The five largest publicly traded, U.S.-based self-storage real estate investment trusts (REITs)—CubeSmart, Extra Space Storage Inc., Life Storage Inc., National Storage Affiliates Trust and Public Storage Inc.—have released financial statements for the quarter that ended Dec. 31. In general, the companies showed gains in key areas, particularly funds from operations (FFO) and net operating income (NOI). Occupancy figures tended to stay about equal or declined slightly.

“Despite new supply’s impact on fundamentals in select submarkets, demand continues to remain steady and broad-based,” said Christopher P. Marr, president and CEO of CubeSmart. “Looking forward to 2019, we remain focused on maximizing store performance and maintaining our disciplined investment strategy to generate attractive, long-term, risk-adjusted returns for shareholders.”

Joseph Margolis, CEO of Extra Space, expressed similar sentiments. “2018 played out as expected, and it was another solid year,” he said. “We expect additional pressure from new supply in 2019, but believe that our diversified portfolio and best-in-class platform are well-positioned to navigate the competitive landscape."

CubeSmart

CubeSmart reported FFO per share of $0.42 during the quarter, a 2.4 percent year-over-year increase. Same-store NOI at its 456 facilities grew 1.9 percent year over year. The company attributed this to a 3.2 percent growth in revenue and a 6.9 percent increase in operating expenses. Same-store locations contributed 93 percent of the REIT’s property NOI during the quarter.

Same-store physical occupancy was 91.2 percent as of Dec. 31, down slightly from 91.5 percent last year. The company’s total-owned portfolio, representing 493 facilities and comprising 34.6 million square feet of rentable space, had a physical occupancy of 89 percent at the end of the fourth quarter.

CubeSmart acquired four storage properties in California, Illinois, New York and Texas for $117.7 million. The REIT’s joint venture, HVP IV, purchased two properties in Connecticut for $15.1 million.

On Dec. 13, the company declared a dividend of 32 cents per common share, up 6.7 percent from the previous quarter. The dividend was paid on Jan. 15 to common shareholders of record on Jan. 2.

CubeSmart owns or manages 1,086 self-storage facilities across the United States. Its operating portfolio comprises 73.1 million square feet.

Extra Space Storage Inc.

Same-store revenue increased 3.8 percent and NOI rose 4.4 percent compared to the same period in 2017. Core FFO, excluding adjustments for non-cash interest, hurricane losses and other deferred financing costs, was $1.22 per diluted share, resulting in 8.9 percent growth compared to the fourth quarter the previous year.

Same-store occupancy was 91.8 percent as of Dec. 31, which was essentially equal year over year.

During the quarter, the company acquired three operating facilities and three properties at Certificate of Occupancy (C of O) for about $74.3 million. In conjunction with joint-venture partners, the REIT also acquired two operating facilities and made four C of O purchases for a total cost of approximately $69.8 million, of which the company contributed $15.7 million.

The company paid a quarterly dividend of 86 cents per common share, which was equal to the previous quarter. It was paid on Dec. 31 to common shareholders of record on Dec. 14.

Headquartered in Salt Lake City, Extra Space owns or operates 1,647 self-storage properties in 39 states; Washington, D.C.; and Puerto Rico. The company’s properties comprise approximately 1.2 million units and 125.7 million square feet of rentable space.

Life Storage Inc.

Total revenue increased 3.9 percent over the previous year, while operating costs increased 1.2 percent, resulting in an NOI increase of 5.3 percent. Same-store revenue grew 3 percent, while same-store NOI increased 4.1 percent, year over year. FFO for the quarter was $1.38 per fully diluted common share, compared to $1.34 for the same period in 2017. Adjusted FFO was $1.38, a 3 percent increase.

Net income attributable to common shareholders for the fourth quarter was $92.3 million, or $1.98 per fully diluted share. For the same period in 2017, net income attributable to common shareholders was $21 million, or $0.45 per fully diluted common share.

Revenue for the company’s 521 wholly owned stabilized facilities increased 3 percent year over year, helped by a 3.8 percent growth in rental rates and partially offset by a decrease in average occupancy of 100 basis points. Average overall occupancy for the quarter was 89.4 percent, with units renting for an average of $13.55 per square foot.

During the quarter, the REIT acquired six facilities in Atlanta, New York (two), Orlando, Fla.; Sacramento, Calif.; and St. Louis for $58.3 million. The Atlanta and Orlando properties were previously under Life Storage management.

The company also sold 12 “mature” facilities to an unconsolidated joint venture in which the REIT maintains 20 percent ownership. It’ll continue to manage the properties.

Subsequent to the end of the quarter, the company approved a quarterly dividend of $1 per common share, which is equal to the previous quarter.

Based in Buffalo, N.Y., Life Storage operates more than 750 self-storage facilities in 28 states and Ontario, Canada. Its portfolio of owned and managed facilities comprises more than 55 million square feet.

National Storage Affiliates Trust (NSAT)

Core FFO per share was 0.37 during the third quarter, a 15.6 percent year-over-year increase. Its net income was $14.4 million during the quarter, a 20.5 percent increase compared to the $12 million it reported for the same period in 2017. The increase was primarily attributed to incremental NOI generated from 57 wholly owned properties acquired during 2018. Same-store NOI was $44 million, up 5.3 percent.

Same-store revenue was $64 million during the quarter, a 4.2 percent increase from a year ago. This was driven primarily by a 4.4 percent increase in average annualized rental revenue per occupied square foot and was partially offset by a decrease in average occupancy of 50 basis points. Same-store average occupancy was 88.4 percent, down from 88.9 percent during the same period in 2017.

During the quarter, the company acquired seven facilities in four states for $51.4 million. The properties comprise about 400,000 net rentable square feet in approximately 3,000 units.

On Feb. 21, the company declared a quarterly dividend of $0.30 per common share, which was up 3.4 percent from the previous quarter. It’ll be paid on March 29 to holders of record on March 15.

Headquartered in Greenwood, Colo., NSAT is a self-administered and -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 ownership interest in 698 storage facilities in 34 states and Puerto Rico. Its portfolio comprises approximately 44.3 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.

Public Storage Inc.

Revenue for same-store facilities increased 1.2 percent, or $6.7 million, in the quarter, as compared to the same period in 2017, primarily because of higher realized annual rent per occupied square foot. Operations costs for same-store facilities increased 4.1 percent, or $4.8 million, during the period compared to the previous year.

FFO was $2.77 per diluted common share, compared to $2.70 for the same period the previous year, marking a 2.6 percent increase. NOI increased $11.1 million compared to the same period in 2017, including $9.2 million for same-store facilities.

The company acquired nine self-storage facilities comprising 600,000 rentable square feet during the quarter for $73.2 million. Four of the properties are split between Georgia and Nebraska, with one each in Colorado, Indiana, Ohio, Oklahoma and Washington. It also completed two new development and various expansion projects that added 600,000 net rentable square feet to its portfolio for $70 million.

The company reported a regular common quarterly dividend of $2 per common share, which was equal to the previous quarter. It also declared dividends with respect to various series of preferred shares. All the dividends are payable on March 28 to shareholders of record as of March 13.

Based in Glendale, Calif., Public Storage has interests in 2,429 self-storage facilities in 38 states, with approximately 162 million net rentable square feet. Operating under the Shurgard brand name, the company also has 232 facilities in seven European countries, with approximately 13 million net rentable square feet.

Sources:
CubeSmart, CubeSmart Reports 2018 Annual Results
Extra Space, Extra Space Storage Inc. Reports 2018 Fourth Quarter and Year-End Results
Life Storage, Life Storage Inc. Reports Fourth Quarter and Full Year 2018 Results
National Storage Affiliates, National Storage Affiliates Trust Reports 2018 Fourth Quarter and Full Year Results
Public Storage, Public Storage Reports Results for the Fourth Quarter and Year Ended December 31, 2018

Easy Storage Solutions (ESS), a provider of Web-based management software for small- to mid-sized self-storage operations, has launched a third-party management and consulting division designed to help facility owners become more profitable in an increasingly competitive environment, according to a press release. The division will be led by Rick Beal, vice president of management and development.

In its new venture, ESS will focus on five goals: growing revenue and people, growing and keeping customers, and cutting costs. “We have found that these pillars will create the right environment and balance of profit and people. When you become a co-worker with us, you have access to all our expertise,” the release stated.

Founded in 2008, ESS provides management software, access-control technology and other tech-based products and services. Founders Ken Hendrickson and Jimmy Sorenson acquired their first self-storage facility in 2014 and a second last year.

Extra Space Storage Inc., a publicly traded self-storage real estate investment trust (REIT) and third-party management firm, has launched a bridge-lending program targeted at non-stabilized storage facilities. The REIT entered the finance sector to fill “a capital void in the market and make some money,” CEO Joe Margolis said during a Feb. 21 earnings conference call with financial analysts, according to the source.

Bridge loans are often referred to as interim or gap financing. They’re intended to be used as a short-term solution until a person or company secures permanent financing or meets an existing obligation. Though they offer immediate cash flow, bridge loans tend to have relatively high interest rates and are usually backed by some form of collateral, such as real estate or inventory, according to financial website Investopedia.

Though Extra Space has already issued some financing and has more loans in the pipeline, Margolis doesn’t expect the program to be a major contributor to earnings this year. “We’re getting very good reception in the marketplace, but we are just beginning,” he told analysts. “We’re going to walk before we run. We’re going to see how the market reacts to this, and I would not expect it to be a significant capital allocation in 2019.”

Extra Space doesn’t anticipate extending its program to self-storage projects that are still in development. “We don’t want to have to take over a half-finished development, but we believe there is an opportunity [with] stores that are not yet stabilized,” Margolis said.

Headquartered in Salt Lake City, Extra Space owns or operates 1,647 self-storage properties in 39 states; Washington, D.C.; and Puerto Rico. Its properties comprise approximately 1.2 million units and 125.7 million square feet of rentable space.

Source:
SpareFoot Storage Beat, Extra Space Storage Begins Offering Bridge Loans to Storage Owners

Update 2/27/19 – Superior Court Judge Carolyn Kuhl issued a tentative decision on Feb. 21 siding with Public Storage in the tenant-insurance class-action suit filed against the REIT. Kuhl supported the company’s argument that the plaintiffs failed to provide evidence proving it made “systemic violations” or “uniform misleading statements” in offering tenant insurance to tenants. The judge also wrote that she found the testimony offered by Public Storage employees to be credible, according to the source.

Under the framework of the order, Public Storage has until March 11 to file a “proposed statement of decision” to address the “principal controverted issues” in the case. Plaintiffs will then have until April 11 to file any objections to the REIT’s filing. Kuhl scheduled a June 12 hearing to consider the statement and objections. If Kuhl’s opinion remains the same, she will likely make the order permanent and close the case in favor of Public Storage, the source reported.

The class-action suit was originally filed in February 2016.

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2/1/19 – Public Storage Inc., a publicly traded self-storage real estate investment trust (REIT) and third-party management firm, is facing a $100 million class-action lawsuit from past tenants claiming they were forced to buy tenant insurance from the company as a condition of renting a unit. Filed in California Superior Court in Los Angeles County, Perez, et. al. vs. Public Storage alleges employees misled customers into believing they had to obtain tenant insurance through the REIT as a uniform practice, which violates California’s unfair competition law, according to a source.

In its legal filings, Public Storage argues that it requires tenants to have insurance for the goods they store but doesn’t stipulate where a policy must be purchased. The REIT also maintains its managers don’t offer insurance advice or check for proof of insurance if the company’s offering is declined, a source reported.

Public Storage attorneys on Tuesday asked the judge to decertify the class, arguing that plaintiff testimony amounts only to a few isolated cases in which employees went “off-script” and, therefore, doesn’t meet the court’s mandate that class certification must apply only to instances in which staff carried out a companywide policy.

Clare Ingram, a Public Storage district manager, testified that company employees must follow a specific script and related procedures when renting storage units. Employees are trained to tell customers that insurance is a rental requirement and buying a policy through the company is an option, Ingram told the court. If a customer declines to purchase insurance through Public Storage, managers don’t ask for proof of insurance, she said. Ingram also indicated that telling customers they had to buy insurance through Public Storage wasn’t consistent with company training and policies.

Recently retired former chief financial officer Edward Reyes also testified on Tuesday, telling the court the REIT’s tenant-insurance program accounts for less than 5 percent of company revenue.

The class of plaintiffs is comprised of tenants who rented a Public Storage unit in California between Feb. 3, 2012, and Feb. 8, 2016.

In 2015, Public Storage settled a class-action suit in Florida in which plaintiffs claimed the REIT misrepresented how it was using the premiums collected from customers who bought tenant insurance through the company, a source reported.

Based in Glendale, Calif., Public Storage has interests in 2,418 self-storage facilities in 38 states, with approximately 161 million net rentable square feet. Operating under the Shurgard brand name, the company also has 228 facilities in seven European countries, with approximately 12 million net rentable square feet.

Sources:
SpareFoot Storage Beat, Judge Sides With Public Storage in Insurance Class Action Case
KCC Class Action Services LLC, Perez v. Public Storage
Law360, Public Storage Looks To Decertify $100M Class Mid-Trial
SpareFoot Storage Beat, Public Storage Battles $100 Million Class Action Suit in California

One of the most critical decisions you make when building a new self-storage facility is the design and construction-procurement method. There are two widely used approaches to consider: the traditional design-bid-build method, also known as “plan-and-spec,” or design-build.

Under plan-and-spec, the developer hires the design team to create the project plans and specifications. He then takes those drawings out to bid and hires a contractor. Ultimately, the owner holds a separate contract for each design as well as construction. This arrangement creates independent goals among the various members of the development team.

Design-build is an alternate method of project delivery in which a single team works under a single contract, directly with project ownership, to provide turnkey due diligence, design and construction services. There’s one flow of work from initial concept through completion. This method has become significantly more prevalent in private construction in recent years, as it has been proven to provide faster timelines, reduced risk, lower overall cost and lower burden to ownership.

So, how does design-build accomplish all that? There are several factors that go into it. First, it’s important to look at the total development timeline and see where your risk lies.

The Timeline

A design-build timeline looks different than plan-and-spec. This is because it allows project steps to happen simultaneously. For example, front-end construction tasks like shop drawings, material procurement and manpower planning can take place while the final project drawing is being created. A plan-and-spec timeline, on the other hand, requires full completion of design before any construction-related activities can occur.

In plan-and-spec, the owner first hires a design team (architect, mechanical, electrical, plumbing, structural engineer, etc.) and works with that team to develop complete and coordinated construction documents. Then he separately solicits bids from general contractors, selecting a contractor and price based entirely on those documents. If pricing comes back higher than expected, time and money are spent to redesign the project and get costs in line. The time spent on redesign is one of the hidden delays that reduces the project’s internal rate of return and pushes opening dates.

If using design-build, the owner can solicit a turnkey price before spending significantly on design. With a site plan, survey and soils report, the design-builder will be able to complete conceptual design in-house and provide a firm price for the total construction before documents are ever started. This allows the owner to mitigate his hard-cost risk. Savvy developers are able to work due diligence, site planning and the solicitation of design-build pricing into their land-option period, giving them a clear picture of total project cost before committing earnest money.

The Risks

No matter which method you choose, understand that you’re at risk of fluctuations in hard costs until a firm project price is established. After that contract price has been set, it’s important to understand your risks during the construction period.

In a plan-and-spec scenario, owners accept more responsibility for complete and coordinated drawings because they have procured those documents directly. They frequently find themselves caught in the crossfire between their general contractor and drawings that were mis-coordinated or perhaps didn’t include adequate detail. Then they’re exposed to change orders throughout the build.

In design-build, the client is at risk for additional costs only if he chooses to increase the project scope. There’s no finger-pointing between a contractor and design team when they’re a single contracting entity. The design-builder is held to a performance specification in the contract, not a set of drawings. The result is no change orders due to design or code issues during construction.

Historically, the design-build method has 5 to 10 percent lower unit costs than the plan-and-spec method. Because of the efficiencies created in an integrated design-build team, it’s 35 percent faster.

Both design-build and plan-and-spec serve a purpose for different types of projects. One isn’t overwhelmingly better for every type. It’s important to examine your project, the resources on your team, your understanding of the building experience and your budget. For owners building a simple or predictable project, plan-and-spec could be right the right choice. For those who don’t want to risk change orders or need an accelerated timeframe to market, design-build could be the way.

If you plan to take the design-build route, it’s best to involve the firm as early in the process as you can. Then, the company will be able to drive design decisions that can reduce the overall budget. It’ll help manage all the necessary pieces to reach the firm project price, and it can maintain a thorough understanding of every variable. This understanding allows the firm to deliver the whole project as opposed to one phase at a time.

Eric Fleps oversees business development for ARCO/Murray Design Build in Dallas, which has more than 25 years of experience. With a background in engineering and project management, he brings a unique understanding and perspective that allows him to guide clients through the development process and foster strategic partnerships nationwide. He’s skilled in cost control, design, and project and sales management. For more information call 214.377.6681; visit www.arcomurray.com.

No matter how nice the features and amenities are at your self-storage facility, the most impactful part of your operation is the interaction between the manager and customer. So, how do you leverage your ability to rent units and optimize the tenant experience? Our Self-Storage Mastery DVD 5-Pack focused on sales and service provides expert strategies and techniques that will help you maximize occupancy and income. The bundle includes the following five videos:

• Rent That Unit! Self-Storage Sales Strategies to Seal the Deal
• A Realistic Approach to Self-Storage Customer Service: Cutting Through the Clutter
• The Lost Art of Service: Creating a Magical Experience for Self-Storage Customers
• Top Things Self-Storage Managers Can Do to Increase Facility Revenue Without Even Trying
• Sales and Service Fundamentals for Self-Storage Facility Managers

Additional Mastery DVD sets focus on career development, revenue management and staffing. Visit the ISS Store for full product details. Learn how to increase your bottom line while simultaneously satisfying customers today!

Inside Self-Storage (ISS) has announced the keynote speaker for its upcoming conference and tradeshow, April 1-4, at The Mirage Hotel & Casino in Las Vegas. Bestselling author, speaker, consultant and former stand-up comedian Brian Carter will present “Eruption, Not Disruption: How to Bulletproof Your Self-Storage Customer Experience to Attract and Retain More Tenants” on April 2, 8-8:50 a.m., as part of the 2019 ISS World Expo.

The presentation will take place on the second day of the event, kicking off the seminar-track education program. Carter will review the social, economic and technology trends affecting the storage industry today and how top-performing owners and managers are creating success in their marketplace. Attendees will learn the five keys to a customer experience that drives a thriving business, the role innovation plays in the evolving industry, the tools top companies and employees are using to build a better future, and how to keep today’s (and tomorrow's) customer happy.

As CEO of his own firm, The Brian Carter Group, Carter has consulted with companies of all sizes, including Microsoft, NBC and Universal Studios. He’s been interviewed by media such as “ABC News,” “Bloomberg TV,” “Forbes” and “The Wall Street Journal.” He’s also written marketing blogs for “Mashable,” “Search Engine Journal” and others. Carter weaves humor into his presentations while offering powerful strategies and tactics to strengthen companies.

The Brian Carter Group is a boutique agency with expertise in digital and social marketing as well as advertising. In 2011, it was the first company to publish case studies about Facebook marketing sales and profit.

This year’s ISS World Expo will feature 100-plus presentations and approximately 200 industry product and service exhibits. It’s produced by ISS, which has provided informational resources for the self-storage industry for more than 28 years. Additional educational offerings from the brand include a monthly magazine, an extensive website, the ISS Store, and Self-Storage Talk, the industry’s largest online community.

 

 

 

A female employee at a self-storage facility in Shreveport, La., suffered head injuries during an armed robbery last week. The incident happened just before 1:30 p.m. on Feb. 18 at Scotty’s Kingston Storage, 8968 Kingston Road. Following the attack, the robber took items from the business and left in the victim’s vehicle, according to the source.

The Shreveport Police Department received a tip after releasing surveillance footage and photos of the suspect. Authorities identified the man as 32-year-old Todd House and have issued a warrant for his arrest. Charges include one count of aggravated second-degree battery and one count of armed robbery. His bond has been set at $300,000.

Anyone with information on House’s whereabouts should contact the Shreveport Police Department or Crime Stoppers at 318.673.7373. The information can be submitted anonymously, the source reported.

Scotty’s Kingston is owned by Scotty Storage Inc., a self-managed real estate development firm that acquires and manages self-storage. The company owns and operates 15 properties comprising nearly 1 million square feet of storage space.

Source:
KSLA News, Man identified, Wanted After Robbing Shreveport Storage Business, Beating Employee

Management software is essential for running a self-storage facility effectively and efficiently. It should suit the individual needs of your business, whatever those may be; however, certain features will simplify and streamline your operation, regardless of its size and type. Following are three features your program should possess today. Let’s see what they are and why they’re important.

Online Rental Capabilities

At the very least, your management software should have online rental capabilities. In today’s Internet-reliant world, the potential for business growth increases exponentially when your prospects can rent a unit online. This is because once someone is on your website, he’s more likely to decide quickly. In fact, 97 percent of people agree that a website has some effect on their buying decisions, according to software developer HubSpot.

When someone goes to your website to rent a unit, a few things should happen. First, your software should keep track of your unit inventory and display—in real time—how many units are available and in what sizes. Furthermore, your rates should be accurate, so your prospect knows what he should expect to pay.

Once the tenant has decided to rent, he should be able to complete the process online. This includes signing the lease agreement electronically. It’s also imperative that your software accepts credit cards. A tenant shouldn’t be able to use your unit without first making a payment. This process should be easy for the customer while providing you with all the information you need.

Access-Control Integration

The next feature your management software should possess is the ability to integrate with your access-control system. Most management-software companies offer integration with a few gate-operator software programs, so you can choose one based on the needs of your property. Often, a management-software company will have a preferred gate provider, which will give you the most power to control facility access.

For example, if you use the recommended gate provider, you may have the ability to open and close your gate directly from your management software. It’s always a good idea to discuss your access-control options with your management-software provider first to make sure integrations are available.

Rate Management

Your management software should also contain a rate-management tool. Managing your rental rates is a vital part of running a self-storage facility because it helps you increase your revenue. Without this tool, it’s still possible to increase rates, but it’ll take longer, especially if you have a lot of units. With rate management built into your software, you can effectively increase rates on a mass scale and set rules to remind you to update rates after a set time.

Getting Help

Regardless of what features your software offers, it’s imperative to maintain a good relationship with your provider. Communicating with the people who develop your program can be extremely valuable. For example, if you need help navigating the software or finding a feature, your vendor should be more than willing to help. You can also ask for tips and tricks. Most companies will answer questions and tell you whether the software can do certain things. They’ll show you how to get the results you want.

Furthermore, you may have a fantastic idea of how the software could better suit the needs of self-storage operators. If you have a good relationship, the company is likely to consider your suggestion and determine if it’s feasible.

Your management software is a vital piece of the self-storage success puzzle. Make your operation as effective and efficient as possible by choosing a program that best suits your business style. And don’t be afraid to ask questions!

Alyssa Browning is the marketing director of Easy Storage Solutions. Launched in 2008, the company provides access control, accounting, call-center services, management software and SEO (search engine optimization) services to small and mid-sized operators. For more information, call 888.958.5967; visit www.storageunitsoftware.com.