Last week, Columbia-based TKG-StorageMart Partners made an unsolicited bid to take over Canada-based InStorage Real Estate Investment Trust. On Wednesday, the company offered to acquire all of the outstanding trust units of InStorage at a price of $3.75 per unit through its Alberta, Canada-based subsidiary TKG-StorageMart Canada Inc. The announcement comes just after TKG-StorageMart’s acquisition of 19.5 percent of InStorage shares.

InStorage has created a special committee to review TKG-StorageMart’s offer. "InStorage unitholders are urged to take no action with respect to the offer (which is open for acceptance until November 21) until such time as the trustees of InStorage have issued further communication with respect to the offer," the company said in a written statement.

The REIT's committee noted that the offer was a significant discount to trading values for InStorage trust units over the year prior to the recent market turmoil. The offer represents a 28.9 percent discount to the one-year weighted average trading price for InStorage's trust units, and a 21.5 percent discount to the weighted average six-month average trading price.

If the offer is successful, it will cost TKG-StorageMart about $300 million for the company’s remaining shares as well as its debt, said StorageMart President Cris Burnam. He also said it’s worthwhile because it would provide his company with the platform to expand business operations in Canada and the United States.

InStorage is the largest owner-operator of self-storage facilities in Canada, with 52 self-storage properties in Alberta, Saskatchewan, Ontario and Quebec.

TKG-StorageMart has 70 facilities in the United States and Canada, including five in Columbia. The Burnam family has been involved in the self-storage industry since 1974.

Fort Knox Self Storage has lived up to its name after a police swoop found $1.4 million in cash in the Australian self-storage facility. Officers also found 519g of heroin with a street value of $260,000 and a loaded 9mm pistol when they swooped on the Dandenong South business, named after the famed U.S. gold bullion depository.

The cash, drugs and gun were found in a secure area hired by a customer. Property, including jewelry, has been seized as suspected proceeds of crime.

Seven people were arrested after officers from the Croydon divisional tasking unit executed nine search warrants including:

• A 47-year-old Lysterfield South woman has been charged with trafficking heroin and possessing a prohibited weapon.
• A Ferntree Gully man, 30, is facing counts of trafficking, possessing and using heroin and cannabis, and possessing proceeds of crime. The pair have been remanded in custody to appear at Melbourne Magistrates' Court Jan. 9.
• A 27-year-old man from Tatong in the state's northeast faces charges of trafficking, possessing and using heroin.
• A Belgrave man, 49, who was charged with trafficking, possessing and using heroin posted bail and is scheduled to appear at Melbourne Magistrates' Court Jan. 9.
• A 39-year-old Tatong man will face the Benalla Magistrates' Court next month.

Aesthetically speaking, self-storage has come a long way in the past few years. Whether it’s zoning ordinances or savvy owners who realize that sizzle sells, facilities are taking on a more elaborate look and feel.

Certainly the growing trend of wine storage has upped the ante. Owners are earmarking notable amounts of their construction budgets to build upscale wine-storage facilities to attract renters such as restaurants, collectors and retailers.

While the trend is growing at a steady pace, it’s still a relatively small percentage of the projects we currently service. From a construction standpoint, adding wine storage is an easy build and can often allow you to use small, cumbersome spaces that may be unrentable as storage units. But the real deciding factor is your market. Facilities located in upper-income, high-density areas are typically most successful in this type of rental.

Adding the Warmth of Wood

Jack Nix, owner of Hoover Self Storage, knew what he needed to do to compete in the wine-storage arena in an affluent area in Birmingham, Ala. “Wine storage is part of the big picture,” Nix says. “Anybody who builds a class-A storage facility today should designate an area for wine storage, even if it’s only a small part of their square footage.”

The 150,000-square-foot facility allocated 578 square feet for wine storage. Nix knew the market base could support this type of service, so he set out to build a façade that exudes panache. During the planning phase, he attended a major industry tradeshow in Las Vegas and visited door manufacturer displays. His approach to wine storage changed when he saw one manufacturer’s doors made of wood laminate over steel. The laminate offers the pricing and flexibility of steel with the upscale look of wood. “We knew immediately that if we wanted to go first class, that look was a must,” Nix says. “Traditional doors were no longer a consideration.”

Once the doors were selected, the wood theme became prevalent in the Hoover Self Storage lobby. “When laying out the wine-storage area, we wanted a showroom window inside the office so customers would know we do wine storage. It was a show-and-tell approach that worked out nicely,” Nix explains.

The lobby has a wine country appeal, with deep-tone wood materials used throughout the entrance to the wine-storage area as well as the lobby desk. There is also wood laminate on the lockers in the lobby that can be used for customer package delivery and more.

It’s not surprising that wood or wood-like laminate is the material of choice for wine storage. Not only do the deep tones of wood connote affluence, wine vats are made of wood. Many other types of décor—such as carpeting, artwork, chandeliers and more—can add to the overall flair.

Meeting a Demand

Wine-storage customers tend to be individual collectors, restaurants and even retailers. Jim LaBonte, owner of Tropical Storage in Miramar, Fla., says many of his clients have their own storage for consumption wines. “We are looking for the wine collectors who need a secure, temperature-controlled area to store their investments,” he adds.

Many collectors invest $600 or more per bottle, making security and temperature/humidity control of the utmost importance. Most facilities offer separate access areas for wine storage, some with 24-hour keypad access or even separate elevators.

The desired wine-storage temperature is around 55 degrees, with humidity at 65-70 percent. In fact, many facilities use computer-monitored refrigeration systems and are investing in backup systems should one system fail for any reason. “It’s important for our customers to feel their investment is well cared for,” LaBonte says. “We have gone the extra mile with construction features, backup air-conditioning units and security systems to ensure their comfort level.”

How much space you allocate for wine storage depends on your projected market base. Hoover dedicated 30 lockers, but left room for expansion. In determining the unit mix, there really are no steadfast guidelines. One evolving issue is wine-storage renters discovering triple-stack lockers to be too small. Most self-storage owners report their clients want walk-in space for easier access, so lockers are being converted to accommodate demand. Thirty to 50 lockers seems to be the average in most facilities, but it fluctuates based on demand. Some owners have even removed wine-storage lockers due to lack of market demand, so knowing your demographics is key in the planning stage.

Marketing for Success

Marketing your wine storage is important in determining its success. In addition to information on your website, many facility owners are joining local wine-tasting clubs and regularly call on restaurants, country clubs and retailers. Advertising in upscale city publications is another avenue for building awareness, as well as participating in local wine expos.

Is wine storage a strong revenue builder? It certainly can be, particularly if customers rent regular storage units in addition to wine storage. Most owners are making the wine-storage area a major focus of facility tours to potential renters, as word-of-mouth can be one of your most beneficial promotion tactics. “Our lobby is built to showcase our wine-storage area, but the ambience has been well received by regular renters as well,” Nix concludes.

Ramey Jackson is vice president of sales for Janus International, a manufacturer of doors and hallway components for the self-storage industry. For more information, visit www.janusintl.com.

Today’s commercial-records centers continue to diversify and expand service offerings to accommodate the growing needs of their clients. This diversification has helped balance businesses by reducing dependency on one source of revenue, i.e., “the box on the shelf.”

Additionally, it translates into more revenue opportunities with existing clients, and offers another means of entry into a prospective client’s door for the salesperson. For example, the first pillar, or “core” service, of a commercial-records center is managing cartons of information, usually paper records. If the prospect is already vended or has a current solution, such as a storage space, then for the records center it is conceivably a dead end.

There is no real sales opportunity, at least until the lease expires or the current vended contract is up for renewal. In the case of the latter, the records center may have an opportunity to close the sale, if they have maintained contact with the prospect.

In-Demand Services

So how do you ensure you get the chance to participate in the renewal process? First, determine if there are other areas in which you can service their business needs. For example, what services can you provide that complement the “box on the shelf” service where you can utilize the same vehicle, driver and office staff?

Many records centers are adding supplementary service offerings, or “pillars,” such as scheduled shredding services, offsite tape rotation or imaging services. These are in-demand services from the business sector, especially with current legal provisions to protect consumers’ personal financial information, credit transactions and health records.

The second pillar supporting the commercial-records center business is the offsite storage of magnetic media or computer tapes. If the customer is currently storing and managing tapes in-house, then the offsite storage of computer tapes is another avenue where you can perform a service and potentially open the door for further business.

Computer tape backups can be as simple as a small case that rotates once a week with just a handful of tapes, or it can be as complicated as interfacing with the customer’s tape management system (TMS) and performing individual tape transactions, such as pulling and refiling tapes into individual slots. The number of slots for storage and the amount of transactions is driven by the customer and can range from a couple hundred individual tapes to thousands of tapes in inventory.

For larger tape customers, purpose-built software exists to handle the interaction between the customer and the offsite vault. In certain situations, if the paper records are stored with your competitor, then tapes may represent a sales opportunity, as the company may not want both items (paper and tapes) stored in the same location.

Electronic vaulting (e-vaulting) is another option today’s records centers are offering customers as an alternative to tape backup—or in addition to—depending on the information and business requirements. E-vaulting has grown in its appeal for all sizes of businesses due to the massive amounts of data being managed, regulatory demands, and competitive pressures to ensure quick recovery of information when needed.

Following the Paper Trail

A third pillar supporting the commercial-records center business is scheduled shredding services, which involves emptying containers, such as consoles placed in the client’s place of business. Consoles are typically secured, locked cabinets with slots for inserting paper or larger locked containers with wheels.

The servicing of the container typically follows a recurring schedule. Some examples may include weekly, every two weeks, every four weeks, monthly, etc., and is typically controlled through a software program designed to manage the schedules, routing and invoicing. The schedule of activity depends on the client’s needs. The collected material is either shredded onsite with a mobile shredding truck or the material is returned to the records center, where it is either shredded onsite, known as a “plant-based operation,” or outsourced to a local operation.

The fourth pillar supporting the commercial-records center business is imaging. For those still living in the land of dial-up modems, imaging is the act of taking a picture of a piece of paper and making the picture available on a computer. Fortunately, for all the records centers out there, we still have paper and, quite frankly, lots of it, despite how much information is transferred and stored digitally. It’s just a fact of life.

Why is all this paper still kicking around? Because imaging is generally very labor-intensive, and it can be expensive to convert boxes of paper to images. Where imaging plays an important role is when you need to either make available certain information to multiple people simultaneously, the information needs to be readily accessible to support a job function such as a call center, or there is an opportunity to streamline a job function. Some records centers have also added digital archiving to their mix of information-management services.

Digital archiving is related to imaging in that it involves the storage and management of electronically created data. However, it is distinct from digital dissemination. Digital archiving is the process of ensuring the data is preserved for the future in a format that can be migrated as and when operating systems and software applications change. If you’re offering digital archiving, be aware that it involves continual investment to ensure the data is maintained in formats usable on current media.

Working Together

The interesting part about these four different pillars is that each pillar can stand on its own or they can work together to successfully complement the records-center business. Some companies have built extremely successful businesses by focusing solely on hardcopy records storage, offsite storage of magnetic media, shredding, or even imaging.

But imagine if you could walk into a prospect’s office—or into an existing customer’s office for that matter—and say, “We can manage your shredding services, magnetic media services and imaging needs, relying on one vendor rather than four. Better yet, we can reduce your costs by utilizing the same delivery truck and driver to pick up and drop off all items pertaining to the four pillars. At the end of the month, we will provide you with one invoice detailing all the different services provided, broken out by each individual department, if you wish.”

One vendor, one invoice, expanded client base—all achieved by building your commercial-records center business upon the four pillars. It makes perfectly good sense.

Scott Bidwell is president and chief operating officer of Andrews Software Inc., which provides software services and products to commercial-records centers, media vaults and document-destruction companies. For more information, visit www.andrewssoftware.com.

The moving and storage industry is dominated by thousands of family owned and operated companies that have been in business for several generations and have weathered the many twists and turns of the economy. To help navigate the current economic situation, many traditional self-storage companies have expanded their services to offer complementary products. One of the more successful products offered today is mobile-storage containers.

Diversifying with new products and services enables self-storage owners and operators to sustain their businesses and even reach a niche market with specific storage needs and lifestyle characteristics.

The Mobile-Storage Customer

Mobile-storage customers include young 20- and 30-somethings, do-it-yourself types and consumers on a tight budget drawn to portable storage because it offers more flexibility than traditional self-storage options. The container is delivered onsite, and the household goods are loaded and unloaded at the customer’s convenience.

As one homeowner put it, “The mobile-storage container came in handy during a recent home remodel for temporary storage of furniture, and the staff worked with us for the most convenient times for delivery, pickup and redelivery.”

Mobile-storage containers allow customers to free up space during the remodeling process, says Frank Amodio Sr., secretary for the Mobile Self-Storage Association and president of Amodio Van & Storage in New Britain, Conn. “It’s a terrific way for our customers to protect their household goods, and it allows them to retain the container and access it as needed. It’s a luxury they wouldn’t have with traditional storage units.”

One customer in San Antonio agrees. “I have already recommended portable self-storage containers to friends and associates who are getting ready to remodel their homes,” he says. “It’s great to have my stuff right here and not have to cart it to an offsite, temporary storage unit.”

Not Just a Passing Fad

The mobile self-storage concept is one of the few business models that can withstand a poor economy, which is why traditional self-storage companies are attracted to this new market. With affordable rental fees and the luxury of convenience, this storage solution is one that caters to its customers’ exact needs and wants.

Amodio believes mobile self-storage is more than just a fad. In fact, expanding into mobile storage was one of his company’s smartest moves. “Our customers appreciate access to mobile self-storage, because it provides them with a low-cost option they have more control over,” he says. “Every time I have an opportunity, I run through the benefits of mobile self-storage to those in the moving and storage industry. I’m a firm believer that we should be providing as many solutions as we can, whether it is for commercial or residential moving and storage.”

Tom McCormick is president of SAM–Store and Move. He has nearly 30 years experience in the rental, leasing and moving industry. SAM–Store and Move is a convenient portable-storage and moving solution delivered to the customer’s residence. The company offers one-way, interstate rentals to customers in more than 4,500 cities across the country. For more information, call 800.438.2726; visit www.getasam.com.

Every self-storage operator must provide well-written rental agreements for tenants to read and understand when renting units. It is not the manager’s duty to explain each provision within these agreements, nor is it necessary for renters to initial important provisions (except where it is required by law). Best practices will prompt any conscientious self-storage manager to inform tenants of rental rates, due dates and modes of payment. As an additional customer service and a means in which to avoid future lawsuits, it is also in the owner/operator’s best interest to practice disclosing six important provisions.

1. Insurance

State required or not, explain to tenants that you don’t provide insurance to cover stored goods (unless, of course, you do) and strongly recommend, if not require, they insure their own belongings. In many claims, occupants think an operator maintained some amount of insurance on the stored goods.

I discourage making any reference to homeowner’s insurance covering stored property, because many policies require a separate rider for property stored out of the house. Generally, homeowner’s policies carry higher deductibles and more stringent exclusions than a self-storage contents policy. As a good business person, tell renters to buy self-storage insurance. They should not skimp, hedge their bets or rely on a storage owner to do it for them.

2. Credit Card Information

Explain why it is critical to have tenants’ credit card information on file. Credit cards should look like a requirement of the rental agreement—namely as a means to protect customers from unnecessary fees. Let the tenant know you could be saving him from agitation and late payments if a card is provided or if an auto-debit from a bank account is arranged.

How do you do this? Look the occupant in the eye and say, “Suppose you have to run out of town and you forget to pay your rent. What if you are gone longer than expected? Suddenly, your $75 monthly bill earns a late fee, possibly an over-lock or other charge, going up another $20. But, if we have a credit card number to charge, you will avoid the extra fees and hassle.”

Don’t be afraid to ask for a credit card—for your protection and the tenant’s. It’s one of the best things to do to make the self-storage relationship go smoothly.

3. Termination

Your rental agreement likely discusses termination procedures, i.e., how many days notice is required, and that the unit must be swept and locks removed. You also probably want the occupant to stop by the office to “check out” and provide a forwarding address. Whatever your requirements, discuss them with tenants upon signing the lease.

While the requirements to terminate may be in your rental agreement, posted at the front gate and the office, or even on stickers on your doors, put it into their heads right from the beginning. If you don’t, occupants are going to feign complete ignorance. You can bang your head against the wall and say, “Didn’t you see the sign at the gate? Didn’t you read the sticker on your unit? Didn’t you see move-out notice forms on every building and the mailbox at the gate to make it easy for you?” It won’t matter.

Tell people what you want from the beginning and show them how to do it. You won’t be encouraging early termination, but you will be building proper expectations and avoiding a dispute at the end of the term if an occupant fails to vacate or give proper notice.

4. Checkups

Let the occupant know it is his duty to check on his property once in a while. Many rental agreements have the “legal language” that says an occupant has inspected the unit and finds it to be suitable. What you need to tell renters is this, “Come by once in a while and check on your property, just to make sure it is OK.”

It’s not necessary to provide a laundry list of all the things that can go wrong in self-storage, such as roof leaks, infestations, mold, leakage from other units, etc., but it’s always better to catch problems sooner than later. Let tenants know it’s to their personal advantage to make this a practice.

Hopefully, a pleasant byproduct of this policy is that the occupant will continue to bring more property out to the self-storage unit and eventually need a larger or additional space. Occupants that are overseas in the military or are leaving town and storing their property in the unit represent a different problem; suggest they have a friend or family member check in occasionally.

5. Gate Procedures

Gate or door failure is almost always a result of user error. People do not intuitively know how to push the buttons to make a gate open. You can put directions on a sign but, better still, teach them how to use it when they first rent from you.

Also, let people know from the get-go if you charge for false alarms or to open the gate after hours. Inform them of exit procedures. I see a lot of unhappy occupants who fail to understand that after 9 p.m. they will be charged a manager “response fee” to open up the gate manually after hours.

Finally, let tenants know other gate nuances. For example, some gates only allow one coded entry per visit, disallowing another entry until they exit. This prohibits a husband and wife, for example, from visiting the site in separate vehicles at the same time.

6. Security Disclose

If your facility is full of fake cameras, or if you have only one gate code and anyone who has ever rented at the site knows the code, it’s your duty to disclose this information to tenants. People make their self-storage decisions based on how secure they feel. But, security systems are fallible. If your system is not backed up by a generator or if your camera system always goes out in a thunderstorm, you do not want people relying on a false sense of security.

These items are something you may generically disclose in your rental agreement, but highlight them when discussing the rental agreement. That “reliance” could come back and be grounds for a lawsuit.

When discussing rental agreements with occupants, the most important point is to say the same thing to everyone as much as humanly possible. The six items above are sound rental agreement disclosures but they also represent sound advice every self-storage occupant should have upon entering into a business relationship with your facility. Renters can read it for themselves in the rental agreement, but explaining these points to them are the cornerstone to creating good self-storage owner-occupant relations.

This column is for the purpose of providing general legal insight into the self-storage field and should not be substituted for the advice of your own attorney.

Jeffrey Greenberger practices with the law firm of Katz, Greenberger & Norton LLP in Cincinnati. He primarily represents owners and operators of commercial real estate, including self-storage. He is the legal counsel for the Ohio Self Storage Owners Society and the Kentucky Self Storage Association. His website, www.selfstoragelegal.com, contains his legal opinions and insights into the self-storage industry, as well as an article archive. For more information, call 513.721.5151; e-mail [email protected].

A U.S. operator of self-storage facilities has taken a 19.6 percent stake in InStorage Real Estate Investment Trust and indicated it may increase its holding and make a takeover bid for Canada's biggest self-storage owner.

Canadian Trading Partners LLC (CTP), part of Warburg Storagemart Partners LP of Columbia, Mo., acquired 2.4 million InStorage units from Sentry Select Capital Corp. for $8.9 million. This raises the Canadian Trading Partners stake to 4.8 million units or 19.6 per cent of InStorage.

CTP is currently considering the offer to acquire additional units but may at any time reconsider, Canadian Trading Partners stated Tuesday. 

Trust units in InStorage, which has 52 properties in Alberta, Saskatchewan, Ontario and Quebec, closed Tuesday at $1.65 on the TSX, down from $8.50 a year ago and representing a market value of $40.8 million. For more information, visit www.instoragereit.ca/.