Well, we can't. So maybe we maybe we partner. So we kind of started pivoting that strategy a couple of years ago where we're I think we're unique in that, where we're one of the only operators that has its own operating brand free up storage. But we also use the REIT strategy

on some of our acquisitions as well, giving us an edge in any market that we go into. And we sort of like carefully craft where we're going to put in our own in-house property management division, or we're going to use a third party to manage the property. In either case, we do what's going to be best for the investment. And we're sort of agnostic. We're not slanted one way or the other who we use. We're just looking for the best possible outcome. So I think that's been helpful in our speed, right? Because

How do you scale a bunch of properties if you have to manage them all internally and you kind of outstrip your team's ability to keep up with it off? Quite frankly, right? You gotta hire all those people. You gotta find new people. You're know, you're spending you're sending your operations team on due diligence trips, distracting them away from the property. So by having that third party to sort of rely on has been a big part of the scale in the last year and a half where we've kind of looked inward and really improved our own internal operations and processes. I think that's been really helpful.

for the overall health of our portfolio and how it's helped fuel our growth.

Scott Meyers (06:31)

Well, you are right. are very unique in that instance. many of us, when we start out investing in a particular market and then expand from there, it makes sense. We go through this evolution to have integrated property management and vertically integrated property management because you can control the expenses. mean, this is where we start out. We self-manage and just about everybody does from their very first property on up.

That is not only good to be able to control those expenses and to mind the store, if you will, because nobody cares as much about your property as you do. And more importantly, the bottom line and the expense load that goes along with self-managing. But then you get to ⁓ a point in which you begin to expand geographically and you just don't have the footprint. You don't have regional managers, district managers in those markets. But more importantly, as you mentioned, we don't have a presence there. So you're going to head over into a market.

in which any of the REITs could dominate or three or four of the REITs dominate, well, can't buy into, you can't buy the eyeballs. They're gonna dominate that market and you're just not gonna get that traffic ⁓ and or the economies of scale. And so we always hung our hat on that still and would compete with them. And also from a private equity standpoint, it's a really good story to tell, isn't it? To say that.

You know, we're controlling the expenses and so we're not gonna overspend and then we find that they're eating our lunch and we can't lease up and so we're not hitting our returns. And so what I'm getting at is the conversation I had with Scott Lewis ⁓ at a recent mastermind in which he stated that you were intentionally, not by default, but intentionally looking at these properties and projects in which you could utilize extra or others in terms of a third party ⁓ management structure. And he said, we prefer this because

Now, to your point, what you just mentioned, Ryan, is that ⁓ we don't have to do the heavy lifting to hit those numbers. And when I get a budget from a third-party property management company, I can underrate to that from an investment standpoint. And he said, know, life is so much easier from that standpoint. And the fact that then I don't have to produce those returns based upon my own projections, which I can't necessarily control.

as consistently as the REITs. And so that was a big mind shift for us and for many folks in the mastermind to see that you were doing that. Talk through a little bit about that, either a light bulb moment or if it was just a logical conclusion, that's a pretty big pivot.

Ryan Gibson (08:54)

I wanted to do it from the start. But you you kind of have a fork in the road, right? You either want to go learn it all yourself so you know the ins and outs, or you go and have someone else do it and you just sort of listen to what they say and you sort of learn. You know, looking back over the years, you know, looking back over the last decade of doing this, it's kind of like, I think either way you go, you're gonna be fine. But I kind of appreciate everything that we've done, which is, you

We went and we figured out how to do it right. We figured out how difficult it is to command a market and own the digital advertising space, which is basically what this is now. Right. You can you can operate at a at a high level ⁓ and you can have the best managers, the great, you know, the best positioning, the nice looking store, the retail center. You can mimic and mirror that from that perspective. But the REITs, they have the marketing. know, 44 percent of Americans when they look for storage.

They're going to Google and they're putting the words public storage in Google. Right. You just don't have that tailwind. And so I think I think the light bulb went off and our first acquisition that we put a read in and it was an amazing deal. We bought a deal about a year and a half ago in Portland. So two in Portland one in Vancouver Washington you know kind of a little package and there was the assets were severely discounted but they were built in 2018 fully stabilized 90 percent occupied.

And we were buying the properties for a great price, but they were extra space managed. And when we looked at the market, we're like, okay, well, we can go in and we can take extra space out of the building and do our own thing. We looked at the market. There's nine other extra space competitors in that market. So what was a bloodbath? We're not going to go in there and slap our name on them, pretend like we're going to outstrip what they're doing. And so it was, you know, and then the friction of the turnover and the expense of, you know, a hundred or 200 K a building.

to do our marketing and branding and all this stuff. And so we said, you know what, just leave it alone, you know, and let's let them sort of just transition the building. And there's things that you give away, but there's also things that you get. And so, you know, one of the big things that you give away is the tenant insurance, you know, so you're not gonna, you're gonna, they're gonna take a hundred percent of your tenant insurance, which is a downside to the investment, but you're gonna continue to be able to kind of rely on their presence in the market. And I think for me,

And I don't know who told me this or how I how iconic the light bulb moment. But the thing that can't that entered my head was how do you hold the reits accountable? Right. You know, how are you going to get in there and hold them accountable? And we do we do hold them accountable and have an asset manager and analysts and things like that. But Wall Street holds these reits accountable and month over month, year over year, quarter over quarter. They are accountable to Wall Street. So some people might say, well, what, you know,

How do I know that they're gonna only focus on ones that they own and for it? They're reporting all of that stuff up to their shareholders. They can't show declines in Noi or occupancy growth they might or that they have but that's gonna hit their stock price and that's what they care about the most and even the Extra managed or the public managed properties are gonna impact the outlook of what their company does and how their share price trades So I think the accountability to Wall Street

With the benefit of being able to take advantage of the market to me was just kind of that light bulb moment of like man This makes a lot of sense and what I really like is some markets that we've gone into you buy these mom-and-pops you look at the other re operators in the market that are achieving Much higher rents greater occupancy and you say hey, this is becoming a simple mark to market strategy Where are these guys are charging 21 bucks a foot? We're at 14 and they're fully everyone's fully stabilized no pipeline

We're just going to simply mark to market the strategy to go to where they are over a five year term to back into our results. And, and then we just let her rip. And it's like, this is really nice. So, you know, that that's all great. And then there's some instances where it makes sense to put our brand in, you know, we're buying a property just up the road from here. We already have a property in this market. We can share kind of payroll resourcing. We're doing a unique technology called store ease.

We're a lot of you know, only a handful of midsize operators use that you walk in there's a person on the screen So if somebody's out attending to a unit, you know, you're talking to a real live person. That's you either in Colorado or Texas That works for us directly. It's a book your unit. So there might be some synergies there But also just having the operations team and sort of the knowledge in-house is like kind of a lethal situation where you can rely on a REIT that is super dialed in

But then you also have your own team as well to kind of manage through, you know, your own property management, but also kind of fact check and make sure that what we're doing is actually, you know, correct and appropriate to what the pro forma projected or whatever it was. So I would say that it's kind of a long, a long way around to say, you know, we bought a deal and kept them in the building and it's gone extremely well. ⁓ Yeah, very well.

Scott Meyers (14:09)

Well, everything you said is 100 % true. it's interesting is we have a number of these projects as well. They're one-offs if we don't have a portfolio in the market. I think that's the only way that if you're going to take on a REIT that is well established in the market with multiple locations, you have to buy a portfolio or quickly build one and go head to head with them. And even then, ⁓ I don't know that the juice is worth the squeeze. Here's an interesting question that came about from one of our passive investors. We were on a webinar. We're raising capital for one of our projects.

third party is going to be third party property managed. And the question that came up in the chat was, okay, Scott, your secret sauce has always been the fact that, you know, it is your deal and your nimble, you're quick in the market, you're going to mind the expenses and the management. He didn't say all of that, but you know, all the things that we've been saying over the years, you know, this is an investor that's been on our webinars and invested with us. said, now you're going have a third party property management company run this facility.

why would I invest with you? What's the difference? Why wouldn't I just invest in a REIT? Or what separates you now from any other owner operator? Because now you're no longer an operator, you just found the deal and you're have an operator over here. And so we wrestled with that a little bit. ⁓ The project still has the returns, the IRR that we normally have, but if it is apples to apples, have you run into that? And if so, how do you distinguish, how do you separate yourself from anybody to overcome that?

Objection, if you will.

Ryan Gibson (15:35)

I love that objection because it has such a great answer and it's real simple. I mean if you want to invest in a REIT go buy a REIT and you don't get the depreciation and you get the market speculation of that company the ups and downs the roller coaster and you want to buy a REIT you're buying a stock right and so what's the difference between investing in a REIT and investing in this actual property that's going to give me

actual results based on the performance of this asset. That's the major difference. You're not going to get the depreciation from the stock, but you buy into this property, you're going to get the tax efficiency and you're going to get how this asset performs and not how some market speculation is going or something like that. Right. So I, so that, so that's the difference there. The secret sauce is you're well networked. You know, the deals, you know, the brokers, people are bringing you these opportunities that are diamonds in the rough.

And that is the value that we bring as operators, right? We're not, you know, okay, good luck. Go find your own, you know, deal if you want to go on your own and go look at through thousands of deals and come up with millions of dollars and, you know, negotiate a loan and, you know, assemble the capital stack and, you know, come up with all this money to buy this asset. Right. That, that is, mean, that cannot be understated. That is a big deal. I mean, being embedded in the industry to do that.

And then when it comes to property operations and management of the asset, yeah, okay. They're they've got the red or green or orange shirt on at the property and they're managing your property. And you do have the secret sauce, but you also know how that secret sauce allows you to identify the asset, the opportunity, the market to know that that is a good buy. And then you're only enhancing the outcome by having a publicly traded company come in and manage it.

who's held accountable to Wall Street. mean, that is to me, that's like a, know, when we, we've had the opposite reaction from our investors, our investors are saying, this is really cool. So you're telling me you're going into a market, you're partnering with a REIT, the number one operator in the world, and they're going to run your property and you have networked and embedded yourself so well in this industry that you're buying this at a discount or you're, you know, you're, getting this deal flow.

And we're just along for the ride. This is amazing. Right. And it helps me quite frankly, helps me sleep better at night that a wall street managed company is literally the ones that are running the operation. So I love that question. I think that's a nail it out of the park. ⁓ objection and, and, by the way, they only manage what they want to buy. So we've been, we've taken some of our assets to REITs and they're like, we're good. We're, not going to manage that one. You know why? Cause they don't want to buy it.

So think of it this way. We bought two properties in Oregon with public storage as our manager. We bought three with extra space. And when we go to sell our portfolio in the Pacific Northwest, what do you think we're going to do? We're going to list it all together. Some are extra space managed, some are public storage managed. Somebody's going to lose the name on the building. And so now you're creating this dynamic where they both want the assets. They don't want to lose market share.

Scott Meyers (18:42)

Right.

Ryan Gibson (18:50)

Create a competitive bidding war, you know based on how you strategize the exit strategy So I would say you've got a built-in exit strategy because you know Typically when you go to sell these things as long as they're in the room buying Which they will I mean their stock has definitely been down You know when you look at the net, know, if you look and I don't want to go into a hole How do you value a REITs and how do you see that it's undervalued or whatever it is? But if you look at how the nav has been marking down these

asset values based on the NOI of the REIT reports, it's a great time to go buy REIT stock because as soon as that stock comes charging forward and that REIT comes overvalued and we see that overvaluation, guess what the REITs are going to do? They're going to wake back up and they're going to say, we need to buy stuff. And what are they going to do? They're going to look at their own managed portfolio and say, I want to buy this stuff. Why do you think public storage got into third-party property management five years ago?

They got into it because they want to have an acquisition strategy. You don't become a property manager. You become a property management company for two reasons. One, you eventually want to buy that property and you want to be the first in line to do it. Or two, you're a broker and you want to have first hand at the listing. That's two reasons. If you think you're going to make money in this business doing that, you might, but it's going to be very hard earned money.

We're charging property management fees for these properties, but we're not making money. It's a pass through and we're barely covering our expenses to keep our people going. so, you know, so it's, either pay ourselves that property management fee or we pay extra space for it, either one. But I would say you're bulking up your ability to exit and the investor is getting more confidence in that if a REIT would want to manage it, that means they potentially would probably want to buy it and it meets their standards and expectations.

So I love that objection. think it's a great question.

Scott Meyers (20:44)

Well, I knew most of the answers to that question as well. So that's hypothetical. I just want to see how you answered it. But it is. And that's what we state is that for all the reasons you mentioned that people are passive investors versus active investors and the fact that the REITs aren't out there looking. This is how we win, if you will, ⁓ or beat them, if you want to call it that. Well, first of all, they're really not looking.

for the types of properties that are 40,000 square feet with expansion, because they didn't want to wait for the expansion to build it. And so that's why Spartan also has a development arm so that you can do those and you can get them over to 55, 60,000 square feet where they're, they are now a REIT ready property that they can add to their portfolio along with others. And same with development. You know, we, sell these off at CFO, but there's, well, there's one REIT who's a building because they have a deeper pockets and they have a time to wait, but most of the rest.

They want something that is already at CFO or in lease up because they've got to get a cash flowing because they have to report to Wall Street. And so they're not willing to wait. they are not searching in the same ponds that we are in until the fish gets really, really big and then they're ready to pounce. And then to have that built in buyer that we know is going to pay at least 50 basis points more for a portfolio on the back end. If we can put ourselves in a position where we can at least ⁓

put ourselves in a better position for those folks to be our buyer, then we know that our projections, you we can be a little more liberal with those on the backend and what we can, you know, what we can project for as in terms of returns for our investors. So for all those reasons, you know, 100 % agree. Let's bring up another point that the investors would mention. And I just want to see if you've had seen any impact in your portfolio. And that is if you do have third party property management companies in from the beginning, the fees are higher.

We know that and if we underwrite appropriately, it shouldn't be, but the fees are typically higher. And we know that the performance, you know, because of incentives may not be in place the same as if we were managing it. are you, across your portfolio, have you dialed back the returns? You know, all things being equal, have you dialed back the returns for your investors on the projects that are third-party property managed because you can't control it as much and the expense load is higher than yours?

versus where you were and say the same property if you were to manage it on your own.

Ryan Gibson (23:04)

You know, I would say it depends. You know, I don't think the driving force to the investor returns is impacted heavily by fees. I think it's definitely a part of it, right? I if you charge a lot of fees to a property, you know, you'll kill the returns. However, I would say every time we look at a property, we say we underwrite it and say, OK, what does our team think that we can do?

And then we say, OK, how does the REITs, how have they underwritten the asset? And we look at terminal NOI valuation. one way to think about it is like, OK, extra space is going to take all your tenant insurance. And you might be like, that's a reason why you don't want to ever do that. But guess what? That tenant insurance revenue is still valued at a multiple at the end of the investment, right? You still can take that tenant insurance revenue and divide it by a cap rate and earn that

Multiple and guess who really is good at tenant insurance extra space they make a ton on that tenant insurance and so when you think about The fees you say well, you know extra space charges, you know a four and a half or five percent Whatever it is, you know, we're not that dissimilar, but they take the tenant insurance. So that's more expensive So if you're holding an asset for the short term Extra space might not be such a bad property manager because you're gonna yeah, you'll miss some cash flow along the way very subtle

But also at the end you might get a better bump in rents based on how they've underwritten the asset. So it depends. It depends on what your basis is going in. It depends on you hey I mean you got to consider as well like yeah my fees are lower but I'm going to enter a market where there's nine other REITs that rate there. I'm not going to stand a chance. Right. So why my expenses are lighter. My revenue is going to be lower. Right. So you know potentially because there's so much competition or maybe my expenses.

are not going to be so much different because they've already got scale there. They've already got a roving manager. They've already got ⁓ advertising. Right. And so when you look at Publix underwriting, you'll actually see pretty low advertising ratios because of what I mentioned earlier, which is they've already got the SEO. They've already and people know orange doors. They know public storage. And so I think that advantage is a little bit more. ⁓

Refined in the underwriting to where the fees I'm not seeing much difference and if anything, you know, I'm seeing consistent better projections from the REITs That they've so far and it's only been a year and a half or two So far they've been able to hit those targets pretty well and and exceed in some markets. So Yeah, I wouldn't say there's much difference in the returns. Yeah

Scott Meyers (25:53)

Well, we are halfway through 2025. Can you believe that?

Ryan Gibson (25:58)

I was sitting them waking up this morning. went on a hike and I was like it is May We're we're halfway through the year.

Scott Meyers (26:07)

Yeah, and May is nothing but a sprint until the end when all the kiddos activities and graduations and everything are in a full swing. so, yeah, basically here we are. We'll find ourselves in June pretty quickly. And so I got to ask, your 2025 strategy, how's it looking? Is it playing out the way you thought? Has there been any other pivots that you've made or any maybe unforeseen changes in the market that has affected Spartan in any way that has maybe taken you off track? Or has it been better than you anticipated?

Ryan Gibson (26:38)

You know, would say I would categorize this year as being slightly better than anticipated. I would say that the deal flow has increased. And so we're seeing more things come to market that we really want to buy. And I would say it's kind of been a lot like twenty twenty four so far. You know, we never really have banked on rates coming down rates, you know, subtly went down. I think it was last year, I guess now seventy five basis points, which, you know, had an impact on the market. But I think what we're finding is that.

You know, as we continue to aggregate these properties, we're able to kind of refresh the financing at a lower rate than we got in last year. And so, you know, we were just, you know, our latest acquisition, we just got quoted a 6 % fixed interest rate with a nice 24 month IO and 30 year amortization. And it's like, you know, there's some really attractive work. We're starting to see positive leverage again, where, you know, before the interest rates were ⁓ higher than the cap rates going in.

Now we're seeing that kind of flip flop. We're seeing more optionality and buying. know, and you know, we're sort of like business as usual on the tenant demand side, because you know, from 2023 till you know, summer 2023 till now, the tenant demand has not changed. In my observation, people aren't people aren't moving. We're just kind of having this flat, you know, maybe up a percent or two in rent and rent growth. But it's just been sort of this flat market.

You know, and if you overlay that with the home sales volume, like it pretty much mirrors home sale value. So I know a lot of people don't think that that's the thing that's lowering tenant demand, but I think that's that that that to me is my opinion. I think that we're seeing sort of tenants stay longer, but we're not seeing the traction on the move in rate that we'd like to see. But we're also achieving excellent ECR retention. So, you know, we're raising the rents on our customers and they're staying. That's that's the thing that's happening. And I and I sort of

just kind of continue to be surprised by the resilience of our space. know, this asset class has been really resilient to a lot of the ups and downs that other real estate has gone through. So we've seen more of the same. I would say deal volume is definitely up. ⁓ We've got about $175 million of purchase in our pipeline that'll take us to the end of Q3. So we are very active buyers.

And we see great performance in our assets that have been acquired in the last couple of years. And the REIT strategy continued to play out. But yeah, I would say that it's kind of been a lot like 2024 in a lot of ways.

Scott Meyers (29:16)

Yeah, I would echo the same here, but I love to ask that question to see where everybody's at. You we were out at the ISS show a couple of weeks ago, and I think Terry Lanza, who I adore, who's running the ISS World Expo and just about everything over there at Informa, you know, I just said, tell me the temperature. You what's the sentiment that you and the staff have? And she said, well, she said, our numbers are up. However, it appears that the folks... ⁓

This is a different crowd than last year. The folks that really were just looking to test the waters or find out or still questioning whether it's a good time to invest in self storage. They stayed home this year. said, she said, all the people that I've talked to and the people that were sitting in the sessions, these are the doers. These are the folks that are out here and they're back to network again. And, and more, you know, folks that maybe stayed home last year, the doers, you know, are back. And so it's a group of action takers and doers that were out there this year. And those were the conversations. It's always.

I think it's always a positive conversation at those shows and you have to kind of sift through that. for the most part, we're in an industry that no matter what, I think when we're in a recession or when we're in an inflationary and expansion period in the economy, self-storage does well in both instances. so you're always going to get that. I feel as if ⁓ there's our activity levels increase as well. And we're very optimistic for those same reasons you just mentioned. We still are affected by the fact that home sales are sluggish and that drives.

20, 30 percent depending upon the market of the traffic, but our folks aren't leaving. And, you know, we're seeing, you know, in our facilities and across the country from, you know, Yardi to, all our data gathering partners, know, rent growth is up. It's low, but it is up. And there continues to be optimism by folks that are out there utilizing storage in the economy, and I think that bodes well for us. So we're...

We're in that same boat right now. Our acquisitions are up. Still taking a little longer for us to get the capital in that we're raising right now just because I think those are the folks that are still watching the news and paying attention to all the negative press. so it's up to us to educate them that don't miss out. If your money's on the sidelines, you're going backwards. And so that is our task and our charge. But we're nothing but bullish on this industry and have been for the past 20 years that we've been in it.

Ryan Gibson (31:33)

And just imagine when the home sales return, right? I mean, that's just the cherry on top. know, so I think that's the big thing right now is if you're looking at a self-storage deal, you kind of got to know fairytale ending and you're underwriting, right? You can't beg too much under appreciation. You can't bank anything on market rent growth. You kind of just have to look at the market and say, what is the market getting right now? Why does this? Why does this opportunity uniquely position us to just bring the rents to where everybody else is at? And and with supply

Constraints or no pipeline and I think that's been you know our business plans the last year and a half have looked all the same Which is okay? We bought we don't refine this property at $15 rents the markets achieving 22 the occupancy super high our plan is just as slowly and incrementally raise the rents, know to where the markets at today in five years and And that's it. We're not showing any breakneck above market rent growth. We're not we're really

you know, kind of bearish on expansions, you know, because, ⁓ you know, we're not really doing a lot of the expansions. Ground up development now in a $25 market is where we've kind of sunk our teeth into. But other than that, you know, it's really just can we achieve results kind of on the day one or some super compelling market? know, we bought three properties in northwest Arkansas and Bentonville.

And the population growth, 36 people a day, ⁓ and the fifth fastest growing city, those kind of markets, I think, is where we're really kind of looking to thrive. So, yeah.

Scott Meyers (33:12)

Well, I think that's wise. And if you're not, in your words, writing the fairy tale and knowing of the story in your in your underwriting and you're just writing to the market with really, you know, nothing, all things being equal, that in itself, I believe, is a is a stress test of the facility. And that is your litmus test, because, again, rates we know are going to come down a bit, we assume. And the housing market is going to come back. And so I think we're at that at that unique place in terms of, you know, the bottom, if you will. And I'll never call it that because I'm not.

prognosticator, but we get it. We're seeing glimpses of it improving right now that I think is going to continue. So that in itself is the natural stress test. So Ryan, ⁓ as we wrap up and end our time together, once again, I thank you so much for your time. And through the years that we've known each other, we've been investing together in different projects. And we certainly appreciate the business relationship that we've had within our mastermind and other areas as well. And I love it when either you or Scott bring another book.

mastermind. There's a couple of them that are on my shelf or in the top over there that I've read as a couple of recommendations. Amp it up being one of them as we talked about speed. Oh yeah. so is there a book right now that the group is going through at Spartan or anything that is on at the top of your bookshelf or on the desk right now that you'd like to share with Storage Nation?

Ryan Gibson (34:31)

You know, Scott doesn't like reading anymore, you know, so he doesn't read any more books. No, I'm just I'm just joking. Of course, we've got. Yeah. So we our quarterly book is a book called Leadership and Self Deception. it is phenomenal. ⁓ Any entrepreneur need, know, anybody who's trying to change their business relationship or their personal relationship. This is a must read. It's all about everything's kind of your fault.

You know, at the end of the day, you know, it gets you in the right frame of mind to to really take a look at your life and in your business and kind of see it through. Yeah, I probably could have done that better. Or, you know, here's you know, this person is blaming everybody. And how do I help them get out of the box? And they talk about the box a lot in the book. It's a great ⁓

book to listen to on audible because it's very storytelling and ⁓ It's a it's a phenomenal book It's it's really changed the way that I approach business and my personal relationship with my wife and so highly recommend five-star book Really great ⁓

Scott Meyers (35:46)

Fantastic. I appreciate the share, Ryan, that we will include that in the show notes. I know that is one that I have not read as well. So I will add that to my list as well. Well, Ryan, always good to chat with you. If people want to find out more about you and know what Spartan is doing in the industry, what is the best ways for them to be able to do so?

Ryan Gibson (36:03)

Yeah, Spartan-Investors.com is our website or you can email me Ryan, R-Y-A-N at Spartan-Investors.com.

Scott Meyers (36:11)

There you have it, storage nation. You have been hanging out with Ryan with Spartan, who is just a dear friend and somebody that we look up to in the entire organization over there at Spartan. So Ryan, thanks once again for your time. Appreciate you.

Ryan Gibson (36:22)

Yeah, thanks, Scott.

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