Big Yellow Self Storage of Chester, Cheshire, England, a member of the Big Yellow Group PLC family of storage properties, launched its annual Big Yellow Christmas Toy Appeal. Donations will be accepted at the facility on Sealand Road. Staff hope to raise £10,000 worth of new toys and gifts, according to the source.

Additional supporters of the drive include CheshireLive, Chester FC Community Trust, Morrisons, Royal Mail and the Co-Op Westminster Park. “We’re still looking for more businesses, sports clubs and organizations to help promote the appeal, and it would be great to hear from anyone that would like to get involved,” said Jeff Banks, business-development manager for the Big Yellow Chester location.

To date, the facility has raised nearly £100,000 in gifts for children and family charities. Organizations that have benefited from the drives include Age UK, Countess of Chester Hospital, Local Solutions, Miles of Smiles and Save the Family Ltd.

“Every year, the goodwill of the people and businesses in and around Chester simply amazes me,” Banks said. “Every gift, no matter how big or small, is valued so much by the charities that receive them just in time for Christmas.”

Additional donation sites in Chester include Deva Stadium, Co-Op Westminster Park, Morrisons and Royal Mail.

“Putting a smile on those under privileged and sick children at Christmas is our main aim of the toy appeal, and [we] would ask anyone who can spare that extra present to donate this year, to drop it off at one of the various donation stations in the area,” Banks said.

Big Yellow Group operates 99 self-storage locations in the United Kingdom under the Big Yellow Self Storage and Armadillo Self Storage brand names, with most concentrated in Greater London and Southeast England. Its total portfolio comprises 5.7 million square feet.

Source:
Chester Live, Christmas Toy Appeal Launched by Big Yellow Self Storage in Chester

Green Storage, which operates eight self-storage facilities in Ontario, Canada, has received a “Business Excellence Award in Sustainability” from the Ajax-Pickering Board of Trade. The award was presented on Oct. 24 at the 25th Business Excellence Awards, presented by One Toronto Gaming at the Ajax Convention Centre. It recognizes local businesses for excellence, community support, leadership and sustainability as well as individual business achievements. More than 250 people attended this year’s event, according to a press release.

Green Storage properties feature a number of eco-friendly initiatives, including rooftop solar panels, cool-roof systems, electric vehicle-charging stations, insulated glass windows, low-flow plumbing fixtures, motion-sensor LED lighting and in-floor radiant heating inside the units. Its business cards are made from recycled paper, and its moving and packing supplies are created from sustainable and recycled materials. The facilities also use digital rental agreements to save on paper and offer customers the use of electronics-recycling bins. In addition, the company plants a tree for every signed lease, which led to 4,000 plantings last year.

Green Storage operates facilities in Toronto as well as Ajax, Aurora, Bolton, Keswick, Newmarket, Orillia and Hamilton, Ontario. It also has a development underway in Scarborough, Ontario.

Established in 1955, the Ajax-Pickering Board of Trade has more than 650 members and represents an array of business sectors and small-to-large organizations. The “Business Excellence Awards” were established in 1994 to recognize achievements and excellence in business performance.

Source:
Ajax-Pickering Board of Trade, Ajax-Pickering Board of Trade Celebrates 25th Business Excellence Awards

Redd Premium Self Storage in Bangkok, Thailand, will be among more than 20 sites featured as part of Bangkok Bound, an architectural showcase on Dec. 14-15. Participants will be able to tour the self-storage facility and other locations for free. Other sites include the award-winning Kloem Hostel, the Architecture Library at Chulalongkorn University, a community mall in the Bang Sue area and the Naiipa Art Complex, according to the source.

Designed by Openbox Architects in 2017, the self-storage facility at 866 Rama 9 Road was created to evoke “stacks of cardboard boxes, with a layer of transparent wrapping material,” according to Archello, an architectural website. The red façade matches the company’s brand identity, while the hue was “adjusted to give a touch of Thainess.”

In addition to self-storage, the Redd location offers valet-storage pickup and delivery service, a coffee shop, and coworking space. The facility offers 24-hour access and humidity-controlled units, according to the company website.

Organized by ArchiTracker, a mapping app designed for modern-architecture enthusiasts, Bangkok Bound is expected to have about 2,400 participants. Some venues will have guided tours led by architects, though most require advance booking, the source reported.

Sources:
Coconuts Bangkok, Take a Free Look Inside These Stunning Bangkok Buildings in December
Archello, REDD Premium Self Storage
Redd Premium Self Storage, Website

The 2017 Tax Cuts and Jobs Act has brought about major reform in the tax laws impacting self-storage operations and other commercial businesses. Couple that with the 2014 Tangible Property Regulations (TPRs), which were designed to give guidance on what an owner is required to capitalize and what he can expense, and all building owners have the ability to capture $30,000 to $80,000 in income-tax savings in the first year of ownership.

Though the new tax codes have some limits, they provide more opportunities to expense items and offer beneficial depreciation deductions. Let’s explore how to exploit the benefits of reform and lower or defer income taxes to create additional cash flow.

Maximize Expenses

The first thing you should do is apply one of the three safe harbors to your situation. These allow you to expense certain items right off the bat. They include:

• De minimis safe harbor: Your CPA will know about this. It allows most business owners to expense anything costing $2,500 or less.
• Routine maintenance safe harbor: This is one of the least used but has an incredible benefit. It allows you to expense a repair to a building if you reasonably expect to replace it within a 10-year timeframe. How does that apply? Think about carpeting, cabinetry and painting, for example.
• Small taxpayer safe harbor: This is a bit complicated but worth looking into if your facility has multiple buildings.

Second, identify the value of building systems and structural components. The tax codes give very specific guidelines on whether expenditures should be capitalized as an “improvement” or expensed as a “repair.”

For example, let’s say you have an HVAC system worth $100,000. It includes the interior and exterior HVAC units, ductwork, wiring, etc. One of these units goes bad and must be replaced. You can spend up to $35,000 fixing it and still expense the dollar amount because that building system was already defined. If you spend $40,000, you’d have to capitalize the expenditure as an improvement. How would you know this without a building-systems definition? A reputable cost-segregation firm can provide this for you.

The new regulations also allow building owners to “look back” and expense large deductions in the current year by applying the regulations to prior years. Best of all, none of these strategies require an amended return.

Explore Cost Segregation and Accelerated Depreciation

Once you maximize your expenses, it’s time to consider how depreciation can help you save on or defer taxes. The U.S. tax code allows owners to depreciate their property in two ways.

Straight-line depreciation slowly depreciates the whole building over 39 years. It basically allows commercial building owners 1/39th of the cost of the building to offset income every year for 39 years.

To break a building into various parts and accelerate depreciation into shorter tax lives (most commonly five, seven and 15 years), you need an engineering-based, cost-segregation study. This creates a larger amount of depreciation in the first five years of ownership that offsets business revenue and immediately lowers income taxes. Tax reform gives you the ability to capture all of this savings in the first year of ownership. You’re looking at $30,000 to $80,000 in additional cash flow per $1 million in building costs, which you can use to gain interest and invest back into your business.

In the case of new construction or additions, a cost-segregation study will identify items that qualify for Section 179 and 100 percent bonus depreciation, allowing for a significant amount of extra depreciation. In other words, rather than spread depreciation over multiple years, deductions are all available in the first year of ownership. This allows an owner to take anywhere from 20 percent to 40 percent of the value of a building as a deduction in that first year.

Self-storage buildings can particularly benefit from cost segregation and bonus depreciation. Items like interior doors, moveable wall partitions, security systems, specialty lighting, landscaping and paving are all items that can be accelerated.

Use Partial Asset Disposition

If you’ve renovated or remodeled in 2019, a partial asset disposition (PAD) allows you to write down the basis of assets that were removed as well as the labor costs to remove and dispose of them. Typically, owners capitalize an entire renovation when some portion of the project can often be expensed.

A PAD allows you to receive a tax deduction in the same tax year as the renovation, but it’s a “use it or lose it” opportunity. If you fail to capture a PAD in the current tax year, the opportunity is lost forever. This is a true tax savings and not a deferment, as it results in a tax savings at the time of sale.

Getting Help

A reputable cost-segregation company, teamed with a well-informed certified public accountant (CPA), can make navigating compliance issues and maximizing deductions relatively easy for you. The right firm will perform a site survey of each building, back up its work with proper documentation and defend the work at no cost to the client should an audit ever occur. A good firm will also work closely with your CPA or tax preparer to maximize deductions while helping you maintain compliance with current tax codes. Honestly, informed building owners have used these strategies for years, but now you can, too.

Warren Dazzio is executive vice president of Cost Segregation Services Inc., an engineering-based consulting firm specializing in the U.S. tax code as well as cost-segregation and R&D studies in the United States. He has extensive knowledge of operations, sales and business development in multiple industries. For more information, call 225.241.9823, e-mail [email protected]; visit www.cssistudy.com.

How do you determine compensation for your self-storage employees, especially your facility and district managers? The saying “You get what you pay for” is true when it comes to staffing.

If you have a solid team with low turnover and are already hitting company goals, you likely know how to attract and retain good people. Congratulations! If that isn’t the case, you may want to reconsider your compensation package and retention plan. Here are some tips to help you do things more successfully.

Offer a Competitive Salary

Many companies go about setting salaries the wrong way, especially if it’s for a new position or one that’s been plagued by turnover. Before determining salary for a position, create a list of the skills and experience you need. Find candidates who match those requirements, have stable career histories and a list of accomplishments. Then, create a compensation package that includes a competitive base salary and bonus program to attract those contenders.

Will you have to stretch beyond what you’ve paid in the past? Maybe. Will finding someone who can achieve your goals, who doesn’t change jobs every year, save or make you money? Absolutely.

Let me share a story. There once was a woman who was relocating and used the services of a gated self-storage facility. One sunny afternoon, she was organizing items in her indoor, climate-controlled unit. When she went out to get some things from her vehicle, she saw it speeding around the corner, driven by a man with a bandana over his face!

The facility manager, who lived onsite, said he had noticed a bunch of unfamiliar people on the property at night. But he didn’t do anything about it. After some investigating, it was discovered those visitors were using a tenant’s code to get through the gate. A little proactivity could have prevented the incident.

So, ask yourself: Is it worth spending a few extra dollars every month to have a good employee, one who pays attention to what happens on the property and cares about tenant safety? (I really miss that Jeep of mine, by the way.)

If you must stretch from a compensation standpoint, get creative so you don’t exceed your budget. For example, a strong property manager could oversee two sites with dependable assistants at each. A talented district manager could handle 10 locations instead of six. The focus should always be on maintaining a solid core team. Competitive salaries not only attract good employees, they keep them.

Provide Bonuses

Bonus programs are vital to successful staffing, and they must be measurable. Employees should know what they need to accomplish to earn a bonus and what the reward will be. Nobody likes “discretionary” bonuses. The word means “optional” and that’s what employees hear … They may or may not get a bonus and, if they do, they have no idea how much. Would that make you work harder?

Here are a few considerations for your bonus plan:

• Think about what you’d be willing to pay. If an employee achieves X, you’d be happy to pay Y.
• Bonuses are typically based on monthly, quarterly and annual goals and paid out on a matching schedule.
• Consider setting a standard goal and a stretch goal. Perhaps you can create a formula based on sales percentages.
• Other incentives, especially at the site-manager level, might include contests offering smaller rewards such as restaurant gift certificates or an extra day of vacation time.
• You don’t need to wait until employees hit goals before you recognize them. If you have someone who’s dedicated, hard-working and performing well, hand him a thank-you card containing $50 or $100. That kind of appreciation goes a long way!

Offer Benefits

Benefits are important and can serve as a great enticement or retention tool for top talent. It’s common for large companies pay a portion of the employee’s premium for medical insurance, though the days of employers paying 100 percent for plans are long gone. Some offer a 401K retirement plan with some type of matching. Other benefits might include:

• Company-paid life and disability insurance
• Stock or equity options
• Company vehicle or car allowance
• Educational reimbursement
• Paid vacation
• Flex time
• Apartment or housing discount

Every self-storage operation is different. You might not be able to offer all or even most of these things, but be aware of what competing companies provide. If you expect to attract the best employees, these benefits will factor into the equation.

Support Your Staff

The work environment you create is important when it comes to attracting and retaining staff. Provide the tools they need to succeed. A manager can’t fix a deteriorating property if the owner won’t invest in capital improvements. Employees can’t market the property to increase revenue if the owner won’t spend on advertising campaigns.

Take care of good employees. Reward, recognize and promote them. Pay competitive salaries and provide them with opportunities to advance. Be personable and encouraging. Be a great leader and gain respect. Create a culture in which people can thrive, where they enjoy what they do. In return, your team will meet or even exceed your goals. Be the company about which everyone says, “Wow, I’d love to work there. They treat their employees so well!”

Lisa Pyle, a partner at Real8 Group LLC, has more than 20 years of experience in executive search within the real estate industry. She’s been working with self-storage clients for several years, placing talented mid- and senior-level executives in the areas of property and asset management, development, construction, and finance and accounting. To reach her, call 865.224.8900, ext. 103; e-mail [email protected]; visit www.real8group.com.

Westport Properties Inc. (WPI), which operates more than 120 self-storage facilities under the US Storage Centers brand, is partnering with national nonprofit Move For Hunger to collect nonperishable food for families in need this Thanksgiving. The storage operator will accept donations through Nov. 18 at 20 select properties in Arizona, California, Colorado, Florida, Nevada, Massachusetts, Minnesota, Philadelphia, Tennessee and Texas, according to a press release.

All food donations will benefit local food banks. Suggested donations include common holiday fare such as canned pumpkin, vegetables and yams; cornbread and stuffing mix; cranberry sauce; gravy; chicken stock; and instant mashed potatoes.

Move For Hunger is a 501(c)3 nonprofit that works with relocation companies to collect unwanted, nonperishable food from those who are moving and deliver it to local food banks. The organization also organizes community food drives, participates in awareness campaigns and creates employee-engagement programs.

Founded in 1985 and based in Irvine, Calif., WPI is a real estate investment company that acquires, develops and operates self-storage facilities and provides third-party management services. Its portfolio comprises more than 9 million rentable square feet in 15 states.

Update 11/14/19 – Rosemurgy Properties and Sentry Self Storage completed construction on the partnership’s Hollywood facility, holding a grand-opening even on Nov. 7. The design by Kenneth Carlson Architects includes a two-story glass storefront. The property features covered parking and loading zones, multiple freight elevators, and zoned keycode access for customers, according to a press release.

“With the growth of the local area and the downsizing of both rental and for-sale living units that East Hollywood and Fort Lauderdale are experiencing, the need for storage space is increasing,” Rosemurgy said. “Sentry Self Storage-Hollywood is located in a prime location for these markets. As these areas continue to grow and businesses expand, commercial storage needs will continue to increase accordingly.”

“We were ecstatic to partner again with Rosemurgy Properties to bring this beautiful project to the city of Hollywood,” added Norman Schulman, CEO of Sentry. “We wanted to create a consumer-friendly, secure self-storage facility with all the modern conveniences that make it easy for customers to move and store their belongings, and that’s exactly what we built. The Carlson design team worked closely with us to create this modern and architecturally beautiful building in this growing Hollywood market.”

10/3/18 – Rosemurgy Properties and Sentry Self Storage received a $10.4 million construction loan for their self-storage development project in Hollywood, Fla. The lender is BB&T Corp., a bank-holding company based in Winston-Salem, N.C. The partners paid $885,000 for the 32,200-square-foot lot in 2016, according to the source.

Once complete, the facility will contain 870 climate-controlled units.

4/6/18 – Rosemurgy Properties and Sentry Self Storage have completed their conversion project in Deerfield Beach, Fla. The two-story site contains 726 units. Features include three freight elevators, a double-bay loading dock and controlled gate access. 

The companies also broke ground on the new development in Hollywood, Fla. Slated to open in summer 2019, it’ll be built by DC Construction Associates Inc. of Boca Raton, Fla., according to a press release.

“Exciting growth is occurring in both cities, which is creating a strong demand for these projects,” Rosemurgy said.

5/4/18 – Rosemurgy Properties, a privately owned commercial real estate development, investment and management firm, and Sentry Self Storage LC, an industry consulting and management firm, are developing two new facilities in Florida. One will be a newly built property while the other is a conversion of an existing structure.

The partnership purchased a .78-acre site at 2060 Coolidge St. in Hollywood, Fla., to build Sentry Self Storage-Hollywood. The five-story facility will comprise 121,000 square feet of climate-controlled space. The project will break ground in the fall, with completion slated for summer 2018.

The partnership also acquired and plans to convert the 3.2-acre site at 545 S. Federal Highway in Deerfield Beach, Fla., to Sentry Self Storage-Deerfield Beach. Expected to be finished this summer, the facility will comprise 93,163 square feet of climate-controlled space.

Kenneth Carlson - Architect P. A. of Deerfield Beach is designing the new facility. The firm is also working in conjunction with Gallo Herbert Architects, also of Deerfield Beach, on the conversion project.

“We are excited to partner once again with Sentry Self Storage and bring two best-in-class developments to Broward County,” said Alex Rosemurgy, CEO of Rosemurgy Properties. “We are looking forward to adding these locations to our existing portfolio.”

Established in 1977 and headquartered in Deerfield Beach, Rosemurgy Properties’ portfolio includes multi-family, office, retail, self-storage and undeveloped land with the focus of a long-term diversified investment strategy. The company, which includes construction and property-management services, continues to expand its portfolio through acquisition and development.

Based in Coral Springs, Fla., Sentry Self Storage manages more than 30 properties in several states, and works with 14 ownership groups.

Source:

The Real Deal, Rosemurgy, Sentry Score Financing for New Hollywood Self-Storage Facility

If you already own and operate a self-storage facility, you know it’s important to have a written financial plan for the business. There are many resources out there designed to help you create an annual operating budget. But what about an underperforming property you’ve acquired (or intend to acquire) and improve?

Ideally, you want to turn this facility around and increase profitability. Already, industry brokers have begun pricing properties in this seller’s market based on how they should function, rather than how they are already functioning. Your task, as an owner or investor, is to determine if these often-overzealous calculations are obtainable. This will take research on your part, and a pro forma budget.

The days of bargain hunting for self-storage may be behind us, but there are still some very lucrative deals available. Even in the competitive real estate market of the last four years or so, I’ve witnessed instances in which new ownership of a “mature” property experienced year-over-year revenue growth as high as 65 percent. That’s a rare find, of course. My company’s acquisitions during this span have averaged approximately 20 percent first-year growth, which is a more reachable target. Let’s look at how to create an accurate operating budget that can help you achieve similar success with an underperforming property.

Expenses

With an acquisition, chances are there’s a financial history from the previous owner. To begin, focus on expenses. Look for areas where you might be able to “trim the fat.” Assuming you aren’t using third-party management, you may not have the advantage of economy of scale, but there may be other opportunities where you can reduce costs. Give every line item a thorough examination. What you find may surprise you.

I’ve seen storage businesses that have operated for years using their local bank for credit card processing, paying more than 3 percent per transaction when they should be paying less than 2 percent. This may sound minimal, but with $500,000 in processing annually, a 1 percent savings is $5,000. Don’t leave that money on the table! When you add that amount to your net operating income, it’s worth about $75,000 in property value at today’s capitalization rates!

Look for expenses that can be eliminated. I recently took over a property that was leasing a copier. A one-time purchase of a $300 copier eliminated that monthly expense. Do you really need that fax line that’s costing an extra $30 per month? Perhaps you do, but it is the 21st century, and your business may do fine without it. Gather bids on things like waste removal and landscape maintenance. You might find unrealized savings on any item.

After looking for places where you might be able to reduce, look at those in which expenses may actually increase. The property has been underperforming, which is why you want it, right? Well, it’s underperforming for a reason, and you have to figure out how to change that trajectory. You may need to consider upgrades to facility marketing, curb appeal or community involvement. The property may require a remodel.

Righting the ship may involve an injection of capital, so it’s important to plan and figure out a schedule. Perhaps you’ll initially want to focus on cleaning up the rent roll, and then look at making capital improvements beginning at the six-month mark. Can you make the necessary upgrades out of operating capital, or will you need to have a cash call? Your budget will give you a good indication of how you’ll move forward.

Revenue

To make that determination, look at the revenue side of the budget. There are two major factors that go into calculating monthly revenue: actual dollars per square foot ($/PSF) and occupancy. There are also secondary revenue streams to consider, but we’ll examine those later.

If an undermanaged property averages 20 rentals per month, can you expect at least a 25 percent increase behind an aggressive, new marketing plan? If so, look new rentals over the past 12 months and increase those numbers 25 percent by way of projection. Be cautious, though. Are there delinquencies to be cleaned up? You might actually see an occupancy drop during the first three months while you trim the dead weight, which could offset planned net gains.

Also, calculate rental increases. If the property is renting at $.80/PSF and your goal is to take it to $1.10/PSF, this will need to be done incrementally. After examining the facility, you’ll determine how aggressive you can be. You may decide you’ll be happy with taking your $/PSF up to $.90 in the first 12 months. That means each month, your projected rental revenue should increase $.083.

Let’s assume you plan raise rent on 300 units. Dividing that number by 12 months means you should average 25 increases each month. Next, determine what your average percentage will be. Let’s say that during your first year, you’re going to be fairly aggressive with a 12 percent increase. Assign a dollar amount to that 12 percent to determine the overall effect it will have on your $/PSF.

Keep in mind this is an aggressive increase, so there will be some churn. If the churn rate for the previous year was 6 percent per month and you know you’re going to be aggressive with 12 percent rent increases, you may need to increase that churn to 10 percent or more in your budget projection. Are you prepared for the possibility of losing that many paying customers? This all needs to be calculated into your monthly numbers.

Market Factors

There are also seasonal factors to consider. What does the history of the property tell you? If there was a 10 percent churn last August, can you expect that to repeat next August, right before school starts? This is where market knowledge is critical. Do you get a lot of college rentals? Is there a troop deployment returning home? Is the new subdivision nearby selling its final phase? Look for things that can have a negative impact on occupancy and factor those into your planning.

Finally, look at secondary revenue streams. Are you increasing the facility late-fee structure? Will you be adding ancillary product and services such as tenant insurance, merchandise sales or truck rentals? If so, these will need to be added as new line items for revenue and accurately calculated into your expectations.

Creating a budget for an underperforming property can be challenging, but by setting realistic and obtainable metrics, a previously mismanaged self-storage facility can soon be on the right track to produce the revenue it should.

Monty Rainey is owner of RPM Storage Management LLC, a Texas-based third-party management company that performs self-storage feasibility studies, due diligence, staff hiring and training, and more. Prior to launching RPM in 2014, Monty served as a district manager for a self-storage real estate investment trust and property-management firm. In his career, he’s led the successful management of more than 100 properties in Colorado, Oklahoma and Texas. For more information, call 830.832.9496; visit www.rpmstoragemanagement.com.