The Minnesota legislature passed a $434 million tax-relief bill last month that included the repeal of controversial sales taxes that would have affected some business services this month, including self-storage.

Half of the tax relief is expected to come from repealing sales taxes on warehouse and self-storage services, telecommunications services, and business equipment-repair services. The taxes were all passed last year as a way to broaden the tax base. The warehouse bill was set to go into effect this month, prompting Republicans to ask for a special session last fall to repeal it sooner, according to the source.

In praising the tax development in its Monday e-mail newsletter, the national Self Storage Association (SSA) called the sales tax “chaotic.” “The SSA has been active in Minnesota, seeking the tax repeal and working to improve current laws that govern the sector,” association officials said.

The SSA has assisted other states in battling the threat of sale tax, such as Illinois, where a 4 percent sales tax was supposed to go into effect on Jan. 1 in River Grove. The town was the third in the state to attempt to implement a sales tax on self-storage in the past five years. Both previous attempts were abandoned.

Michael L. McCune, founder of the Argus Self Storage Sales Network (ASSSN), died on April 5. He was 68.

McCune was actively involved in the commercial real estate business for more than 40 years. He played a key role in the development and sale of nearly 4 million square feet of office properties in Denver. In 1994, McCune recognized self-storage as a solid investment opportunity and formed ASSSN to provide self-storage owners with an organized market for buying and selling properties. He felt self-storage represented a much better investment opportunity for real estate investors than was being perceived by the market, and his goal was to educate investors and industry professionals about the opportunity, according to Argus representatives.

“Mike had a unique understanding of real estate and particularly self-storage,” said Charles Ray Wilson, founder of Self Storage Data Services. “We shared ideas, but I always felt that I benefited the most.”

McCune was a fixture at self-storage conventions and frequently gave presentations on facility valuation, capitalization rates and other real estate issues, helping self-storage owners realize the potential of their investments. He watched ASSSN grow into one of the largest brokerage companies in the business, with more than 30 affiliate offices nationwide.

“Mike was widely regarded as one of the brightest and most well-respected professionals in the self-storage industry, and his keen insight and sense of humor will be greatly missed,” said ASSSN President Ben Vestal.

McCune’s legacy extends beyond the self-storage industry, as he was a tireless volunteer for a number of organizations that provided clean drinking water, education and economic development in underprivileged areas worldwide. He was a man who cared deeply about others and his absence will be felt by countless friends, colleagues and the many lives he touched.

“We have all lost a brilliant colleague and a dear friend. I am saddened by Mike’s passing and reminded to be more appreciative every day for my health, family and friends. Mike was a good man and we had a friendship that went back many years. I will miss him a lot,” Wilson said.

An amended bill intended to update the self-storage lien law in Alabama appears to have stalled in the senate, effectively ending its chance for passage this year, according to the national Self Storage Association, which supported the bill along with the Alabama Self Storage Association. The bill did not come up for a vote before the 2014 legislative session ended on April 3.

House Bill 421 could be reintroduced during the 2015 session. It is currently with the senate’s committee on commerce, transportation and utilities. As presently written, it would shorten the time required for default from 30 to 15 days and enable self-storage operators to use e-mail for delinquency notifications.

The measure also would allow limitations on the value of stored goods, the imposition of late fees, and towing of motor vehicles after delinquency exceeds 60 days. In addition, it addresses liens enforced against active members of the military and other provisions.

Real estate investment trust Sovran Self Storage Inc., which operates the Uncle Bob’s Self Storage brand, will pay its shareholders a quarterly dividend of $0.68 per share of common stock for the first quarter of 2014, which ended March 31. The amount is equal to that of the 2013 fourth quarter, and will be paid on April 28 to shareholders of record on April 17.

The annualized dividend is $2.72 per share, which, based on today’s opening share price, equates to an annual rate of approximately 3.7 percent, according to a company press release. It is equivalent to the amount paid in the fourth quarter of 2013.

Sovran also announced details of a financing arrangement totaling $175 million of senior, unsecured debt. The company will use proceeds from the privately placed term notes (Series E) to repay the $115 million outstanding balance on its line of credit and fund future property acquisitions. The Series E notes bear an interest of 4.5 percent for a 10-year term.

M&T Bank was the placement agent in the transaction.

Buffalo, N.Y.-based Sovran operates 486 self-storage facilities in 25 states. The company ranked No. 5 on the Inside Self-Storage 2013 Top-Operators List.

Update 4/8/14 – The governors of Indiana and Michigan signed updated self-storage lien laws last month, enacting new measures that change the administering of the lien-law process for facility operators in those states.

Indiana Gov. Mike Pence signed HB 1385 on March 25. The new law enables the use of e-mail for delinquency notifications, advertising for auctions by “commercially reasonable” means other than the local newspaper, limitations on the value of store goods, and other provisions.

Michigan Gov. Rick Snyder signed HB 4484 on March 27. The new law enables self-storage operators to impose monthly late fees equal to the greater of $20 or 20 percent of monthly rent, limitations on the value of stored property, towing of motor vehicles after delinquency exceeds 60 days, and other provisions.

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3/27/14 – Updated self-storage lien laws in Indiana and Michigan have passed through their respective legislatures and are awaiting governor signatures. If signed, both measures will change the administering of the lien-law process for self-storage operators in those states.

In Indiana, House Bill 1385 eliminates the need to use Certified Mail for tenant notifications, adding definitions for “verified mail” and enabling the use of e-mail. Supported by the Indiana Self Storage Association and the national Self Storage Association (SSA), the bill also enables operators to advertise lien sales by “commercially reasonable” means other than the local newspaper. As long as three independent bidders attend the auction, the manner of advertising would be deemed commercially reasonable. The measure would also make online auctions permissible.

The measure also allows operators to place limitations in rental agreements on the value of stored goods. The limit specified on the lease would be considered the maximum value of the tenant’s stored property. The bill also addresses motor vehicles, including boats, and would enable operators to have vehicles belonging to delinquent tenants towed.

In Michigan, House Bill 4484 enables self-storage operators to impose monthly late fees of $20 or 20 percent of monthly rent, whichever is greater. It also allows limitations on the value of stored property and includes a protection from liability if personal identification or confidential information is disposed or sold during an auction. Supported by the Michigan Self Storage Association and SSA, the measure also eliminates the requirement for operators to obtain an affidavit specifying how and when a default notice was sent to a tenant.

The measure also addresses motor vehicles, including boats, and would enable operators to have vehicles towed after delinquency exceeds 60 days. The approved bill was sent to Gov. Rick Snyder on March 25.

In its weekly e-mail newsletter, the SSA said it is actively seeking lien-law updates in 12 states and tenant-insurance statutes in seven states.

The William Warren Group (WWG), a privately held real estate company that operates the StorQuest Self Storage brand, has purchased six Colorado facilities consisting of 353,902 net rentable square feet of storage space and nearly 2,700 units for $33 million. The properties, which WWG had managed since September 2011, will be rebranded under the StorQuest name. The company now operates 14 sites in the greater Denver area and has 102 locations in its portfolio.

“We believe there is a significant opportunity within the Denver market, as demand remains high and supply remains tight,” said Bill Hobin, president and CEO. “Although the properties have been performing well since we started managing them, we feel the assets have room to grow.”

The properties are:  

• StorQuest Clock Tower, 16400 E. Colfax, Aurora—Opened in 2003, the facility encompasses 70,537 rentable square feet in 533 units. It’s 15 miles east of downtown Denver. 
• StorQuest Highlands Ranch, 745 Monument Drive, Highland Ranch—The single-story facility opened in 1998 and includes 62,120 rentable square feet and 467 units. It’s 18 miles south of downtown Denver.  
• StorQuest Louisville, 1200 Lock St., Louisville—Opened in 1996, the single-story facility is 6 miles east of Boulder and 25 miles northwest of downtown Denver. It comprises 56,535 rentable square feet in 522 units.  
• StorQuest Manitou Springs, 125 Higginbotham Road, Manitou Springs—The facility overlooks Midland Expressway in West Colorado Springs. Opened in 2000, it includes 39,950 rentable square feet and 313 units.  
• StorQuest Pony Express, 18455 Pony Express Drive, Parker—The single-story property encompasses 53,550 rentable square feet and has 402 units. It opened in 1999 and is 20 miles southeast of downtown Denver. 
• StorQuest Twenty Mile, 18601 Longs Way, Parker—Opened in 1997, the single-storage facility is 20 miles southeast of downtown Denver. It includes 71,210 rentable square feet and 455 units.  

“These assets provide an ability to capitalize on the continued economic growth as well as the growth of the StorQuest Self Storage brand in Colorado,” Hobin said.

In February, WWG purchased a facility in Lafayette, Colo., as part of a larger transaction that also included three Arizona properties. The Colorado property at 530 Stacy Court was purchased from A-1 Self Storage for $6.9 million. The facility comprises 72,312 rentable square feet in 551 units. It had also been managed by WWG prior to the acquisition.

Founded in 1994 and based in Santa Monica, Calif., WWG is a privately held real estate company that develops, acquires and operates self-storage facilities in Arizona, California, Colorado, Florida, Hawaii, South Carolina and Texas.

Selby Self Storage has opened a new facility in Selby, England. Located at Selby Business Park, the facility features indoor units and automated services with 24-hour access, as well as outside container storage and warehouse floor space for storing pallets, theater sets and other items. The company secured financing from Barclays PLC.

“It occurred to me that we didn’t have any storage facilities locally, and the business park in Selby seemed a great location to launch,” said Ross Stewart, owner of Selby Self Storage. “Barclays provided an innovative and flexible funding package for me to expand, and the unit provides high-end modern self-store facilities that people locally are finding invaluable.”

An expansion project is already underway on the property, according to the source.

“Ross is a longstanding and valuable customer, and so when he decided to launch the new business, we were delighted to provide the funding,” said Kelvin Smith, senior business banking manager at Barclays. “It’s great to see a local business taking advantage of low interest rates and investing for the future, creating jobs and contributing to the local economy.”

Selby Self Storage began in 2003, storing customer items in wooden crates, according to the company’s website. The new facility offers modern security amenities, including closed-circuit television, an alarm system and keypad access. It serves residential and business customers.

By Kay Miller Temple

The self-storage industry is no exception to every modern business whose management software is changing to embrace SMAC: social media, mobile applications, analytics and cloud. Software improvements don't just add to the bottom line for facility owners, they provide employees with a streamlined workflow and tenants with a customer-focused rental experience. In this article, you'll get insight to recent innovations in industry management software and how you can use it to improve your business.

Social Media

From its present relationship of mutual respect, business software and social media could evolve into a more integrated partnership. For now, social media's role in day-to-day business operation makes for an important conversation where potential software interfaces are concerned.

Business websites should be connected to Facebook and other social media tools, according to Chris Pennington, marketing manager at SMD Software Inc., the provider of Sitelink management software. But he cautions that unless storage operators are making regular, authentic and relevant posts, results may be lacking. "Rebranding or retargeting is often more powerful than a social media presence," he says.

Social media and branding on the Internet is a "must," according to Shaina Cossairt, business development consultant for QuikStor Security & Software, another provider of software for the self-storage industry. Facility owners should discuss search engine optimization (SEO), websites and social media with their vendors, she says, to understand how software can be “the hub” of their modern marketing campaigns.

"There was a time when having a simple ad in the Yellow Pages was all a self-storage facility required for its marketing campaign," she says. "Wow, have times changed! Social media and branding yourself on the Internet is a must to compete nowadays."

Mobile Applications

Software companies are also embracing the mobile movement by adding applications for self-storage businesses and their customers. Apps that provide real-time information and connect simultaneously with other facilities offer convenience, says Mark Smith, senior vice president of product strategy for Centershift Inc., a company that designs applications to integrate websites, call centers and smartphones.

Some apps enable managers to pass a self-storage unit and instantly know its status. Details can also be noted in the app and recorded for follow-up.

Mobile apps also provide convenience for tenants, says Paul Darden, president of District Manager, a provider of self-storage management software. For example, customers with smartphones can receive texts about upcoming or delinquent payments. "They can then immediately make payments right from their phones," Darden says.

Websites that are deemed mobile-responsive allow a self-storage business to be found more easily online and for rentals to happen immediately. "Fewer and fewer reservations are being made by traditional PC users," Smith says.

Analytics

Management software programs that incorporate revenue-management tools are a necessity in today’s competitive environment. In addition, the software should allow data analysis of unit rates and availability so operators can better manage their rental income. "When occupancy is high, rates should be increased; and when they are low, rates should be decreased," Pennington says. "Either way, income benefits from higher rates or higher occupancy."

Operators who manage several sites face another challenge: keeping pace with what’s happening at each site. Software programs that include easy-to-read infographics are one way to show the performance at multiple sites, according to Ramona Taylor, president of Space Control Systems Inc., a company that offers programs for rental-counter and customer management.

A "dashboard-view analysis” of all facilities will use icons to indicate sites that are not performing up to par. "It’s a quick and easy way to see where management should direct its time and attention," Taylor says.

There are also advances in software-analysis systems on the horizon. Expert systems and artificial intelligence will soon be introduced into the self-storage industry, according to Darden. Data mining will provide answers on improving income, including tenant-by-tenant analysis.

Cloud

One move many self-storage operators are making is toward a Web- or cloud-based program. Essentially, this software enables authorized users to access a facility’s information from any Internet connection. There's no CD to purchase and no worries about having enough hard-drive space on an office computer to run programs. Vendors handle the complexity of program building and information storage, and users enjoy the simplicity of logging on to access it.

The benefits of cloud-based software are "enormous,” Smith says. "Having your facility's data in an accessible environment not only allows you access at any time, from any location, but also allows your data to be integrated seamlessly with a website, call center or reservation aggregator.”

Up of 40 percent of self-storage businesses are now using some form of cloud-based management software, according to Pennington, who lists these advantages:

• More integrations. A program that integrates with additional vendors offers more opportunities. Lower credit card rates are one example. This allows a business to add to the bottom line and cut operating expenses.
• Easy accessibility. An Internet connection or smartphone allows users to have access and file-sharing. Employees can review documents and e-mails even when they’re away from the office.
• Increased security. Cloud computing can be more secure than traditional IT infrastructure since providers usually build multiple levels of security and redundancy into their data centers.
• Business resiliency. Studies show that more than 50 percent of small companies will go out of business within a year of a major data loss. In a cloud environment, if a laptop is lost—or worse, the whole office—a business can be back at work in no time since the information and files are securely in place.

A Change in Programs

While it doesn’t happen often due to the cost, training and business disruption associated with such a major move, there are times when a facility owner will opt to change software programs. Before making the switch, however, owners should consider whether the new software will truly generate more revenue, says John Fogg, general manager of Sentinel Systems Corp., a provider of security-access systems and management software to the self-storage industry. Regarding the disruption to business, Fogg suggests owners ask themselves:

• Will my managers buy in, resist change or possibly leave if I change software programs?
• How much data entry will be required to catch up between changes?
• What is the cost for gate-access software interfacing with the new program?

Taylor suggests that in addition to considering the functionality needed by site managers to accomplish tasks such as error correction and providing customer assistance, the needs of accountants and management teams should also be considered before changing programs.

Credit Breaches

Daily reports of credit-data breaches at high-profile businesses such as Target and Neiman Marcus are leaving customers concerned about how any company they do business with handles sensitive data. The self-storage industry’s major program providers have linked with credit card processing companies to be compliant with the Payment Card Industry Data Security Standard (PCI-DSS).

"The best way owners and operators can be safeguarded is to link with one of these processors who have been approved by their software provider," Fogg says.

Moreover, sensitive data should not be stored on a property computer, Smith advises. But if it is, he says it needs to be encrypted, providing "an enormous roadblock to potential thieves."

"Your software provider should be in constant compliance with the payment card industry’s audit standards," Smith adds. "This helps to ensure that systems are in place and working to prevent unauthorized access and use of sensitive customer data."

Users Prompt Innovation

When it comes to innovation and upgrades in self-storage management programs, listening to customer (operator) requests is key, says Smith. "We try to keep a close ear on what they are seeing and doing, and how our software can potentially help them."

Software providers keep their customers' suggestions—large or small—in mind to determine advances that may benefit the majority, Cossairt says. "The day-to-day users of software can provide the best insight of what does and does not work well for them."

Software evolution is not driven just by industry changes and technology, but also by self-storage operators who sometimes need individual program flexibility. "Staying in touch with customers, listening to their concerns and problems, and working with them to come up with solutions is critical to building good software," Taylor says.

The Speed of Innovation

In 1965, Intel's co-founder, Gordon E. Moore, predicted that computing hardware advances would double about every two years. That interval has proved a debatable but a good rule of thumb. Current software advances can be summarized by SMAC. But by next year, another catchy buzzword or phrase will likely appear. What will remain unchanged is the relationship between self-storage owner/operators and their management-software companies—a relationship that keeps customers satisfied and businesses profitable.

"When all is said and done, self-storage software still boils down to the day-to-day main functions of taking payments, renting units and moving people out,” Fogg says. “How information is handled is what makes a program become feature-rich—marketing, reporting and data accessibility. Don’t be fooled by bells and whistles. Evaluate software based on the mainstream operations of your business."

Kay Miller Temple is a physician and recent graduate from the master’s program at Arizona State University’s Walter Cronkite School of Journalism and Mass Communication. To reach her, e-mail [email protected].

Self Storage Group Inc. (SSG), an investment-management company with interests in self-storage, has adopted a stockholder rights plan. The move is another step in the company's decision last year to change from an investment company to an operating company that “owns, operates, manages, acquires, develops and redevelops professionally managed self-storage facilities.” SSG is also trying to maintain its qualification as a real estate investment trust (REIT) for federal tax purposes.

The board’s approval of the rights plan is intended to preserve the company's ability to fully implement its operational change and discourage the accumulation of shares by any person or group who could “adversely affect” SSG’s ability to qualify as a REIT, officials said in a press release. The company applied to the Securities and Exchange Commission on March 28 to deregister as an investment company.

SSG qualified for REIT tax treatment in 2013. To continue under that designation, no more than 50 percent of the value of the company's outstanding shares may be owned directly, indirectly or constructively by five or fewer individuals or entities, officials said.

To implement the rights plan, the board declared a special dividend of one non-transferrable right for each outstanding share of the company's common stock at $.01 per share to stockholders of record at the close of business on April 4. Each right entitles the registered holder to purchase one share of common stock at $.01 per share, subject to adjustment. The rights will be distributed as a non-taxable dividend and expire on Aug. 1, unless they are redeemed earlier or exchanged by SSG.

The company previously operated as Global Income Fund. SSG owns seven self-storage properties under the Global Self Storage brand in Illinois, Indiana, New York, Pennsylvania and South Carolina through its wholly owned subsidiaries. Those assets comprise more than 80 percent of its net assets, according to company officials. As part of its new business plan, SSG also has invested in REITs, including Extra Space Storage Inc., Public Storage Inc. and Sovran Self Storage Inc.

SSG is a non-diversified, closed-end, investment-management firm whose common stock is traded over the counter under the ticker symbol “SELF.” The primary investment objective of the company has been to provide a high level of income, with capital appreciation as a secondary objective.