The dog days of summer are upon us, and what better way to cool your toes than boating on Lake Norman? If you’re a member of the Peninsula Yacht Club, your day on the water is a short drive from Charlotte’s center city and a friendly hello away.
For Stephen and Dave Benson of Morningstar Properties, their first launch into the marina business has been a splashing success. Upon purchasing the marina, Dave was quoted as saying, “This looks and feels like a business we would be able to understand…This is such a well-known property – the best and the brightest in our own back yard.” And just a couple of years later, his course has proven seaworthy.
Navigating New Waters
Dave and his father, Stephen, have always loved boats but it was only recently that they decided to add them to their business portfolio. More than 20 years ago, Stephen Benson practically created the concept of branded mini-storage by applying the name Morningstar and a consistent business approach and pleasant feel to mini-storage locations throughout North and South Carolina. The storage business flourished, so much so it was hard to keep track of the acquisitions and divestitures that made it a success. Along the way, son Dave joined Stephen to handle the responsibilities. Sensing what they believed to be the storage industry peak, they had begun weighing new real estate ventures for Morningstar.
About four years ago, the father-son pair began actively looking for a new market for expansion. As it happened, their love of boats – racing boats, sail boats, antique boats, any kind of boats – led them straight to Peninsula Yacht Club, located on the grounds of one of their former haunts.
“My dad taught me how to sail, introduced me to the water,” says Dave. “We used to go out on the lake, and come back wet in some fashion,” he laughs. But the choice of marinas as their next business expansion actually had more to do with similarities between it and their existing business than any sentiment about their shared memories and passions.
“We would go up to the marina on Saturdays, take the boat out, and have a look around,” says Dave, “and one day it dawned on us – it looks a lot like storage.”
Explains Stephen, “More and more people are putting their boats in buildings where they’re stacked up like shoe boxes.” The boats are lowered with lift trucks and brought to the dock, ready for use. It’s efficient in terms of space, and it keeps the boats in good condition.”
In addition to the functional similarity, the Bensons saw that the industry climate was similar to that of the storage industry. “There are no huge corporate players,” says Stephen. “It’s mom and pops generally. It’s a business that’s under the radar for the big players.”
The Bensons also saw a parallel between the condition of the marina industry today and that of storage 20 years ago. “Mini-storage was in pretty sorry shape, and at a very low standard. Security consisted of a mean dog – a Leroy Brown – and the buildings were suitable for storing only what you might keep in a garage.” Morningstar changed all that, building masonry buildings and adding flowers and grass, to create an atmosphere and facilities suitable for bringing your mother and storing her heirloom clock.
Likewise, while there are many beautiful, well-run marinas around, Stephen believes much can be done to make them even better. “The market is pretty unsophisticated,” he explains. “Good software is not widespread, and most people still think of marinas as a place to store and repair a boat. We’re more interested in creating a place for a Saturday afternoon with the family, or a group out at a social event.”
In addition, they expect to bring a more focused approach to operations, and apply principles of consolidation and scale to achieve a higher level of business sophistication. And, of course, they expect to build the same sort of brand recognition and loyalty that Morningstar Storage already enjoys.
“So when the Peninsula Yacht Club fell into our laps,” says Dave, “it was a blessing.” He explains that they didn’t set out to buy a yacht club, nor do they expect all of their marina properties to attain the same level of luxury as the Peninsula Yacht Club: “But it’s taught us a lot about what people are looking for. It’s been a great proving ground for us.”
It’s also a terrific flagship for them, garnering a lot of attention among the upscale boating crowd. On six and a half lake-front acres and boasting a luxurious full-scale dining and meeting room and a friendly staff, the Peninsula Yacht Club serves 950 members and last year hosted 42 weddings and receptions, setting a standard among high class marinas.
Since that first marina acquisition in 2004, Morningstar has also acquired the Reserve Harbor Yacht Club in Pawleys Island, S.C., and the Bahia Bleu Marina, Savannah, Ga.
Sink or Swim
The similarity to storage has borne itself out for the Bensons, but not without at least a few “snappy” surprises. “You don’t have to deal with a whole lot of alligators in the storage unit business,” laughs Dave Benson. “But that’s exactly what we deal with at one of our South Carolina marinas.”
More mundane challenges include a larger seasonal labor component, food service, and a more prominent people and events aspect. At the Peninsula Yacht Club, their flagship, people and events take a front seat.
As a private membership club, the marina has to provide value to members beyond the use of attractive storage space. So the Morningstar team instituted Friday night movie nights in the pool, Mad Hatter tea parties complete with etiquette lessons, Easter egg hunts, and mystery nights where attendees are challenged to act out – and solve – a whodunit-style mystery. “It wasn’t done before,” says Stephen. “Events were lean, so our idea is to build value for our members.”
In addition to regularly planned events, members can enjoy lunch or dinner in the dining rooms, or plan special events such as weddings and receptions. “It’s not just storage and a shop,” says Stephen. “It’s more like a country club, but instead of a golf course we have docks and a lake.”
While the Bensons agree that the endeavor has been mostly successful, they attribute part of that success to the skilled and talented people who work with them, as well as the patience of the Yacht Club members. They also attribute it to good planning: “We started looking about five years ago, trying to understand the business and where we would screw up,” chuckles Dave. “Because we knew there was a chance we would absolutely screw up.”
Now, of course, all of their marina locations are doing very well, thank you. As a matter of fact, Stephen adds, “We are aggressively out there looking for more properties,. From Baltimore to Florida, we’re planning to add between six and eight marina properties each year.”
The only downside, says Dave ruefully, is not getting to spend as much time on the water as they’d like. “We thought that by getting into the marina business we’d be hanging around the marina from time to time. But the bottom line is, it’s a business. So you’re talking to bankers and looking at numbers just like any other business.”
That’s not to say that the Bensons never get out on the water, though. In fact, they own a couple of antique boats, and Dave races speedboats for fun. And both men have diverse interests and backgrounds outside of storage and boating.
Going With the Flow
The success of Morningstar belies its humble origins. Stephen Benson graduated with a B.S. from Augustana College in Illinois then obtained his M.B.A. at the University of Illinois. From there he followed a diverse but entrepreneurial career path which included working for International Harvester Company in South Africa and Paris, and subsequently joining his brother-in-law to become one of the very early Wendy’s franchisees, developing and operating several dozen Wendy’s Restaurants in Pennsylvania, New Jersey and Delaware. The restaurants were sold back to Dave Thomas in 1979 and the Benson family relocated to Charlotte. After that, Stephen started up Morningstar Storage in 1981 from scratch.
Dave Benson earned his master’s degree in art history from the University of Virginia and spent a few years working for Christie’s, the art auction house. But just as the marina business doesn’t mean spending all your time on the water, he discovered that the art auction business is more about business than art, and decided to go after an MBA with an eye toward helping in his father’s business. In 1996, he joined the business his father had built from scratch in 1981, Morningstar Storage.
In the process of building the Morningstar business, the company has acquired and divested itself of any number of properties, usually selling in complex transactions to much larger companies. So much so, in fact, that the company has been asked by the media if it is getting into the buying and selling business. It is safe to say that the Bensons are on the constant lookout for good growth opportunities.
Fortunately, following a strategy of staying close to home to develop the storage business, the company grew from a few storage locations in the early 1980s to more than 60 today. The name has become associated with pleasant service, attractive grounds (they’ve won several landscaping awards), and quality facilities.
Although they won’t be able to stay quite as close to home with the marina business, they plan to apply many of the same successful strategies: Creating and updating facilities to be pleasant and high quality; hiring effective management for each location; applying technologies and best business practices across the board; and gradually building brand recognition and loyalty.
Despite new challenges, the plan is working for Morningstar, even in the face of economic realities that many predicted would cause a downturn. The cost of gasoline, say many, keeps people at home, driving down business for marinas and other leisure activities. Stephen says they haven’t seen that happen at all.
In fact, he says, “It’s just the opposite. Instead of a family trip to see the sights of America, people are going to stay at home and ride around in boats.” Adds Dave, “It’s a great amenity right in your back yard.”
Business is good, and the Bensons are enjoying themselves. “We try to take the business seriously, but not ourselves,” laughs Dave. Stephen takes it easier these days than in the early days, but there is nothing he’d rather do than work with his son on the business.Dave agrees: “It’s a real treat to get to work with my dad. And we’ve got a great team at Morningstar, so we’re going to keep that rolling. Yesterday storage, today marinas, and who knows what’s next!”