Members of the Texas Self Storage Association (TSSA) raised more than $188,000 last year for the Shriners Hospitals for Children in Galveston, Texas, and surpassed $1 million in lifetime giving. The donation was the largest contribution the organization has made since it began raising funds for the hospital 15 years ago, according to a press release. In 2015, it raised more than $150,000.

TSSA representatives presented Shriners with a check to celebrate the milestone during a recent tour of the hospital. “When you see the way the hospital approaches care, treating the whole child—both body and mind—with the goal of returning their life to normalcy, you can’t help but be profoundly affected,” said Doug Hunt, co-chair for the TSSA Fundraising Committee. “TSSA members are incredibly generous, and this is such a worthy cause. It’s an honor to raise funds for this hospital, and I’m proud that we were able to surpass the $1 million goal this year.”

TSSA raises funds by hosting a silent and live auction as well as a charity poker tournament during its annual conference each fall. A significant portion of the funds also comes from individual members, the release stated.

“In reaching $1 million raised, TSSA has risen to an exclusive level that few supporters join,” said Dr. David Herndon, chief of staff for Shriners. “Their transformational gifts represent a commitment to support Shriners Hospitals for Children in our efforts to provide the best clinical care, to advance research and to train the healthcare professionals of tomorrow. We are deeply honored to have partnered with TSSA for 15 years, and look forward to many years of continued friendship.”

Since the hospital entered the burn-care field in 1966, the survival rate of children with burns on more than 50 percent of their body surface has doubled. Today, patients with burns on more than 90 percent of their body can survive and go on to lead productive lives thanks to the cutting-edge clinical care, research and education regardless of a families’ ability to pay, the release stated.

“TSSA members are very generous, and through their generosity, our budget remains viable while enabling us to remain the world's most recognized pediatric burns-treatment hospital,” said Greg McEwen, Shriner’s incoming chairman of the board. “Their gifts come from the heart, and we cherish the relationship not only with the TSSA, but also each of the members. I cannot thank them enough for what they do and mean to us.”

The TSSA Fundraising Committee is making plans for its next campaign, which will largely be executed at the association’s 2017 conference. The event is scheduled for Oct. 18-20 in San Antonio.

Established in 1986, the TSSA is a nonprofit trade association dedicated to enhancing the quality of the self-storage industry in Texas. The association provides opportunities for members to increase their knowledge of the self-storage industry through education, research, discussion and exchange of information.

Shriners Hospitals for Children includes 22 hospitals in Canada, Mexico and the United States, providing advanced care for children with orthopedic conditions, burns, spinal cord injuries, and cleft lip and palate.

 

BOS Container USA, a provider of German-manufactured, quick-build, portable-storage containers, will now stock inventory at five U.S. locations. The move is designed to speed up delivery of the company’s products to customers and enable them to place smaller orders, according to a press release.

The new locations are Atlanta; Carson, Calif.; Elizabeth, N.J.; Elk Grove Village, Ill.; and Flower Mound, Texas. The standard inventory will include 7-by-7, 7-by-10 and 7-by-13-foot containers. Typical unit features include anti-condensation coating, double doors, four corner caps and security locks. Available accessories include access ramps, clothing and hose racks, shelving systems, and tool rails.

BOS Container USA is the U.S. importer and sales representative for Germany-based BOS GmbH Best of Steel, which was launched in 1967. The company manufactures a range of steel and stainless-steel products including door and window frames, material containers, and quick-build warehouses.

By Tracy Sells

For many independent self-storage operators, the real estate investment trusts (REITs) present challenges as well as opportunities. The REITs account for roughly 10 percent of the industry, and while that’s a relatively small number, there’s no denying they have great influence on other operators and the business as a whole. They’ll continue to grow and likely increase their share of the market, albeit slowly.

I work for The William Warren Group (WWG), which operates under the StorQuest Self Storage brand. Our company has 120 facilities and is still growing, yet we’re impacted by the REITs just like other small to mid-sized operators. By and large, we view that impact as positive. While there are certainly challenges, the REITs also bring many advantages to the table. Let’s look at the effect REITs have on smaller operators as well as some tips for independents to compete effectively in their markets.

Focus on Marketing

Competing for rentals in a market containing a REIT-owned facility is always a challenge. That property is only one of many in the REIT’s portfolio. If one out of 1,000 facilities realizes a loss, that deficit is mitigated by the 999 others that are turning a profit. If the facility is new and sets its prices below those of the competition to lease up, it has de minimis impact on the REIT portfolio’s net operating income, but it negatively impacts the bottom line of every other storage business in that market. That hit is harder on small to mid-sized operators.

The fact that the REITs can outspend my company and most every other operator on marketing doesn’t mean we can’t be just as effective with our programs. With more than 50 percent of new customers originating online, finding the right provider to help manage your website, efficiently manage pay-per-click (PPC) advertising and monitor your local-search program is as important as the ability to generate trackable results. In addition, effectively using low-cost social media tools and best practices can help you gain additional online presence while increasing your Google search placement and reducing your PPC spend.

Managing your online reputation is another key component to stacking up against the REITs. While spending only a fraction of what they invest in online marketing, WWG’s total social media user engagement, or Klout score, ranks higher than each of the REITs. While they have large marketing departments and advanced technology systems, there are many resources within our industry to help smaller operators run an online marketing program that’s every bit as effective as theirs.

Be Price Savvy

The REITs have sophisticated systems and talented experts dedicated to revenue management. They invest heavily in this area and are constantly monitoring and evaluating rates, sometimes making it hard for others to keep up with their ever-changing pricing models. This doesn’t have to be the case. Smaller operators can also be quite successful in their programs by using the tools or modules available in most management-software systems. Know what’s happening in your markets in terms of supply and demand, and monitor what your competitors are doing from a pricing standpoint.

It’s also important to get your managers on board with pricing changes. Owners often allow managers to dissuade them from raising rents because they’re fearful of potential backlash from existing tenants, or from potential customers who claim they’ve been quoted a better price from a competitor. It’s important for managers to understand the importance of revenue management and its effect on the business and buy into the concept. With the proper training and incentives, you’ll likely find your managers supportive of price increases. In the era of 90-plus percent occupancies, raising rental rates is one of the only means to realize growth.

Outshine on Service

We certainly can’t outspend the REITs, but we can outshine them. Our focus is on winning the consumer with service. We pamper our customers, communicate with them, play with them, make them laugh and make renting from us easy. We make them feel good. We don’t just give them a storage unit, we give them a better experience! This is a major piece of our operating strategy.

For many of the REITs, their three most important departments are revenue management, digital marketing and an in-house sales center. In contrast, our three most important departments are human resources, customer service and digital-experience management. If you hire the right people to run your stores, train them properly, give them the tools to be outstanding service representatives and create a culture that promotes a happy work environment, you’ll find that you too can outshine the REITs from a customer-service perspective.

Respect But Pivot

The REITs have done many great things for our industry. Among them, they’ve built first-class facilities in great locations, which has helped to enhance the visibility and reputation of self-storage for the consumer. All operators benefit from a positive perception of our business by the public. The REITs have also been leaders in technology and systems from which we have all learned.

At WWG, we view the REITs as our friends. While we admire and respect them, we don’t think you need to be a large operator to be successful. Following some REIT practices, however, such as revenue management and online marketing, are important and should be a focus of every operator, regardless of size.

Being smaller can help differentiate your business in a positive way. Smaller operators are closer to the customer and can use that to their advantage. They can create a better culture for their employees to foster an environment that promotes outstanding customer service. We can also take advantage of our nimbleness, making decisions more quickly than the REITs.

At WWG, we may not have the deep pockets of the REITs, but we have systems and technology that are just as effective as theirs. We have outstanding people at all levels of our organization and an entrepreneurial spirit that enables us to be creative, flexible and responsive.

As a smaller operator, you too can use industry tools to have effective online marketing and revenue-management programs, and you can use a third-party call center to have very successful systems for your facility. Combine all of this with greater attention to detail, a nimbler decision-making process and superior customer service to manage your facilities just as well as, if not better, than the REITs.

Tracy Sells is director of strategic partnerships for The William Warren Group, a privately held real estate company that operates the StorQuest Self Storage brand. She’s responsible for the company’s third-party management program, including new business development and relationships with facility owners. Tracy has nearly 20 years of self-storage industry experience spanning development and operation. She’s also a board member of the Maryland Self Storage Association. For more information, call 310.451.2130 or visit www.williamwarren.com.

Real estate firm Broward Development LLC received approval to build a three-story self-storage facility in Jacksonville, Fla. The development will be the company’s fifth storage site in the city, according to a press release.

Slated to open in late 2017, the property will be managed by self-storage real estate investment trust Extra Space Storage Inc. The 2.8-acre property along Deerwood Park will comprise 100,000 square feet of storage space in 700 climate-controlled units.

Broward was represented in the transaction by Scott Davis, a development manager with Cantrell & Morgan, a commercial real estate brokerage firm based in Northeast Florida.

Founded in 2015, Broward is based in Atlanta.

Commercial real estate firm Wentworth Storage Co. LLC (WSC) has purchased land in Phoenix for $770,000 on which it plans to build a self-storage facility. The 1.6-acre property is near the northwest corner of 19th and W. Glendale Avenues. Construction on the 100,000-square-foot,  climate-controlled facility will begin this year, with an expected completion in early 2018,. The project will be built under Glendale Avenue Self Storage LLC, according to the source.

The site, purchased from NRDP AZ III LLC, is one mile from Interstate 17 and across the street from an existing WSC-owned property, the source reported. Company officials indicated there will be a synergy between the two sites. “This property offered us an opportunity to acquire a great infill site,” said Dave King, WSC’s vice president of self-storage.

WSC is seeking additional acquisition and development opportunities, according to the source. The company closed on more than $160 million in self-storage projects in the last year. It’s already evaluating or under contract on another 1 million square feet of self-storage nationwide.

Based in Phoenix, WSC was founded more than 40 years ago. The company has been involved in more than 7 million square feet of development and acquisition transactions, and has a current portfolio of 1.3 million net rentable square feet.

National Storage Affiliates Trust (NSAT), a Maryland real estate investment trust (REIT) specializing in self-storage, has purchased Value Self Storage in Palmetto, Fla., for $4.4 million. It’s the company’s fourth acquisition in the state over the past year, according to the source. The seller was Investment Properties of Sarasota LLC, an Osprey, Fla., company headed by James C. Rutledge.

The 4.8-acre property at 2015 8th Ave. W. will be branded as Hide-Away Storage. Sarasota, Fla.-based Hide-Away Storage Services Inc. became NSAT’s seventh participating regional operator a year ago. It contributed its 14 properties comprising about 1 million rentable square feet to the REIT’s self-storage portfolio for approximately $115 million.

In November, NSAT purchased several Florida self-storage facilities, including Lakewood Storage in Bradenton, Fla., for $7.6 million from Michael E. Edwards, owner of Manatee River Groves Inc. The company also bought a 26-property portfolio from Kayne Anderson Real Estate Advisors LLC, an investment-management firm, that included five facilities in Florida.

During October, NSAT completed its acquisition of the iStorage portfolio. The real estate transaction included the iStorage facility at 6403 State Road 64 E. in Bradenton, Fla.

Headquartered in Greenwood, Colo., NSAT is a self-administered, self-managed REIT focused on the acquisition, operation and ownership of self-storage properties within the top 100 U.S. metropolitan statistical areas throughout the United States The company has 448 self-storage facilities in 23 states comprising approximately 27.5 million net rentable square feet. It's owned by its affiliate operators, who are contributing their interests in their self-storage assets over the next few years as their current mortgage debt matures.

SmartStop Asset Management LLC, a diversified real estate company that manages 103 self-storage facilities in Canada and the United States, will partner with Canadian real estate investment trust SmartREIT in a joint venture to develop and co-own self-storage facilities in Canada. The companies intend to create a joint portfolio of storage properties comprising 75,000 to 125,000 square feet each, with some assets to include leasable retail space, according to a press release. Two locations in the Toronto area have been identified, with plans for additional assets forthcoming.

SmartREIT owns and manages 32 million square feet in retail centers primarily anchored by Walmart. It has recently expanded its portfolio to include office, residential and self-storage on large urban properties or as adjuncts to its shopping assets, the release stated.

"We view today's third-generation, multi-story self-storage facilities as being a complementary use within and around our centers, requiring minimal land and parking, resulting in efficient rental income value creation," said Huw Thomas, CEO of SmartREIT. "This strategic alliance is a logical step as we continue to intensify our shopping centers and unlock value in underutilized parcels of land within our portfolio. We are very pleased to partner with SmartStop, a leader in the self-storage industry with a proven expertise and track record to expand the business in partnership across Canada."

SmartStop has also been diversifying its portfolio, recently expanding into the student-housing sector. "We are excited to partner with one of the largest Canadian REITs and utilize SmartREIT's prime retail properties for additional SmartStop Self Storage locations," said H. Michael Schwartz, founder and CEO of SmartStop. "This joint venture gives SmartStop the opportunity to expand its existing 12-property portfolio in the Greater Toronto area to other major metropolitan areas across Canada. By leveraging SmartStop's existing online-marketing expertise, institutional management, and revenue-optimization systems, the partnership will provide growth for both SmartREIT and SmartStop."

SmartREIT has assets totaling more than $8.7 billion. Its retail properties include local, regional and national merchants. The company is a fully integrated real estate provider that offers construction, development, leasing, operational and planning services.

SmartStop has approximately $1 billion of real estate under management. Its self-storage portfolio comprises about 7.5 million rentable square feet. It’s also the sponsor of Strategic Storage Growth Trust Inc., a public, non-traded REIT focused on self-storage acquisition and development, and Strategic Storage Trust II Inc., a public non-traded REIT that focuses on stabilized self-storage properties.

Update 2/17/17 – The White Bear Town Board has approved the self-storage project on Leibel Street, enabling Pine Ridge Capital and White Bear Mini Storage to begin development this summer. Developer Nate Hansen clarified during the meeting that the group has planned three phases. The first will include the climate-controlled building and a traditional storage structure, followed by two additional buildings in about two years. The third phase would include the remaining three buildings, according to the source.

“We want to be a part of the community,” Hansen told the board. “It’s important that our building looks nice because we want to drive retail business to our building. We want to become the place to go where you can quickly buy boxes, tape, blankets [and] bubble wrap for all your moving needs.”

The project received additional support from Darryl LeMire, president of the Benson Airport Board of Directors.

Though Kermes continued to have reservations about the project, he agreed it offered benefits. “For the size of the site, to only bring one or two full-time positions into the township doesn’t go a long way in meeting one of our goals to bring in increased employment,” he said during the meeting. “However, those benefits you are bringing to the township with this project [offset] that.”

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2/10/17 – An investment group led by Jon Taxdahl has received pushback on a self-storage proposal in White Bear Township, Minn. Pine Ridge Capital LLC and White Bear Mini Storage intend to develop a seven-building facility on 4.5 acres at 5906 Highway 61 and 2310 Leibel St., but the planning commission initially recommended to deny the application. Taxdahl, a principal at Pine Ridge, has defended the $4 million project as an upgrade to a deteriorating property that will “add significant tax base for the town,” according to the source.

During a December meeting in which planners recommended against the project, Taxdahl said opposition was due to a “lack of education” about self-storage. He noted the property had been for sale for nearly seven years, with the asking price far below market value.

The project would make use of two storage buildings that are already on the property. An existing house, former machine shop and third storage structure would be removed. The storage facility would be built in two phases, with four buildings constructed this spring and three others planned within two years depending on the market, the source reported. One building will be designated for climate-controlled units.

The project requires a conditional-use permit for self-storage as well as a wetland permit to allow infill of three wetlands determined to be “incidental” by the watershed district, the source reported.

The property is adjacent to Benson Airport and Lake Animal Hospital. Veterinarian Amy Kruchowski Phillips spoke in favor of the self-storage plan but asked for fencing along the north and east sides of the property for screening. “My concerns were addressed,” she told planners. “The storage unit will be quiet neighbors. It’s better it get developed vs. having a dilapidated house and storage building that will become an eyesore.”

During an executive board meeting last month, board chair Bob Kermes said he considered the corner lot a gateway to the community and was concerned about the impression the storage business would make. Taxdahl noted the facility would be aesthetically pleasing, and the investment group would invest $20,000 in “lawn care,” according to the source.

The plan also includes a walking path on the east side of the property that abuts 18 acres of park land.

There will be another public hearing on the project.

Based in Edina, Minn., Pine Ridge Capital manages $40 million in real estate, according to the source. The White Bear project would be its second self-storage property.

By Terry Campbell

You've probably thought a lot about how to start or expand your self-storage business. Do you want to build a new facility or acquire an existing one? What permits and paperwork do you need? Most important, how will you obtain financing for your project? There are many loan options available, but finding the one that meets your business needs is key.

In 2010, the Small Business Administration (SBA) made its loan products available for self-storage properties. This gave industry owners who were eager to acquire, build, expand or renovate facilities a new financing avenue. The following overview of the SBA 7(a) loan program provides insight to its benefits and who makes a good candidate for this type of funding. It also includes a case study of a storage operator who tapped this option to fund his most recent project and advice for choosing a lender.

The 7(a) Program

The SBA 7(a) loan program is an attractive option for self-storage owners because it allows them to acquire, build and renovate facilities while allowing them to stay independent. Once you’re up and running, you can focus on your operation instead of wondering how you’ll make your next balloon payment.

Unlike conventional lending, 7(a) loans offer attractive equity injections, 25-year fully amortizing terms, and no balloons or financial covenants. Additionally, working capital can be financed, and there’s a prepayment penalty of only three years. It’s important to remember that no one loan product fits everyone; but understanding how a 7(a) program might benefit your business could be critical to your success.

Are You a Good Candidate?

If you’re looking for money to expand your portfolio, an SBA loan can be a viable option. A strong candidate for this program has ample experience running a business or a background in self-storage. To apply for a loan, you’ll need the following:

• Statement summarizing the purpose of the loan
• Balance sheet prepared within the past 90 days
• Current profit-and-loss statement
• Tax returns from the past three years (business and personal)
• Personal financial statement
• Record of current tenants and management reports for an existing self-storage business
• Feasibility study (if the loan is for a new construction project)
• Business plan and résumé

SBA lenders look for many of the same traits in borrowers as conventional lenders. These are often referred to as the five Cs: credit, collateral, character, cash flow and commitment. These variables immensely affect your ability to secure financing:

• Credit is a direct reflection of your financial patterns. Most lenders prefer to see a credit score of 700 or higher as well as a detailed track record of your spending habits. Criteria may differ by bank, including what’s considered an acceptable credit score.
• Collateral is measured by the number of assets you have to secure the loan and your saleability in the event of liquidation. A benefit of 7(a) loans is they’re not collateral-driven; however, the loan must be fully collateralized if possible.
• Your character is evaluated through your historical working accomplishments and plan for the overall success of the business. It’s important to have a thorough business plan in place.
• Cash flow is the most significant factor for an SBA loan. The bank will perform a cash-flow analysis to determine whether the business can be profitable while also supporting its expenses and new loan debt.
• Commitment is how involved you are with the project. It’s frequently determined by your willingness to “have some skin in the game” as well as your employment history.

Loan Success Story

In 2016, John Lindsey, co-founder and president of the Lindsey Self Storage Group, was ready to expand his portfolio. Over the past 40 years, his company has developed and managed more than 100 facilities in the Southeast. When seeking capital to finance his latest project, Lindsey explored his options and ultimately chose an SBA loan. “SBA financing provided my company with a strong opportunity to acquire a new asset that has proved to be quintessential to the continued success of my company,” he says.

With a working-capital loan, Lindsey was able to take a property that was previously mismanaged with minimal cash flow and turn it into a new and improved facility. “This capital was put directly toward various capital improvements—both physically and operationally—that aided us in the repositioning of the asset in the market,” he says. “Without this type of loan, we wouldn’t have been able to take on a project of this capacity.”

Lindsey’s success story is just one of many. The SBA loan program has given self-storage owners and investors the opportunity to own their facilities and thrive in a growing market.

Choosing a Lender

When considering an SBA loan, finding a lender that focuses solely on SBA lending and has a background in self-storage will lead to a smoother and more transparent process. For this reason, it’s helpful to seek a lender who’s part of the SBA’s Preferred Lender Program (PLP). A PLP lender will know how to determine eligibility and properly structure the loan. PLP status allows a bank to approve the loan without waiting for the SBA approval, as it actually acts on the SBA’s behalf.

“Working with a lender with extensive knowledge of self-storage provided a seamless process from start to finish, which allowed us to move extremely quickly through the SBA process,” Lindsey says.

If you’re a current self-storage owner or looking to break into the industry, an SBA 7(a) loan may be just what you need. Do your research and find a lender that understands the SBA loan programs as well as the storage business.

Terry Campbell is general manager for the self-storage lending division of Live Oak Bank, which offers financing for facility acquisitions, construction, expansion, refinancing or renovation. He has more than 22 years of self-storage industry experience. For more information, call 910.202.6933; e-mail [email protected]; visit www.liveoakbank.com/self-storage.