Westy Self Storage of Hackensack, N.J., hosted a breakfast on Dec. 6 for “Making-It-Home,” a nonprofit that delivers donated home furnishings to low-income and formerly homeless people, veterans, and people with disabilities who are transitioning from emergency shelters to new housing. Titled “Moving Moments,” the event at 65 Commerce Way celebrated those who’ve contributed to the charity, according to the source. More than 100 people attended, including Making-it-Home staff, donors, recipients and sponsors. A room arrangement of donated furniture was on display at the storage property, and Westy provided free space to store contributions.

During the breakfast, Mayor John Labrosse presented an award to Westy for its support. “We are grateful for what Making-it-Home and Westy does to help our community. I am proud to say that such generosity has made Hackensack the first town in Bergen County to have no homeless veterans,” he said.

The award was accepted by Tim Mincin, district director for the Westy Hackensack facility. “It is our pleasure to lend a helping hand to Making-It-Home. We put forth great effort and take pride when supporting local organizations that make such a positive impact on so many lives,” he said.

Awards were also given to volunteers Cynthia Myer, president of Ridgewood Moving Services and the New Jersey Warehousemen and Movers Association, and Julia Orlando, director of the Bergen County Housing, Health and Human Services Center.

Making-It-Home accepts donations of new and gently used furniture from cleaning companies, furniture stores, individuals and interior decorators. It works with moving companies, professional organizers and realtors that receive unwanted furniture during a move as well as other marketing channels that provide referrals. This year, it became an official program of the Bergen Volunteer Center and established a collaboration with the Bergen County Housing Authority.

The program “ensures that those who are ready to make a fresh start are able to move into their new apartments knowing they will have basic furniture on which to sleep, sit and eat,” said founder Cynthia Massarsky. “This essential ingredient helps complete the picture and ‘make their house a home.’ It provides a safe, healthy and comfortable home environment that encourages people to secure and hold down a job, motivates their children to achieve in school and helps individuals and families to thrive.”

Making-it Home is staffed by volunteers. Additional organization sponsors include families, Bruce The Bed King, Hackensack Main Street Business Alliance, Junkluggers of North Jersey, Valley National Bankcorp, Veterans Services of Bergen County and New Jersey Senator Loretta Weinberg.

Founded in 1990, Westy Self Storage is headquartered in Stamford, Conn. It operates four facilities in Connecticut, four in New Jersey and seven in New York.

The recent influx of buyers to the self-storage space has led to higher transaction volume. Owners who are unfamiliar with the sales process may have questions about procedures and tactics that will help them achieve maximum asset value. With this in mind, let’s examine some of the less obvious parts of a real estate deal, looking not only at the activity but the strategy behind it.

Pricing

In the world of real estate transactions, the market usually has a relatively narrow band of values. The reason is if prices were any higher, there wouldn’t be any buyers; and conversely, if prices were lower, there wouldn’t be any sellers.

Quality brokers are focused on a price buyers and sellers can agree on to conduct a deal. Without an agreement, there’s no transaction! Owners often think about only what price would make them ecstatically “happy” and not the price someone would actually pay. But overpricing is not harmless! Most qualified and capable buyers won’t consider an acquisition if the facility is overpriced, which greatly hinders the property’s value and liquidity.

If you’re a seller, use a qualified and experienced real estate broker to properly assess the value of your property. He’ll apply the income approach along with market-sales comparisons to arrive at an appropriate value that’ll allow you and the buyer to agree on the purchase price.

Marketing

When taking a self-storage property to market, it’s important to note that quality and risk are often very subjective. For example, a relatively low occupancy might indicate a poor performing facility or, alternatively, a great opportunity to increase occupancy and revenue. For this reason, it’s extremely important to market to a wide audience to find the buyer who has the most optimistic view of your asset. Always beware of the broker or colleague who says, “I have the right buyer for you. We don’t need to market the property.”

To maximize your value, look for a buyer who sees the glass as half full, not half empty. This will help you achieve the maximum sales price. The more qualified prospects who are exposed to your property, the better chance you have of maximizing your value.

Deal Structure

It’s important to understand that the structure of a deal can be as important as the purchase price. Too often, the parties focus only on the price and glaze over the structure without considering the financial implications of the non-financial aspects of the transaction.

There are two main deal structures that are typically used when buying or selling an entity or its assets. Specifically, these are an asset purchase (real estate contract) or an entity purchase (limited liability company or stock purchase). Below is an outline of some pros and cons associated with these two structures, although it’s important to note that I’m neither an accountant nor an attorney. Please seek tax and legal advice from your counsel when structuring a deal.

Asset purchase. When structuring a deal as an asset purchase, there are two significant advantages to the buyer. First, he maintains a “step up” cost basis for tax treatment for all purchased assets, which allows him to enjoy full depreciation. Second, he can choose what assets he wants to purchase and avoid contingent and unknown liabilities, which are often costly and burdensome.

The main disadvantage to the buyer is an asset purchase may trigger a reassessment of real estate taxes after the sale is complete. With the very aggrieve valuations self-storage properties have been receiving, this can be detrimental to the investment’s ongoing yield.

Entity purchase. When structuring a deal as an entity purchase (stock purchase), the overriding benefits for both seller and buyer are simplicity and convenience. However, this type of structure isn’t the norm in self-storage real estate. The buyer receives all of the company’s assets and liabilities, eliminating the need for title transfer, reducing number of third-party consents (except where there are change-of-control restrictions), and minimizing the vast transactional cost associated with an asset purchase.

For the buyer, the two main disadvantages of an entity purchase are increased exposure to liability and the loss of tax benefits. Although a thorough corporate and contract review can help him mitigate any go-forward liabilities, he’ll need to be OK with an increase in liability. Additionally, he’ll need to talk with his accountant to see what tax strategies can offset and mitigate the loss of tax benefits.

There are many factors to be weighed when determining how to structure a deal that will realize the maximum value of your self-storage property. Prior to drafting a purchase agreement or marketing the asset for sale, it’s crucial to give proper consideration to all aspects of a potential transaction. Early planning and preparedness can prove to be beneficial to both parties and substantially cut transactional costs and attorney fees.

That said, the information above is generic and shouldn’t be construed as advice for any specific deal. I strongly recommend you seek advice from your local broker, attorney and tax professional before proceeding with a sale or acquisition.

Ben Vestal is president of the Argus Self Storage Sales Network, a national network of real estate brokers who specialize in self-storage. Argus provides brokerage, consulting and marketing services to self-storage buyers and sellers and operates SelfStorage.com, a marketing medium and information resource for facility owners. It also offers panel discussions in which brokers from around the country share their insights on self-storage market fundamentals and economic trends in their regions. To access recordings, visit www.argus-selfstorage.com/presentations.html. For more information, call 800.55.STORE; e-mail [email protected].

Real estate developer SJM Partners Inc. has filed plans to build a six-story self-storage facility on the Upper East Side of New York City. If approved, the building on East 92nd Street would be 85 feet tall and comprise 44,432 square feet of floor space, with 35,790 square feet zoned for commercial use, according to the source. All levels will be entirely dedicated to self-storage except the first floor, which will also include a loading dock, lobby, offices and two parking spaces.

A two-story parking garage operated by Farrell’s Leasing Co. and Farrell’s Limousine Service currently stands at the site, which is between 1st and York Avenues. Plans to demolish the structure haven’t been filed with the city, the source reported. Stephen McBride, managing principal at SJM, is listed as the property owner.

McBride and SJM President Stephen J. Garchik are partners in the Miami City Self Storage LLC joint venture, which has been actively pursuing developments in South Florida and other select “high-growth” cities, according to the company website.

Based in Reston, Va., SJM has more than 35 years of experience in real estate development including construction, design, leasing and management. It has ownership in 41 properties primarily in Florida, Maryland, New Jersey, New York, Virginia and Washington, D.C., according to its website. The company lists storage operators American Stor-All Storage and Self Storage Zone as affiliated real estate partners.

Update 12/14/16 – Stor-Age has completed its acquisition of Storage RSA share capital through its subsidiary Roeland Street Investments and made “significant progress” toward a proposed purchase of another Cape Town facility in Somerset West Business Park that operates under the Storage RSA brand, according to the source.

The completed acquisition includes five storage facilities comprising 39,869 square meters and a development opportunity in Johannesburg. The pending property comprises 5,500 square meters, the source reported. Together the assets will add more than 45,000 square meters to the Stor-Age portfolio.

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9/23/16 – Stor-Age Property REIT Ltd., which operates 37 self-storage facilities in South Africa, has agreed to acquire local competitor Storage RSA. With seven locations in Cape Town and the Gauteng province, Storage RSA is the third largest self-storage operator in the country, according to the source. The memorandum of understanding is for 100 percent of its shares.

The deal is in line with the Stor-Age pursuit of value-added acquisitions, according to company officials. “From a sector perspective, concluding the deal would solidify and significantly contribute to Stor-Age’s position as a significant self-storage operator and property fund in the South African market,” officials told the source. “While there is some room for immediate value enhancement of the portfolio through Stor-Age’s sophisticated operations platform, the majority of this value enhancement will occur over time through key initiatives, such as digital marketing, revenue management and scale in key markets.”

It has not yet been announced when the deal is expected to close.

The move further solidifies Stor-Age as the dominant self-storage operator in South Africa. Last November, it became South Africa’s first self-storage real estate investment trust listed on the Johannesburg Stock Exchange. Headquartered in Cape Town, it operates self-storage facilities in six South African cities. Established in 2006 by the Lucas family, it’s the operator appointed by Stor-Age Property Fund Managers Pty. Ltd. to manage and market the property portfolio owned by Stor-Age Property Holdings Pty. Ltd.

Extra Space Storage Inc., a publicly traded self-storage real estate investment trust and third-party management firm, has purchased a two-property Hawaii Self Storage portfolio containing facilities in Hilo and Lihue, Hawaii. Combined, the properties comprise 84,507 square feet of storage space in more than 800 units. The Hilo facility at 425 Kalanianaole Ave. and the Lihue property at 1480 Haleukana St. feature drive-up units, electronic access and perimeter fencing, individually alarmed units, video cameras, and retail-oriented offices, according to a press release from JLL Capital Markets, the commercial real estate and finance firm that represented the seller in the transaction.

 The seller was Hawaii-based Five Star Enterprises LLC, which does business as Hilo Power Self Storage, according to Bizapedia. It was represented by JLL Managing Directors Steve Mellon and Brian Samoza.

“The portfolio provided a rare opportunity to acquire two self-storage properties in Hawaii, unencumbered by debt or land leases. There is also significant upside through the expansion of the Lihue facility and other minor renovations,” Somoza stated in the release.

Headquartered in Salt Lake City, Extra Space owns or operates 1,421 self-storage properties in 38 states; Washington, D.C.; and Puerto Rico. The company’s properties comprise approximately 955,000 units and 107 million square feet of rentable space.

JLL is a full-service global provider of capital solutions for real estate investors and occupiers. Last year, the firm completed $140 billion in investment sale and debt and equity transactions globally. The firm’s Capital Markets team comprises more than 2,000 specialists globally.

Update 12/14/16 – U-Haul Moving & Storage of Avondale has added 646 indoor, climate-controlled self-storage units to its property in Decatur, Ga.

"We have another U-Haul facility four miles up Memorial Drive that is completely occupied with regards to our self-storage units. This community needed more self-storage, and we're happy to deliver,” said Jason Petty, president of the U-Haul Co. of Central Georgia.

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1/4/16 – Phoenix-based U-Haul International Inc. is converting a building in Decatur, Ga., into a self-storage facility. The company had previously leased the property at 3653 Memorial Drive and closed on the acquisition in September. U-Haul Moving & Storage of Decatur officially opened in April, providing moving and packing supplies, truck and trailer rentals, and U-Box portable-storage containers. Renovations are underway to add 200 indoor, climate-controlled units, hitch installation, propane sales, and RV parking, according to a company press release.           

The 13.75-acre property features 145,978 square feet of space. Located in Avondale Square, the building was constructed in 1969 and has housed many businesses, including a furniture store. It’s across from a Walmart Supercenter.             

"The best part about taking over this building is U-Haul will now be able fill the entire 13 acres of empty space, and serve more and more customers at lower cost," said Raquel Bryan, the facility’s general manager.

The opening of the Decatur property was driven by U-Haul’s corporate sustainability initiatives, which support infill development to help local communities lower their carbon footprint, the release stated. U-Haul’s adaptive reuse of existing structures eliminates the amount of energy and resources required for new-construction materials and helps local cities diminish their unwanted inventory of unused buildings, U-Haul officials said.

Established in 1945, U-Haul has more than 44 million square feet of storage space at more than 1,200 owned facilities throughout North America. 

A woman was injured by her own car on Monday while trying to enter her access code at a Basalt, Colo., self-storage facility. The tenant had exited her car to punch in the code, accidentally leaving the vehicle in reverse. She sustained “extensive injuries” to her legs when she attempted to stop the vehicle from moving, Basalt Police Sgt. Aaron Munch told the source. Emergency responders were called to the property on Park Avenue around 4 p.m.

It isn’t clear from the report how the woman’s legs were injured or whether she was entering or exiting the facility. The car also struck one of the storage buildings, but caused no damage to the property, according to Munch. The tenant was transported to Valley View Hospital for treatment.

The self-storage facility is near the intersection of Park Avenue and Willits Lane, the source reported.

Storage Seeker, an online self-storage directory and price aggregator, has launched a monthly Self Storage Rent Index, which tracks average price fluctuations from same-store units in more than 3,000 U.S. cities. In November, the national index declined 0.7 percent, with some markets experiencing much larger swings on both sides of the spectrum, according to the company. Unit rentals in Waterbury, Conn., showed the largest average decline in price at 16.7 percent, while units in Hayward, Calif., experienced the largest increases at 54.2 percent.

Two indices display the percent increase and decrease in prices for the top 50 “major markets.” After Waterbury, Conn., the top five cities showing price reductions were Roseville, Calif. (12.1 percent); Cary, N.C. (10 percent); Palatine, Ill. (9 percent); and Fremont, Calif. (8 percent). Behind Hayward, Calif., for price increases were Monterey, Calif. (28.4 percent); Daly City, Calif. (18 percent); Burlington, N.J. (9.5 percent); and Warren, Mich. (7.1 percent).

Based on the data, most swings were much smaller than what is depicted at the top of the lists. Among the top 50 cities showing decreases, 33 had reductions of less than 5 percent. Of the top 50 markets showing increases, 27 had bumps of less than 2 percent.

“Since storage units are rented by approximately 10 percent of U.S. households and millions of businesses, knowing if rents are increasing or decreasing in the city where you rent storage or are moving [to] can save a consumer or business a lot of money over time,” Storage Seeker officials wrote in a blog post.

StorageSeeker.com allows consumers to compare self-storage unit prices at different facilities, while also providing some discounted rental rates or move-in specials when a unit is reserved online, according to the company website.

Macritchie Storage LLC, a self-storage developer based in Calgary, Alberta, Canada, is planning to convert the former Michigan Liquor Control Commission warehouse in Lansing, Mich., to self-storage. The company will spend $2.9 million to transform the two-story, 79,000-square-foot building at 506 Hosmer St. to a storage facility consisting of 678 climate-controlled units, according to a city press release.

“Once again, we have a great opportunity to transform an abandoned, dilapidated building into a viable commercial facility,” Mayor Virg Bernero said. "Rehabbing old buildings reduces blight in our neighborhoods, puts people to work, creates new business opportunities for local contractors and suppliers during the renovations, and adds to our city’s tax base, all at zero cost to Lansing taxpayers."

Macritchie is purchasing the property from Sam Eyde Management Co., a real estate and development firm that bought the building from the state in 2001 for $410,000. Macritchie has requested a 12-year abatement on new-property taxes generated from the project through the Obsolete Property Rehabilitation Act (OPRA). If approved, the company will save $157,000 in city taxes, which it must then reinvest in the property, the source reported. The facility will generate $80,000 in property taxes for the city during the abatement period, up from the $5,200 it currently produces, the release stated.

The Lansing City Council was scheduled to consider the OPRA request during a Dec. 12 meeting. If approved, construction will begin in the spring with a completion date in December 2017.

Macritchie is also converting a former SuperValu supermarket in Kenosha, Wis., to self-storage. It’s transforming the 61,651-square-foot structure into 122,818 gross square feet of storage in about 1,000 units.