Meet Our New Partners – Metropolitan Capital

Meet our New Partners - Metropolitan Capital - Now a Part of Marcus & Millichap Capital Corporation

Today we are discussing the capital markets for not just storage, but everything that's going on in the marketplace in general right now. And, we're here in the new Dallas office and part of the Marcus & Millichap Capital Corporation now. I thought it'd be a good opportunity to introduce our partners, Metropolitan Capital, to our owners and operators, give them a little history, and tell them what we do together and why we're here and all that.

To start, Metropolitan Capital has about 27 years of history and in these years they've done just over $16 billion in debt and equity placements, all in the commercial real estate space. They cater to all types of clients. They represent the client and their interests. They sit on their side of the table, negotiate the best deal for whatever it is they are trying to do on that day, whether it be a long-term CMDS, whether it be life company, hedge fund, construction loans, all across the capital stack we play. And they've had a very good success rate in doing that, and again, as stated before, they've done just over 16 billion, all in the commercial real estate space, and we're very pleased to be part of the Marcus engine. In other words, Capital Corporation specializes in raising debt and equity, and Karr Self Storage has a very robust investment sales platform. So, we thought a merger of the two was a great fit, and we're very excited to be here.

As our investors know, we, Karr Self Storage, focus exclusively on storage within the state of Texas, representing owners in primary, tertiary, secondary markets, all of them down the spectrum. And we'd like to think we've got a pretty solid understanding of what's happening at any given time in the capital markets, but we also understand that it's not our specialty per se. So, we thought it'd be a good opportunity to bring our investors up to speed on the kind of where we've been, where we are now, and what we see coming down the pipe relative to capital markets, particularly in light of the COVID situation.

Historically pre-COVID, the liquidity markets were very strong, and they still are strong, but there are some reservations in the markets currently today. Pre-COVID, we were financing all product types from the basic food groups of retail, multi-family office industrial, but we also focused on self-storage, hospitality, lot development, condo development, things like that that were outside of the [inaudible 00:03:35] food groups. And one of the areas that we have historically done very well on is construction. And we've also done a lot of permanent inequities.

Now pre-COVID, our diversification across product types has actually been very, very diverse in the sense that each of those product types had liquidity chasing after pre-COVID. COVID produced a different element to the capital markets that people are uncertain about what areas to invest in. Now, there are certain areas that we're kind of on the tail end of the major part of the pandemic that certain product types are rising to the top. There's a cream to the top that people say. Industrial is one of those, self-storage is one of those, multifamily's one of those. On the other end of the spectrum, hospitality and certain types of retail are suffering in the capital markets today.

And when I say suffering, those asset types can still get financed. It's just that it's at much lower leverage and a much higher cost. Now, on the positive side of the spectrum, self-storage, industrial, multi-family, there's still a lot of capital, both on the debt and the equity side, chasing those product types.