Metro Storage LLC, which operates more than 90 self-storage locations in 11 states, has acquired a former electronics store in Springfield, N.J., a suburb of New York City, which it plans to convert to a Metro Self Storage facility. It will be one of the newer projects constructed in the area during the past 10 years, according to a company press release.

Slated to open in the fourth quarter of 2015, the property at 22 Route 22 will include 85,000 rentable square feet of climate-controlled storage space and 900 interior units. The conversion will involve raising the roof on one section of the building to add a second story; creating a two-floor mezzanine in another section of the building; and converting the remaining portion to single-story storage, the release stated. Property highlights will include security, two sets of elevators, four drive-in loading bays and a large business office.

“The Springfield site will be the sixth Metro store in the New York/New Jersey market,” said Matthew Nagel, chairman. “We’re looking forward to expanding our brand in that area.”

Metro Storage has purchased several properties in the past year for self-storage conversion projects. The company recently opened a self-storage conversion project in Bannockburn, Ill. The facility includes 383 interior, climate-controlled units. Two additional buildings are under construction and scheduled to be complete in February.

Headquartered in Lake Forest, Ill., Metro Storage is a privately owned, fully integrated real estate operating company specializing in the development, acquisition and management of self-storage facilities nationwide.

Real estate investment trust Sovran Self Storage Inc. announced details of its recent financing arrangement totaling $625 million in senior, unsecured debt. As part of the deal, the company’s revolving credit limit increased from $175 million to $300 million, and the maturity date was extended to Dec. 10, 2019. The interest rate on the revolving credit facility was reduced from 1.5 percent to 1.3 percent over LIBOR based on the company’s current investment-grade credit rating of BBB-. The facility fee was unchanged at 0.20 percent.

The arrangement also reduced the interest rate on the company’s $325 million term notes from 1.65 percent to 1.4 percent over LIBOR. The maturity date remains June 4, 2020. The agreement provides the company an option to increase the facility by another $225 million.

“The continued support from our bank group has further strengthened our already solid credit profile,” said Andrew Gregoire, chief financial operator. “The increased capacity provided on our line of credit and the improved pricing will allow us to continue to execute on our growth plan. In addition, it provides Sovran with a path toward the public-debt market.”

Nine lenders participated in the syndication. Wells Fargo Securities and M&T Bank were joint lead arrangers and bookrunners in the transactions. Wells Fargo Bank served as syndication agent. HSBC Bank USA, PNC Bank, SunTrust Banks and U.S. Bank each served as co-documentation agents.

Sovran has interest-rate swap agreements to effectively convert the $325 million of variable-rate, bank-term notes to fixed-rate debt. The company didn’t enter into any new interest-rate swap agreements in conjunction with the amended facilities, and all existing-swap arrangements remain in place.

Sovran operates more than 500 facilities in 25 states under the Uncle Bob's Self Storage brand name.

 

By Ted Dobbs

In the world of self-storage, problems can arise that are beyond the control of facility owners and their tenants. Fire, wind and water are just a few of the things that can damage a property and the goods inside its units. While these may be natural calamities, tenants often blame facility operators for the loss.

It’s a good idea to think about how you’ll resolve these disputes with tenants before they occur. A tenant-insurance or property-protection plan can make a huge difference for you and your customers in the event of a claim. By having a program in place, you’ll have a methodology for solving tenant disputes or problems.

The Benefits

Tenant insurance and protection programs insulate a self-storage owner from legal liability. They emphasize existing rental-agreement terms, which require tenants to insure or protect their own belongings. Although many renters believe their goods will be protected by their homeowner’s insurance policy, sometimes they’re not or the coverage is inadequate.

Having a program in place will also allow for a more collaborative discussion between tenants and self-storage staff when there’s a loss. In this day of social media, when customers can comment instantly on a business and reach a wide audience, it’s important for a storage facility to have good customer relations with quick and easy dispute resolution.

Finally, insurance programs can provide an additional revenue stream for self-storage owners and a potential bonus program for facility managers.

Tenant Participation

There are many ways to get your tenants to participate in your insurance or protection plan. Owners often design and implement their particular programs to mirror their company culture, demographics and employee caliber.

An effective approach many have adopted is to include verbiage in the rental agreement requiring tenants to “insure or protect their own belongings” and provide evidence of “financial responsibility” in the form of a renter’s or homeowner’s policy declarations page, or coverage by some other means. Tenants who can’t meet this standard can then be encouraged to sign up for the facility’s plan to fulfill the lease requirement.

In addition to telling tenants about the program during the rental process, post information on your website and around your facility. When introducing a new tenant-insurance or protection plan, send an e-mail or letter to all existing tenants explaining the benefits and encouraging them to talk with the property manager about signing up.

If your storage business doesn’t offer a tenant-insurance or property-protection program, now’s the time to add one. Research the plans available to determine which will best fit the needs of your operation and tenants. Help your customers be proactive in safeguarding their belongings and protect your business with a quality insurance or protection plan.

Ted Dobbs is an underwriter and protection-program salesperson for Deans & Homer, which offers programs specifically for the protection of self-storage owners and their customers. Offerings include a package policy to protect the facility, direct mail-in tenant insurance and tenant-protection programs. For more information, visit www.deanshomer.com.

Several self-storage management companies have released operating results for the third-quarter ending Sept. 30. All showed improvements in same-store revenue over the third quarter in 2013.

Absolute Storage Management (ASM) released its third-quarter 2014 operational results as well as year-to-date results through Sept. 30 for its 80 properties. Same-store revenue increased 8.6 percent for the third quarter and was 9.7 percent higher behind occupancy gains of 5.7 percent for the year-to-date. Concessions were 13.8 percent lower in 2014 compared to the previous year.

 “Operating results remained solid across most of our markets. Concessions have been declining throughout the year, while asking rents are nearly 4 percent higher,” said Michael Haugh, president. “Year-over-year revenue growth, however, appears to be slowing. The growth rate is trending down as occupancies reach all-time highs.”

Storage Investment Management Inc. (SIMI) reported results for the 28 self-storage properties it manages. Collectively, the facilities averaged an increase in same-store sales of nearly 6 percent during the quarter compared to the same period in 2013. Net operating income (NOI) for the period increased by 11.1 percent over the third quarter in 2013. The company attributes the surge to rent increases and steady occupancy, according to a press release.

Same-store revenue increased 7.6 percent year over year for the properties managed by Southeast Management Co. The increase was 7.8 percent higher, along with occupancy gains of 2 percent, according to a press release. The company’s NOI also showed a year-over-year increase of 13.1 percent year-to-date.

Founded in 2002, ASM owns and manages self-storage facilities throughout the Southeast. The company is actively seeking to add additional properties to its portfolio through traditional third-party management relationships and joint-venture/acquisition opportunities. Headquartered in Memphis, Tenn., it has regional offices in Atlanta; Charlotte, N.C.; and Jackson, Miss.

Based in Virginia, Southeast Management has a regional office in North Carolina. The company manages and owns self-storage facilities in Florida, North and South Carolina, and Virginia.

Headquartered in New York, SIMI is led by principals Charlie Fritts, president, and David Inman, chief operating officer, who have a combined 75 years of self-storage industry experience. The company manages facilities in Connecticut, Maine, Massachusetts, New Jersey, New York, Pennsylvania and Rhode Island.

 

Update: 12/15/2014 − The proposed self-storage development, estimated to cost about $10 million, is also being backed by the board of directors of the Coliseum Central Business Improvement District (BID), a special service-taxing district authorized under Virginia Commonwealth Law. Board members said the storage development would help "underserved" markets, the source reported.

"The proposed development will transform a blighted, abandoned parcel into an aesthetically pleasing and unique use within Coliseum Central," the board said.

The city's community plan calls for mixed-use development for the land. The Coliseum Central master plan states the property should "create dense, connected and pedestrian-friendly activity centers" in the area, according to the source.

Steve Romine, a Norfolk, Va.-based attorney representing the developer, told the planning commission during the Dec. 4 meeting the storage facility would be a “high-quality, urban-design-type building.” Romine said possible property uses that wouldn’t require a zoning change include a detention facility, massage parlor, tattoo parlor and Turkish bath. The facility’s size would rival that of a nearby single-story, 183,000-square-foot Walmart, the source reported.

The Coliseum Central BID encompasses more than 1,900 commercial acres and represents more than 700 Hampton, Va., property owners and businesses.

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12/5/14 − A proposed self-storage development in Hampton, Va., is one step closer to approval despite opposition from the city’s planning staff. Planning commission members voted 5-1 on Dec. 4 to recommend the council approve the storage development.

The city's planning staff asked the commission to deny the application from Michael D. Sifen Inc. to rezone the property at 1975 Cunningham Drive, which formerly housed a restaurant and club. They said changing the zoning would allow development that’s too dense for the area, the source reported. The city council will review the proposal at a future meeting.

The project includes a four-story, 135,000-square-foot storage facility with 900 units. It will have 27 parking spaces as well as 1,000 square feet of retail space. The facility will have three employees and be open from 6 a.m. to 10 p.m.

OpenTech Alliance Inc., a Phoenix-based provider of self-storage kiosks, call-center services and other technology, has partnered with Storage Door Curtains (SDC), the manufacturer of Weatherized Door Curtains for self-storage roll-up doors, to create a new energy-management tool accessible through a storage facility’s management software. The companies will securely integrate SDC’s door-curtain monitoring software with OpenTech’s INSOMNIAC Self Storage Network, allowing self-storage operators to access real-time data about energy lost through individual storage units.

The door curtains create an eight-layer, airtight, waterproof barrier at the unit-door opening, according to a press release. The integration of the door-curtain monitoring software, which reads built-in sensors in the curtains to measure energy loss, with OpenTech’s open application program interface, or OpenAPI, will allow self-storage operators to monitor daily energy loss when tenants leave door curtains open on climate-controlled units.

Company officials believe the monitoring capability will enable operators to assess daily energy-loss fees on tenants who fail to properly close their door curtains. "There are a vast number of operators who want to better control the temperature on exterior units,” said James Ciaciuch, CEO of SDC. “We needed a way to configure our software with individual self-storage units to monitor proper door-curtain closings to save energy and assess energy-loss fees. The partnership with OpenTech will allow us to simultaneously reduce the amount of energy lost or wasted and give self-storage owners a substantial source of new monthly income."

"We are excited to be working with such an innovative company. James and his team are forward thinkers, and the investment they have made in developing this new and valuable product is impressive,” added Robert Chiti, president and CEO at OpenTech. “We have a real soft spot for entrepreneurs like James and are happy to be partnering with him to bring a new revenue stream to self-storage operators."

Based in Port Angeles, Wash., SDC is a division of Temperature Retention Systems Inc., a manufacturer and distributor of temperature-retention systems for several industries, including self-storage. The company’s products include weather curtains, storage blankets and monitoring software.

OpenTech provides several models of INSOMNIAC self-serve kiosks as well as a range of self-storage rental solutions including the INSOMNIAC Live! Call Center, INSOMNIAC Online Web and mobile applications, LiveAgent! software products, and the INSOMNIAC ILock Security System, all available through the company's Self-Storage Cloud.

Brazil self-storage developer Diepholz Participacoes Ltda. is converting a former nightclub to a storage facility in Porto Alegrae, Brazil, according to David Blum, president of Better Management Systems LLC (BMS), a U.S.-based consultant assisting on the project. The facility will be branded as Anexxo and is scheduled to open in the second quarter of 2015.

Alexandre Logemann, director of Diepholz Participacoes, has been working with Blum on the project, according to a press release. "It has been both exciting and rewarding to be working on bringing first-class, American-style self-storage projects to countries and markets new to our industry,” said Blum, who has worked with storage developers in several countries. “Taking what we know and love here and adapting to different cultures worldwide has allowed me to see the world and do what I love. Anexxo will be the second self-storage project in Porto Alegre, but clearly a step above what is now available."

Blum has consulted with first-time self-storage investors and developers for 18 years, including more than 10 years in Latin America. BMS has worked on projects throughout Central America, Europe, the Middle East and South America. Founded in 2003, the company assists with self-storage feasibility, development and management.

Great Value Storage (GVS), a self-storage operator with 46 facilities in six states, partnered with Charity Storage, a nonprofit organization that raises money for charities through self-storage auctions, to host an online auction on Dec. 12. The event benefited several charities including the American Red Cross, Habitat for Humanity and St. Jude Children’s Research Hospital.

The auctioned units were from the operator’s Houston property at 8320 Alabonson Road. Participants were able to place bids until the auction closed at 2 p.m. CST. Sold items included a dresser, kitchen table, kitchenware, microfiber couches and a mini fridge, according to a GVS press release.

“The decision to donate our most valuable abandoned units to charity reiterates the holiday spirit of giving,” said Natasha Orona, Great Value’s regional manager for the Houston area.

Charity Storage has distributed more than $140,000 to various organizations since its inception, according to the release. “It is an honor to join forces [with Charity Storage] to give back to the community,” said Randy Weissman, vice president of operations for Great Value.

GVS is a family-owned business that owns and operates storage facilities in Indiana, Missouri, Nevada, Ohio, Tennessee and Texas. The company’s portfolio encompasses more than 2.9 million square feet of storage space in 22,000 units. GVS is a wholly owned and operated subsidiary of World Class Capital Group LLC, a national real estate investment firm based in Austin, Texas. The company’s portfolio includes investments in industrial, land, multi-family, office, retail and self-storage.

By Paulina Pineda

Nearly three months after an earthquake hit, Napa Self Storage in Napa, Calif., was still recovering from severe damage to three of its buildings, which forced the operator to restrict tenant access to some units. The Aug. 24 earthquake led city inspectors to yellow-tag two buildings and red-tag another. According to media reports, the 6.0-magnitude quake was the strongest in the region in 25 years.

In 2014, there have been several fires, floods and other natural disasters that have caused thousands of dollars in damage to self-storage facilities around the world. While owners can’t prevent these events, they can prepare themselves and their management team on the steps to take when something unexpected happens.

I recently asked operators for their advice on handling a crisis, including how to communicate and assist their tenants, interact with members of the media, and ensure adequate insurance coverage. They also shared their tips on how to create an effective disaster plan.

A Property in Crisis

Although it’s been several months since the Northern California earthquake, Napa Self Storage is still reeling from its effects. The property’s two yellow-tagged buildings suffered moderate damage and will need to be evaluated and stabilized. Both are still in use by existing tenants, but the operator can’t rent units to new customers. Building 900, the newest and largest on the property, is a two-story structure housing 230 units. It suffered the most damage. No one can enter the building, as it’s in danger of collapse.

“We had engineers come down, and it was so bad that some of [them] didn’t even want to touch the project or go inside,” says Miranda Evans, spokeswoman with RMB Management Co., the property-management firm that co-owns the facility. “Everybody says it needs to come down.”

Since the building can’t be saved, RMB has refocused its efforts on retrieving tenants’ property from inside.

RMB consulted various engineering teams on the most effective way to salvage the items. One firm said it would use scaffolding on the outside of the building to access the second-story units while dismantling the building piece by piece, but that could cause the second floor to collapse onto the first. Bids for the project carried an almost $300,000 price tag, Evans says.

Another firm devised a plan to shore up the building by installing braces along the exterior walls. This would allow engineers to install scaffolding on the interior of the first floor and bolster the second. The team would then be able to enter the building and recover items from the first-floor units, Evans explains.

The plan requires the approval of the adjacent property owner, who hasn’t responded to RMB’s request. Though possibly less expensive than the first plan, it would cost about $40,000 to brace the outside of the building, another $40,000 to support the inside, then another $75,000 for the demolition. Even if the plan is approved, the company will still need to find funding.

Construction costs aside, RMB was concerned about when and how to notify tenants. “It looked bad, but we didn’t know it would have to be demolished,” Evans says. “At that point, what do we tell tenants?” The company sent written communication weeks after the earthquake, and the delay upset customers. Rumors were rampant that RMB planned to demolish the building with everyone’s belongings inside.

“That was never our intention,” Evan says. “At this point, we would’ve done it a bit different, maybe notified them earlier that there was no access to the building. [But there was] nothing we could’ve done to make everybody happy.”

Many tenants believe RMB should be responsible for the damage. Some are threatening to sue because they perceive they’re being locked out of their units, Evan says. “We understand the tenants are in a bad situation. We’re in a bad situation, too. A lot of the tenants don’t understand that we’re trying to come up with a solution.”

Action Plan

To avoid a situation such as the one faced by RMB, facility operators should have a disaster plan in place. Pacific Highway Storage in San Diego recently participated in the state’s Great Shakeout Earthquake Drill to assess how the facility would handle an earthquake, says Kris Fetter, the administration-rental associate at the property. The drill helped her discover they were “woefully unprepared.” “It was a wakeup call,” she says.

In response, the facility has implemented a crisis-action plan. In case of an emergency, Fetter will notify tenants immediately. “Storage is like any other customer-service-related business,” she says. “You have to be sensitive to the customers’ needs in a time of crisis.”

Nick Lackner, founder and general manager at City Center Self Storage in Pittsburgh, says his facility is prepared for a natural disaster, even though it’s never experienced one. His advice to other operators is to imagine the worst-case scenario and devise a plan around it. Look at catastrophes that have affected other facilities and determine how you would handle something similar.

An operator’s No. 1 priority during a calamity is to make sure employees and customers are safe and provide medical attention if needed, Lackner says. From there, work backward. Managers should contact their district manager, management company or facility owner, secure the property, document everything, take pictures and pull video surveillance if necessary.

Now that City Center Self Storage is out of the start-up phase, one of its main priorities is reducing risks, Lackner says. Having adequate insurance coverage as well as requiring tenants to carry some form of tenant insurance is the best route, he adds.

Media Inquiries

When a catastrophe occurs, media crews will seek people for interviews. A self-storage operator in the middle of a crisis might find himself woefully unprepared to respond when staring at a microphone and video camera. As such, it’s advisable to have procedures for how managers should respond to media inquiries.

First, designate a spokesperson to represent the property and speak with media outlets. Having a single point person ensures your response to the event is consistent. If the manager needs to defer inquiries to ownership, a district manager or the management company, provide around-the-clock contact information. If the manager will act as the spokesperson, create written guidelines on what information should and shouldn’t be shared with reporters.

Of course, a verbal or written “no comment” statement can be issued in any situation, or you can simply downplay an event. “If it’s negative, try and find a way to make it a non-story,” Lackner says. “You only have so much control over that; but if someone calls, you want to make it as uninteresting as possible.”

Insurance Considerations

Once the dust settles, operators are charged with the clean-up, literally and figuratively. In addition to addressing tenant concerns and handling reporters, they must determine how to get the property back up and running. This is one area where an owner’s insurance policies come into play.

Although Napa Self Storage has property insurance, it didn’t have an earthquake-insurance policy. The insurance company denied RMB’s loss-of-income claim because it attributed property damage and loss of income to the earthquake, Evans says. “Even if we had earthquake insurance, it wouldn’t have covered everything.”

However, not having any insurance at all can be even more disastrous. Keith McConnell, vice president of business development, and Chris Nelson, the underwriting supervisor for new business, for MiniCo Insurance Agency LLC, a provider of specialty-insurance programs for self-storage businesses in Canada and the United States, agree insurance is a crucial part of crisis management and disaster planning. A self-storage owner should have general liability, property and workers’ compensation insurance in addition to several other policies that are unique to the storage industry.

One special coverage is customer goods legal liability, which provides coverage against loss or damage to a tenants’ personal property. Another is sale and disposal liability, which covers claims against the facility in case of a lockout, sale, removal or disposal of a tenants’ property. This policy includes defense against allegations, Nelson says.

Self-storage owners should also require or provide some type of tenant insurance to their customers, McConnell advises. Facilities whose customers are insured are much less likely to face demands or requests for compensation, he says. Many of the bigger self-storage chains now require some form of tenant insurance, and the trend is moving in that direction for mom-and-pop operations as well, McConnell says.

The Bottom Line

In the event of a disaster, secure the premises and do whatever you can to prevent further damage. Then contact your insurance agent and provide the following information:

• Location of the loss
• Description of the loss
• Contact information
• Incident numbers, if the event was reported to the police or fire department
• Contact information for anyone who was involved in or witnessed the incident

Frequently review your insurance policy to ensure your facility has adequate coverage, especially if any buildings or new services have been added to the existing site, Nelson says. “You don’t want to wait until a claim occurs to find out that there was no coverage for something.”

Paulina Pineda is a senior journalism major at Arizona State University (ASU) in Phoenix. Her emphasis is print journalism with minors in “Spanish for the Professions” and history. She recently interned as a daily wire correspondent in the Washington, D.C., bureau of ASU’s Cronkite News Service and hopes to find her way back to the nation’s capital after graduation. To reach her, e-mail [email protected].

The Olivette, Mo., City Council approved an amendment to the zoning code on Tuesday allowing self-storage facilities to be developed on lots of at least 7 acres within the city’s light-industrial district. The move was in response to an application from real estate investor Steve Mirowitz, who wants to build a storage facility at 1290 Diehlman Road on 7.5 acres, according to the source.

The zoning change stipulates that the amount of space provided for outdoor storage cannot exceed 30 percent of the lot area. Public access to self-storage properties will be limited to 7 a.m. to 10 p.m.

Additional provisions require that any vehicle stored onsite must have a current license plate. Site and building requirements include controls for excess lighting, and 75 percent of a building’s exterior finish must be masonry, the source reported.