Real estate investment and management firm The Pegasus Group owns 30 self-storage facilities nationwide. The Walnut Creek, Calif.-based company recently expanded its investment portfolio into the hotel industry, opening 10 Value Place extended-stay hotels throughout North California. Inside Self-Storage caught up with Bob Dailey, partner of The Pegasus Group, to discuss the company’s new venture.
In 2006, The Pegasus Group sold 22 of its properties. What was the reasoning behind this decision?
The partners felt the cap rates were at an all-time low and it was a good time to generate cash, not only for new acquisitions, but to fund investment into Value Place. The company still holds investments in mobile-home parks with approximately 2,000 spaces, marinas with more than 1,000 boats slips, and 30 self-storage facilities.
How has the company evolved to manage these two distinct business ventures?
For 25 years, The Pegasus Group has specialized in special-use properties including self-storage, marinas, mobile-home parks, office buildings and other property types. Although the lodging industry has some unique management aspects, the company has experienced lodging people already employed in the management division.
What are the similarities between the two businesses?
There are many similarities between the lodging and self-storage industry including facility maintenance, employee management, marketing and construction. These are all disciplines The Pegasus Group has mastered over the years.
Why did you choose Value Place?
We chose Value Place for our entry into the lodging industry because of its simplicity of operation and the new concept of renting rooms by the week, not the night. The operating concept of renting rooms by the week is similar to the operation of self-storage. There are also similarities in the operation model, footprint of the building, demographics of customers, traffic counts and the low overhead. Essentially with self-storage, we house our customers’ stuff. With Value Place, we house our customers.
Do you believe more self-storage companies will consider other commercial ventures in the future?
Absolutely! Although the real estate industry is in turmoil due to the credit crunch, The Pegasus Group believes opportunities still exist for well-located properties in strong markets. Due to the operating similarities, Value Place is very complementary to the self-storage industry. And with more budget-conscious travelers, both business and consumer, there is going to be more of a demand for affordable lodging like Value Place.
For more information about The Pegasus Group, visit www.pegasusgroup.net/index_content.html.