PODS Appoints Spowart to VP of Marketing

Jan 14, 2010

Portable On Demand Storage (PODS), a moving and storage company that provides portable-storage containers, appointed George Spowart as vice president of marketing at the firm’s corporate offices in Clearwater, Fla.

Spowart was promoted from marketing director, a position he has held with PODS since March 2007. In his new role, Spowart will define the strategic direction for PODS branding and communications across its network of corporate and franchise locations.

“We are pleased to announce George’s promotion to the role of vice president of marketing,” said Christine Pierce, PODS chief marketing officer. “His work has been outstanding in educating customers about the convenience and flexibility of using PODS for local and long-distance moving and storage. We look forward to his leadership in evolving our brand as PODS continues to grow.”

Prior to joining PODS, Spowart worked as a senior vice president in account management for advertising agencies including Allen & Gerritsen, Greenberg Seronick O’Leary and Partners and others.

Related Articles:

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Self-Storage Talk: Portables or Containers?

NAREIT Launches New Publication for Commercial Real Estate Investors

Jan 14, 2010

The National Association of Real Estate Investment Trusts (NAREIT) has launched a new bi-monthly flagship publication, REIT: Real Estate Investment Today, which will take the place of its award-winning Real Estate Portfolio magazine. The publication’s name reflects the integration of its editorial content with NAREIT’s website, REIT.com, a comprehensive source of commercial real estate news and analysis.

The site also includes video interviews with corporate CEOs, investors and analysts as well as live REIT index data and a broad range of other resources for institutional and individual real estate investors and policymakers.

Each issue of REIT will include corporate-strategy features on major real estate companies, analyses of the performance and prospects of individual sectors of the commercial real estate marketplace, one-on-one interviews with CEOs, and Q&A discussion features with leaders in the capital markets and fund-management worlds. The print publication will reach approximately 30,000 readers, primarily senior-level decision-makers in the field of commercial real estate investment.

The magazine will also be published in a digital edition, which will be added to REIT.com. The website receives approximately 100,000 visits monthly.

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NAREIT Launches New Website for 'All Things REIT'

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ISS Blog

Out With the Old, In With the New

Jan 14, 2010

Speaking for most of us in the commercial real estate business, and probably most of us in the self-storage industry as well, I am very happy to put the year 2009 behind me and look forward to the promise of 2010. For me, 2010 will not be without its challenges, but a New Year offers the hope and optimism of a new beginning.

Indeed, our office has three self-storage facilities under contract and in due diligence. We have just completed our third Broker Opinion of Value report for a mortgage servicer, which should lead to a listing of the asset at a reduced value from the original loan value of the facility.

Listings of those kinds of facilities have been very slow coming to the market as the mortgage lenders of these types of assets have practiced a policy to-date of “amend, extend, and pretend” on loans in their portfolio that should have been sold or foreclosed by now.

Our office participated in such a loan sale recently of a portfolio of construction loans on 14 self-storage properties that were built within the last four years, but never made it to stabilization for any number of different reasons.

While I do not have a crystal ball to see into the future for what the New Year will bring, I shall make an attempt to summarize what some of the economists and financial prognosticians say about 2010 and then what my thoughts are:

Interest rates will go up. I don't see rates increasing until second half of 2010.

Capitalization rates will go up. Maybe for other asset classes, but I don't see them increasing for self-storage any further; but I do see underwriting (risk assessment) remaining conservative.

Transaction volume increasing. I do see the number of transactions increasing, but mostly the same type of properties coming to market as 2009:

Troubled assets being sold via selling the notes, rather than the asset itself.
Good, stabilized properties that must be sold because of partnership problems or because the owners of the assets need to liquidate and take their equity and save other assets that are non-performing, but salvageable.
Small portfolios whereby the owner can still realize a gain by covering his loses with his winners or, to get liquid so that the owner can either take advantage of bargains out in the market or use the equity to fund a development deal that has been stalled because of the economy and credit markets.

Self-storage supply and demand issues. Until the economy—and the housing sector in particular—begin to recover and companies begin to hire workers or recall them to their plants, the supply of self-storage will continue to exceed demand along with discounting of rental rates. And this is despite the number of new construction starts dropping to a decade-low number in 2009 and continuing into 2010.

Inflation will begin to rise. Yes, this is probably true; but what better place to have your equity invested than in real estate if inflation does rise?

So much for the prognostications for 2010. We will continue to offer our advisory services as we have for these past 18 challenging months: meeting with clients to plan a strategy, advise them as to current market conditions, or be a reference for financing, marketing, management or construction services.

Nick Malagisi is the national director of self-storage and a senior advisor for Sperry Van Ness, specializing in the purchase and sale of self-storage properties. Since 1993, Nick has participated in the sale of more than 70 properties valued at $350 million.

Andover Properties Purchases $42M Portfolio of Self-Storage Loans

Jan 13, 2010

Andover Properties LLC (Storage King USA) purchased a $42 million portfolio of loans for self-storage properties in the Metro Philadelphia and New Jersey markets. Nicholas Malagisi, national director of self storage for Sperry Van Ness International, participated in the sale. Andover President Brian Cohen closed the purchase of the loans within 45 days in an all-cash transaction.

Andover, a developer and owner/operator of self-storage facilities in the Metro New York area, partnered in the transaction with Angelo, Gordon & Co., a privately held alternative-investment advisor with approximately $19 billion under management across various disciplines.

Andover is actively pursuing other opportunities to purchase debt/equity in the self-storage market.

Related Articles:

StorageLand Founder Joins Sperry Van Ness/Jackson Cooper

Sperry Van Ness/Commercial Realty Sold $41M in Investments in 2008

Malagisi Honored as Top 20 Producer at Sperry Van Ness

Self-Storage Talk: Real Estate Listings and Investment Opportunities

Texas Self Storage Association Raises $33K for Shriners Childrens Hospital

Jan 13, 2010

This week the Texas Self Storage Association (TSSA) donated almost $33,000 to the Shriners Children’s Hospital in Galveston, Texas, with funds raised at its recent annual convention. The money was raised through a variety of conference activities including live and silent auctions and a charity poker tournament.

The Shriners Hospital, which specializes in burn treatment of children under 18, has been the beneficiary of TSSA fundraising efforts since 2001. To date, the association has raised approximately $230,000 for the cause. The TSSA Fundraising Committee is already making plans for the 2010 campaign, which will take place during its convention in Fort Worth, Texas, Oct. 18-20.

The TSSA, established in 1986, is a non-profit trade association dedicated to enhancing the quality of the self-storage industry in Texas. It provides members with industry education, research, discussion and information exchange.

Related Articles:

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College Scholarships Offered by Hawaii Self Storage in 2010

Jan 13, 2010

Hawaii Self Storage has launched its college-scholarship program for 2010, offering 12 scholarships to students in high schools near its five locations: Kaimuki, Kapolei, Mililani, Pearl City and Salt Lake. Oahu students can apply for a $1,000 scholarship that is renewable annually for up to $4,000 toward their college education.

To qualify, students must be Hawaii residents graduating seniors from one of the following public high schools: Aiea, Farrington, Pearl City, Kaimuki, Kalani, Kapolei, Mililani, Moanalua, Radford, Waipahu, McKinley and Leilehua. They must also be formally accepted into or enrolled in a recognized degree program at an accredited two- or four-year institution of higher education. Enrollment must be full time with a minimum of 12 credits per semester or the minimum number of credits required by the degree program. To renew the scholarship, students must maintain a cumulative minimum grade point average of 3.0.

Applications are due by Feb. 12. More information can be found at www.hawaiiselfstorage.net/scholarships.asp.

Source: Honolulu Advertiser, Scholarships available for Hawaii high school students

Related Articles:

Hawaii Self Storage Offers Free Christmas Trees to Tenants

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ISS Blog

A Form of Social Media You May Be Forgetting: The Forum

Jan 13, 2010

Twitter and Facebook exploded to new heights in 2009. What will 2010 bring in the world of social media, at least as it relates to your business and the self-storage industry?

Some would answer, “Absolutely nothing.” A contingent of social media naysayers exists, arguing that Twitter, Facebook, LinkedIn and others are just fads. They contend social media absorbs businesses’ time while contributing little, if any, to bottom lines. If you’re among these naysayers—or the undecided—you should definitely attend Derek Naylor’s social media session at the Inside Self-Storage World Expo, March 1-3 in Las Vegas. Derek will explore how—and why—self-storage operators should use social media to attract new tenants.

To be honest, I’m not sure what Twitter and Facebook will generate for self-storage businesses’ bottom lines, and I can’t look into a crystal ball and tell you if these social media avenues will stay hot in 2010 and beyond. But regardless of what the year holds for Twitter and Facebook, one form of social media that has some staying power is the online forum, such as Self-Storage Talk.

Yes, forums are social media. I joined my first online forum in 2003, and I was actually a late adopter. That forum, which serves as a messageboard for Ohio sports fans, continues to grow in website traffic and number of registered users. It’s been around for nearly a decade, and it’s predated by numerous forums that got started in the ’90s.

Forums didn’t blow up in one year; they’ve grown slowly over time, and I’m confident they’re here to stay. Plus, self-storage operators can benefit from joining forums. I’ve even observed consumers inquiring about self-storage facilities via forums. For example, read this City Data thread, which enables users to get up-to-date census information about any town or city in the United States.

In the case of Self-Storage Talk, the forum isn’t designed to earn its users legions of new tenants and customers—not directly, anyway. But it's designed to help them run facilities more efficiently and creatively. The knowledge of your peers is at your fingertips, as if you’re part of a nonstop Q-and-A session, constantly sharing ideas and tackling challenges. That kind of dialogue is what can ultimately lead to more rentals, better operations and overall industry growth.

It’s not that I have anything against Tweets and Facebook status updates. By all means, keep using those. Follow ISS on Twitter and become a fan on Facebook. But the next time you have something storage-related to share to the online world, don’t forget about the forum. And if you’re a late adopter like me, you can register here.

Managing Self-Storage Delinquencies, Bankruptcies and Abandonment

Jan 13, 2010

To some, self-storage is an expected expense, like a utility bill, a necessary and routine cost of running a household or a business. To others, it’s unexpected, the need to store property as the result of a sudden crisis—a marital separation, foreclosure, relocation or natural disaster. Whether the use is temporary or long term, self-storage is a solution to a problem of needing to store property when you have nowhere else to put it.

But the need for storage doesn’t always translate into the ability to pay it. In the current competitive world of dollar move-ins, waived security deposits and no credit checks, the cost of moving property into a storage unit is only a fraction of the cost of actually maintaining the occupancy past the first month. Self-storage is popular and its use has grown exponentially over the last few years. However, it’s no surprise in this economic climate that the level of delinquencies, bankruptcies and abandonments has also grown. It’s important for self-storage operators to be aware of these trends and be prepared to respond to them.

Encouraging a Move-Out

As rent defaults increase, it’s extremely important for operators to be proactive in working toward the quick resolution of troubled accounts. Sometimes, even though the operator is permitted to deny access and enforce a lien over the stored contents in the space, the best solution is to simply negotiate a reduced “move-out” price (some discount on the debt owed), and close the account upon the tenant vacating the space. Another option, for those tenants who want to move out but don’t have money to pay now, is to allow a move-out and negotiate a future payment plan for debt owed.

The key to both of these deals is the move-out. If the tenant doesn’t move out, the operator has simply negotiated a discount without the benefit of removing the delinquent tenant. Therefore, it’s essential that the discounted move-out agreement be in writing and include a “what if” clause.

This clause simply provides that in consideration for the operator’s agreement to reduce the rent and permit the move-out, the tenant must vacate the space by a certain date. If the tenant doesn’t move out as agreed, the agreement provides that the property in the space is abandoned to the facility and can be sold or disposed. The language would be something like the following:

Tenant has agreed to remove all of his contents from the storage unit no later than the close of business on ________________. Tenant agrees and understands that all property in the unit is to be removed and the unit is to be left in a clean, broom-swept condition, and that any property left in the unit after the close of business on ____________________shall be deemed abandoned by the Tenant and may be immediately disposed of by the Owner.

Under any of these agreements, if the tenant leaves—which avoids further lost rent for the operator and the unrecoverable costs of foreclosure—but doesn’t pay, the operator can decide whether to pursue the debt through various means of collection. However, the most important aspect of such a resolution is the operator’s ability to avoid the loss of further time and expense on a tenant who wants to stay but just can’t afford to.

Abandoned Units

Delinquency resolution can be through tenant voluntary move-outs as well as voluntary property abandonment. Certainly, there will be times when the tenant cannot pay the rent but decides it’s no longer important to keep his property. In such a case, in lieu of a move-out or lien foreclosure, the tenant can simply abandon the property in the unit to the facility operator—typically in consideration for the waiver of his account balance. To avoid misunderstandings, the abandonment should be in writing and contain language such as:

My signature on this form will constitute my release in full of any claims or demands against [self-storage company name] concerning the use of the storage space or the contents of the storage space, and I release all rights, title and interest to any personal property located in the unit. I understand that any personal property remaining in the unit may be disposed of by [self-storage company name] in any manner at the discretion of [self-storage company name].

Although language might be contained in the rental agreement that suggests abandonment can occur simply by the tenant taking off the lock and skipping the rent, it’s often more prudent to consider property as abandoned only where the tenant has confirmed his intent in writing. Although the tenant may truly intend to abandon his goods by removing the lock and not paying the rent, the operator’s best solution without approval in writing is to proceed with the lien procedure as set forth under state law.

Tenant Bankruptcy

It would be unusual to find a self-storage operator whose occupancy hasn’t dropped over the last year or who hasn’t seen an increase in delinquencies. It would also be uncommon to find an operator who hasn’t experienced a tenant bankruptcy filing. It’s not atypical for a tenant who has become significantly behind in his bills or facing the public sale or disposal of property to file for bankruptcy with the knowledge that any filing (even if later dismissed) will stop the lien sale from proceeding.

A tenant who has filed bankruptcy will typically be one who has been in arrears for months, was scheduled for sale and has continued to store property even after filing bankruptcy. This tenant will typically not pay rent, knowing the operator is precluded from continuing the sale process without permission from the court. This situation can often be the tenant’s “checkmate” against the storage operator, leaving him no option but to continue to lose rent.

Although the strategy of filing to avoid a lien sale may be commonplace, it’s also typical for an operator not to take any action, assuming the bankruptcy court will protect the tenant’s interests. Unfortunately, due to the number, priority and size of other creditors involved, the self-storage operator may not receive any attention regarding his claim unless he makes a concerted effort to alert the court regarding the situation.

If the operator is vocal with the court, trustee and even the tenant’s attorney, it’s unlikely the tenant will be permitted to maintain the storage unit without paying for the benefit. Ultimately, if the operator doesn’t get cooperation from the tenant to pay rent, he can enlist counsel to file a motion to “lift stay,” which is a method of requesting the court to permit the lien foreclosure of the tenant’s property if the tenant doesn’t vacate the space or pay the outstanding rent obligation.

When it comes to self-storage debt and bankruptcy, it’s likely the operator will not only lose the unpaid past rent but future rent as well. That’s why it’s so important for him to advocate with the court, especially the trustee assigned to the bankruptcy, to ensure he’s not taken advantage of during the bankruptcy process.

No operator wants to lose tenants, but the loss of occupancy is minimized when operators realize they’re giving away value with non-paying tenants. The key to self-storage profit isn’t just occupancy but “economic” occupancy. Your facility can be full with tenants who don’t pay any rent or 50 percent occupied with tenants who pay on time and in full. The choice is obvious.

Take this opportunity to review your rent files and address tenants who are failing to offer fair compensation for the value your rental space provides. A proactive approach will clearly help to avoid later conflicts and more lost rent.

Scott Zucker is a partner in the law firm of Weissmann Zucker Euster P.C. in Atlanta. Mr. Zucker specializes in business litigation with an emphasis on real estate, landlord-tenant and construction law. He is a frequent lecturer at national conventions and the author of Legal Topics in Self-Storage: A Sourcebook for Owners and Managers. He’s also a partner in the Self-Storage Legal Network, a subscription-based legal service for self-storage owners and managers. To reach him, call 404.364.4626; e-mail [email protected].

Related Articles:

Determining How Long to Keep Tenant Files and Abandoned Records in Self-Storage

Resolving Self-Storage Defaults and Avoiding Lien Sales

Self-Storage Sale and Disposal: Know the Law Before Acting

Six Things to Disclose to Tenants About Your Self-Storage Rental Agreement