The owners of the fully automated self-storage facility RoboVault, formally FTLL RoboVault LLC, recently filed for Chapter 11 protection  in a U.S. Bankruptcy Court in Fort Lauderdale, Fla. The self-storage property is facing foreclosure after the company fell behind on a $20 million bank loan from BankAtlantic. Chapter 11 bankruptcy halts lawsuits and seizures against a company, giving executives time to evaluate how to stay in business.

Opened three years ago on 2.4 acres, RoboVault encompasses 155,000 square feet of storage space. But rather than traditional self-storage with drive-up units or stairs and elevators to access storage interior storage units, RoboVault has a 70-ton robotic lift to retrieve tenants belongings from inside the buildings 408 units. The facility also features biometric security including retinal and fingerprint scanning. The climate-controlled building was also designed to withstand Category 5 hurricanes and winds up to 200 miles per hour.

The facility, which cost $22 million to build, was created with affluent collectors in mind intending to store art, wine, vintage and exotic cars, and other priceless items. Once customers enter the gates, they encounter a series of computerized keypads and fingerprint scans before they can go further.

RoboVault was developed by Marvin Chaney, who has more than 25 years experience in the self-storage industry. He is credited with developing and building South Florida's first high-rise storage facility in Oakland Park in 1986.

David Blum, a self-storage consultant and owner of Better Management Systems LLC, has volunteered to be locked up on Oct. 24 to raise funds for the South Florida chapter of the Muscular Dystrophy Association (MDA).

As an MDA jailbird, Blum will need to raise $3,5000 for his bail, which will benefit the South Florida District Muscular Dystrophy Association.

The MDA Lock-Up fundraising program asks business and community leaders to volunteer to be locked up to raise donations for bail. The events, which occur year-round in various cities nationwide, raise money to support research, a nationwide network of medical clinics, and summer camps for those affected by neuromuscular diseases.

Blum will go to jail at Anthony's Coal Fired Pizza in Coral Springs, Fla. Donations for his bail can be made at http://www2.mda.org/goto/davidblum.

Founded in 2003, Better Management Systems LLC consults with self-storage developers, owners and investors around the world. The company assists with feasibility, development and management in Europe, Greece, Israel, Mexico, South America and the United States.

Theres a big distinction between owning a self-storage business and operating one. Not all self-storage owners wish to oversee staff and manage day-to-day tasks such as unit rentals, marketing and facility maintenance. Its just one of the reasons some operators hire third-party management companies. The other is the number of benefits a management company brings, particularly to a single operator in a crowded and competitive market.

Along with brand recognition and economies of scale, third-party management companies bring experience. But with so many potential partners from which to chooseeach touting increased occupancy, streamlined operation, marketing savvy and morehow do you find the right fit for your business?

Owners need to know what to look for in a third-party management company, what they can  expect from the partnership, and red flags that its time to seek a new company to oversee their operation.  

Seeking a Partner

Much like hiring staff or purchasing new software, choosing a self-storage third-party management company takes research and time to ensure you make the right choice. Not all third-party management providers are alike. They will have very different things to offer and may produce very different results, says Carol Shipley, vice president of third-party management for CubeSmart, a self-storage real estate investment trust and a provider of self-storage management services. Your facility is a valuable asset, and you want a third-party management company that will treat it as its own. To find that perfect partner, you have to do your homework.

It begins with researching companies that are successful in your market. One that doesnt even have a presence in your area may not be the best choice in the long run. Your facility could be overlooked and may not receive the attention it deserves, says Noah Springer, director of third-party management for real estate investment trust Extra Space Storage Inc., which also provides management services. I have heard of too many management companies that have their sites in one part of the United States and a one-off location in another part. Bad idea.

In addition to having a market presence, your choice of provider should have self-storage experience. Ask how long it's worked in the industry and for details on key personnels expertise in finance, marketing, human resources and other critical areas. Any reference to what they have done should be verified, says Mel Holsinger, owner of Tucson, Ariz.-based Professional Self Storage Management, which oversees properties in Arizona, California, Colorado and Texas. If the company says it has consistently shown a level of occupancy growth, it should be able to be back it up with facts, not just words, Holsinger says.

Jack Rogers, vice president of business development for Uncle Bobs Management, advises owners to also look at other properties the company manages, and even visit the companys headquarters if possible to get a feel for what happens behind the scenes. In the end, you need to feel confident the management company is working in your best interest and can deliver on the fundamentals you deem paramount to the success of your business model.

Owners also need to determine if the services provided line up with what theyre seeking. Todays third-party management companies offer a variety services, from manager staffing to marketing. In general, management companies will oversee the day-to-day operation including all facility finances, employee training, marketing and advertising, lien sales, retail ordering and sales, budgets, event planning, maintenance and upkeep, and other operational tasks.

Ultimately, feeling comfortable with the partnership is the most critical factor. This company will be handling the day-to-day operations of a very important investment. If you dont feel comfortable voicing your opinion or communicating exactly what you want from the management company, the relationship is doomed to fail from the start, says Matthew Van Horn, vice president of Cutting Edge Self Storage Management, a full-service management company.

An open line of communicationfrom the startis the best way to ensure a long and fruitful partnership, says Anne Ballard, owner of Atlanta-based Universal Management Co., which provides full-service fee-management to clients in the Southeast. Owners need to clearly state their goals for ownership, she says. This includes revenue goals, upgrade plans and whether they hope to sell the property in the future or keep it as a long-term investment. In this day and age, theres no reason an owner should give up his store identity to achieve outstanding results, Ballard says. In particular, we are feet on the ground where their store is located, providing personalized service and using our industry vendors to achieve the results they need.

The Cost

Each third-party management company will charge accordingly to what it offers, industry experience and its economies of scale. In general, however, most require a flat percentage of the gross income with a monthly minimum. For the majority of operators, this averages between 4 percent and 6 percent of the monthly gross revenue.

Mitigating factors that could move that percentage up or down include the facility size, number of locations and services requested. When selecting a management company, Shipley advises that owners ask about any other fees they may be charged. Many management companies provide services such as sales centers and Internet marketing that require an additional charge but would eliminate the need for outside vendors supplying these services, and often reduce the expense you are currently paying for these services.

While it seems like the fees add up, the third-party management companys sole purpose is to increase an owners revenue. The owner should be able to pay for the management services with the increased revenue the management company expects to bring in, Springer says. While the first year of revenue could be slightly less than the owner was receiving due to the management fee, the increase in revenue over the subsequent years should more than offset the increase in added expense.

Your Expectations

Just as an owner has expectations of his staff, he should have clear expectations of his management company. Youll likely have overall goals in mind, which may include broad objectives such as increasing revenue, staff training or new marketing, and specific items such as a financial reporting timeline, creating a Twitter account or overseeing a renovation project. Be detailed in what you as an owner expect, and make sure the company you are dealing with knows exactly what you expect, says Holsinger, who suggests you ask the company to give you a detailed list of what it will accomplish each month, quarter, year, etc.

You should find out if the company can provide an operating budget, how often a company representative will visit the property, marketing avenues theyll seek, what kind of  reports you can expect, and when they will be delivered. These are just some of the ways you as an owner can ensure youre receiving the services youre paying for, Holsinger says.

Because youre no longer in charge of the operation on a daily basis, you should also expect your management company to bring any concerns or ideas to you that will boost your facilitys revenue or growth as well. They should have the tools to recognize immediate areas for opportunity within your facility as well as problem areas that require quick action, Shipley says. Its also important your management company have a seasoned, detail-oriented accounting team. You want strong oversight of all financial areas of your facility and confidence that your operation is being run by a professional, highly competent accounting group.

As with any partnership, communication is critical to ensure everyone is working toward the same goal. From the start, the owner and management company should agree on a flow of communication and stick to it, Ballard says. Moreover, owners should be on their sites looking to see if everything is according to plan. If it isnt, they should contact the management company rep and discuss a cure or path of action to take.

Ballard suggests owners meet with their management company at least monthly in the beginning. After everyone is more comfortable with reporting formats and ways to access data and provide instructions, then perhaps switch to quarterly or, as we have some long-term customers, only annually.

While a third-party management company can bring a lot to the table, operators still need to be realistic, Springer says. No third-party provider can change your results overnight. However, if the increase in revenue is not making up for the added expense and the property is not headed in the right direction, then the owner is not getting the most out of their third-party manager.

Owners should also be concerned if the management company is not delivering on its promises, whether its timely reports or completing a project on time and on budget. It really boils down to a trusting relationship with open dialogue and actions that match with what was promised initially, Rogers says. Hold the management company accountable, but keep an open mind to the realities of what can happen with the ebbs and flows of the business.

Linnea Appleby, owner of Lime Tree Management, a Florida-based self-storage management and consulting firm, suggests owners regularly review reports, and visit their own site and their competitors to make sure their rates and occupancy are in line with the market. Your site should be equal to or better than the others, she says. If its not, youre not getting the most out of your management company.

Making a Change

So what happens when a self-storage owner finds his management company is not meeting his expectations? It may be time to make a switch. The best way to make a transition to a new management company is to just move forward, Van Horn says. The new management company will most likely have a team of people to work with the former management company to attain all of the day-to-day information theyll need to move forward with the property.

Some management contracts may contain a termination clause. If so, owners will need to coordinate the transition with the new company to organize such items as payroll, accounting, management software and other essentials, Appleby suggests. Allow enough time for a smooth transition so there is as little disruption to the site as possible.

Before making a switch, however, Van Horn says owners should seriously consider why they want to make the change. Changing management companies on a regular basis can be detrimental to a property. Its very similar to a quarterback in the NFL having three or four different offensive coordinators in a four-year period. The quarterback never gets comfortable or seems stable and never seems to reach his full potential. You dont want your self-storage investment to have that type of instability.  

Speak with your current management company first to address your concerns and see if changes can be made. For example, if reports are not timely or marketing is underwhelming, ask the company what they can do to turn things around. Be very clear with your issues and goals, then see if theyre addressed, Van Horn says.

While operators should expect great things from their third-party management company, they also need to be realistic about their goals and expectations, communicate them, and be patient while the management company puts them into practice.

The management of your investment is one of the most important decisions you can make, Van Horn says. Dont settle. Make sure you hire the management company that best fits your expectations.

Strategic Storage Trust Inc., a publicly registered, non-traded real estate investment trust (REIT) investing in self-storage properties, has acquired two facilities in Georgia and South Carolina for $11.4 million. The two properties consist of approximately 1,050 storage units and 142,690 square feet. Both will be rebranded under the SmartStop Self Storage name.

These assets are an ideal fit for our growing brand and strategy, allowing for instant economies of scale for operations and future expansion in the Georgia and South Carolina markets, said H. Michael Schwartz, chairman and CEO.

The purchase is the second transaction in a three-phase acquisition of a 16-property portfolio that contains more than 1.1 million square feet and approximately 8,560 self-storage units in South Carolina, Florida and Georgia. The company purchased the first phase of this portfolio in August, which consisted of eight properties totaling approximately 3,770 self-storage units and 508,200 square feet. Strategic Storage Trust officials expect to close on the remaining six properties in the fourth quarter this year.

The Georgia facility is located at 4777 Highway 80 East in Wilmington Island. The property offers 570 units and 69,360 square feet. Wilmington Island is considered an affluent suburb of Savannah, Georgia's fifth-largest city and third-largest metropolitan area.

The South Carolina property is located at 3015 Ricks Industrial Park Drive in Myrtle Beach. The facility offers 480 units and 73,330 square feet. A coastal city, Myrtle Beach is an attractive tourist destination in the Southeast, drawing an estimated 14 million visitors each summer.

The Strategic Storage Trust portfolio of wholly-owned properties includes 102 facilities in 17 states and Canada that are branded as SmartStop Self Storage. The portfolio includes approximately 66,000 self-storage units and 8.2 million square feet of rentable storage space.

In this issue:

• Canada: Market overview, updates from the Canadian Self Storage Association, and deep-drill insight on the British Columbia real estate market
• Latin America: Market overview, updates from the Latin American Self Storage Association, exploration of regional growth, and a detailed look at the Brazilian market
• Australia/New Zealand: Market overview, operator consensus and insights on the market, and a look at large players and strategies of existing businesses
• Asia: Insight to market trends and expansion, emerging operators, cultural changes, and an interview with Michael Hagbeck, CEO of Extra Space Self Storage Singapore
• Japan: Market snapshot and an in-depth view of the "trunk-room" industry from the eyes of the largest operator of Japanese self-storage
• Middle East: Self-storage expansion and plans in the United Arab Emirates (The Box) and other countries of the region
• United Kingdom: An overview of market conditions including economic factors and performance trends
• Russia: Market overview and a discussion of the Russian market's self-storage renaissance
• South Africa: A close look at this burgeoning market and the story Giba Storage in KwaZulu-Natal province

 

Storage Village Self Storage is holding its third-annual coat drive through Oct. 31 at all five of its locations in Maryland and Virginia. Each facility is partnering with a local nonprofit organization to make sure donated garments go directly to helping community members, company officials said.

The companys North Bethesda, Md., location, for example, has partnered with A Wider Circle, a nonprofit dedicated to assisting community members rise above poverty. All coat donations will be offered through the organizations onsite store.

Storage Village looks forward to working with the community to help keep our neighbors in need warm this winter, said L. Goldberg, Storage Village president.

The companys previous coat drives have provided hundreds of garments to residents. Donated coats should be new or in gently used condition.

The drive is one of several community events Storage Village holds during the year. Next month, the company will donate more than 100 Thanksgiving meals through its annual Room for Dinner campaign.

Storage Village has four self-storage locations in Maryland and one in Virginia.

StorageMart, a self-storage company with 127 locations across the United States and Canada, has designated its New York facilities as drop-off points for items to be sold at Charity Storage auctions. The company selected Women In Need Inc., an organization that helps homeless and disadvantaged women and their families in New York City, as its local charity.

Charity Storage is a nonprofit group trying to establish a national network of participating storage facilities that serve as collection points for goods donated by tenants as well as the general public. Donated goods are stored and later sold during the facilities public auctions.

Self-storage operators that join the Charity Storage network can encourage departing tenants, current tenants, auction buyers, local residents and businesses to donate items to a designated Charity Storage unit at their facilities. Donors receive a tax-deductible receipt. When the storage facility holds a public auction, the Charity Storage unit is sold along with the other units, and any revenue earned from the sale of that unit is allocated to charity.

Net proceeds from the sale of each unit at a Charity Storage auction are split three ways. The national Self Storage Association Foundation Scholarship program receives 10 percent, and Kure It Cancer Research, a nonprofit dedicated to funding kidney and other cancer research, receives 30 percent. Each participating self-storage company chooses a local or national charity to receive the remaining 60 percent.

Partnering with Charity Storage is a perfect fit for StorageMarts vision of community support, said Sarah Little, interactive marketing director. We selected Women In Need Inc. (WIN) as our select charity for our New York self-storage properties because this organization meets a very real need in our community. We learned that 80 percent of the homeless in NYC are women and children. Once we were aware of that fact, it was no question; WIN was the group we had to support.

Stor-Age, a large self-storage operator in South Africa, announced plans to develop a $9.1 million multi-story self-storage facility in Claremont, a suburb of Cape Town. Construction is scheduled to begin this month on the seven-story, modern facility. It will feature 12,500 square meters of self-storage space and offer more than 850 units ranging in size from 3 to 30 square meters.

On the back of an exceptionally strong trading performance over the last 18 months across our portfolio and in particular at our Tokai store, we are pleased and excited to be introducing our high-quality self-storage product into the heart of Cape Towns Southern Suburbs, said Gavin Lucas, Stor-Age CEO.

The facility will be located at the intersection of Brooke and Main roads and be accessible from Cavendish Street, a busy road that leads to a popular retail center, company officials said. In addition to Claremont, the facility will serve the Southern Suburbs communities of Bishopscourt, Newlands, Rondebosch, Kenilworth and Wynberg.

Stor-Age operates nearly 20 self-storage facilities throughout South Africa, with a corporate office in Cape Town.

A memorial service for Tom Litton, owner of Litton Property Management Inc., will be held Tuesday at the Lodi Funeral Home in Lodi, Calif. Litton, a well-known speaker and consultant in the self-storage industry, died in his sleep Oct. 2.

The memorial service will begin at 1 p.m. Flowers can be sent to Lodi Funeral Home, 725 S. Fairmont Ave., Lodi, CA, 95240. Cards of condolence for Toms family can be sent to: Litton Property Management, P.O. Box 970, Woodbridge, CA, 95258.