On June 1, Smart Marketing Concepts LLC will debut its new Usave Storage brand, designed to provide owners of small to mid-size self-storage facilities with Internet exposure and access to online reservations technology.
 
The brand website, Usavestorage.com, gives consumers access to a network of brand-affiliated independents. Each member of the network is given exclusive use of the brand within a specified and protected territory to limit competition by another nearby store, according to Mike Harley, president. Territories will be offered on a first-come, first-served basis via application, beginning June 1.
 
Harley has an extensive background in reservations technology, channel distribution, Internet marketing and national franchising.
 
Headquartered in Oldsmar, Fla., Smart Marketing Concepts was formed in 2003 to provide next-generation reservations technology and Internet-marketing solutions to a wide variety of industries. The company owns and operates a proprietary centralized reservations system offering real-time rates, inventory and management reports with instant customer confirmations.

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Julie Servatius, resident manager of Spring Garden Self Storage in Deland, Fla., is being "locked up" to raise $3,200 for Jerry's Kids. On May 20, Servatius will become an honorary jailbird to help raise money for the Muscular Dystrophy Association. The Deland ALS Awareness Lock-Up event will take place at Bill and Frank’s Brickhouse Grill. Donations will go toward research, treatments and support to those with ALS (amyotrophic lateral sclerosis), also known as Lou Gehrig’s Disease.
 
A humorous news report about Julie’s “capture” and efforts to affect her release can be viewed at www.joinmda.org/deland2010/springgardenss. Donations can be made at the same Web page. As of this morning, $80 have been donated.
 
Spring Garden Self Storage is managed by Cutting Edge Self Storage Management.

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MiniCo Inc., a provider of self-storage insurance products and industry publications, has sold its insurance-agency operation and publishing division to Aran Insurance Services Group of Rockville Centre, N.Y. MiniCo will continue to operate from its Phoenix headquarters.

MiniCo founder Hardy Good, who established the company in 1974, will assist in the transition and serve as a special advisor to the MiniCo Insurance Agency LLC’s board of directors. MiniCo’s insureds and insurance agents will continue their relationships with the company unchanged, according to Mike Schofield, president and CEO. Liberty Agency Underwriters will continue as the company’s underwriting partner.

MiniCo insurance products include MiniPak business-coverage packages and two types of tenant insurance: TenantOne Direct customer-storage insurance and MiniCo pay-with-rent insurance. The company’s publications include Mini-Storage Messenger magazine, Self-Storage Now!, the Self-Storage Almanac and the Self-Storage Development Handbook.

Aran is a full-service general agency and underwriter that specializes in acquiring and developing insurance underwriting facilities for the property and casualty and accident and health markets.

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We’ve heard a lot in the press about being “too big to fail.” As you know, the government stepped in last year to save some of the financial giants. Without that action, our entire financial system would have been in jeopardy. Most small businesses will not be afforded the same luxury, leaving their owners to fend for themselves and in jeopardy of losing their livelihoods.

There is little doubt that the smaller self-storage operator is under more pressure to survive than ever before. It’s true that a self-storage owner—big or small—needs to be smarter to maximize income in this down market. However, it’s possible the small operator is in a unique position to actually take advantage of its size and achieve success―that, in fact, smaller self-storage operators may just be “too small to fail.”

Your facility just might be the right size. Consider that a majority of self-storage properties are between 30,000 and 60,000 square feet and have values in the $1- to $3-million range. In comparison to larger storage properties and other commercial real estate assets, that’s pretty small. In self-storage, when facilities are larger than 75,000 square feet, it becomes more difficult to maintain occupancy. 

Resistant and Resilient

As far as real estate goes, few investments are better than self-storage. Is our industry recession-proof? Financial-markets-meltdown-proof? Unemployment-proof? Overbuilding-proof? No, no, no, and of course not. Self-storage is, however, resistant and resilient. As the market changes, the demand drivers for self-storage also change. According to several reports that track commercial real estate, self-storage has the lowest default rate of all properties.

On average, there has been less rental-revenue pressure on self-storage relative to other property types. If this is hard to believe, consider what’s happening to retail and office properties where tenants routinely approach owners and management companies to renegotiate leases. In most cases, these revised terms will last five years or even longer.

In comparison, the month-to-month leasing prevalent in storage may be a saving grace. As the market recovers, storage owners will be able to respond by adjusting rental rates upward accordingly. Self-storage also has a diverse tenant base, limiting exposure to single tenants and virtually no cost with re-tenanting.

Small self-storage operators have a unique sense of entrepreneurial pride, treating their business like their baby. After finding the site, designing the facility, enduring the pain to get the necessary approvals, getting financed and leasing up the property, there’s clearly a vested interest.

Many small to mid-size operators are very involved with the daily operation and activity at their facilities. Staying involved allows them to control expenses, stay on top of maintenance, manage personnel issues, personally interact with tenants, and maintain a firm grasp on rental demand and pricing. Today’s market requires the flexibility to offer tenants the customized deals necessary to maximize occupancy and revenue. Let’s not forget the personal relationship that might matter to the customer most during his time of hardship or need.

Asset Management

The role of a smaller operator/owner goes beyond property management and must also include asset management. Often overlooked, this component can provide a tangible competitive advantage.

A critical part of managing the asset is keeping the financial partners, including the lender, informed about operating performance, even when this is not specifically required. If you’re experiencing problems, it’s advisable to speak with your lender as early as possible. Odd as it may seem, this is another area in which being smaller can often be to your advantage. So many lenders are currently dealing with much larger non-performing credits with worse scenarios and loss implications than you’ll ever present to them. Keep this in mind, and try to work this to your advantage.

When the capital markets make dramatic shifts, all owners are affected. Over the past 18 months, three of the four self-storage real estate real investment trusts (excluding Public Storage) needed to test their ability to raise capital in a distressed capital-market environment. With much effort, all three succeeded, effectively reinforcing the notion that larger well-operated institutions are capable of assessing capital easier than smaller operators. However, lessons learned by these giants in our sector is capital is not easy to secure; and to do it, one needs to be diligent, creative, resourceful and realistic. 

However, if a lender is still actively lending, it may be easier for it to put smaller loans on the books than larger ones. Additionally, lending limits are based on a bank’s capital structure, which, in many cases, has been reduced in this economy. Smaller borrowers can theoretically access a larger base of lenders. In this regard, I highly suggest you seek the advice of a professional mortgage broker to expand the base of capital sources and market your deal, given that competition for loan dollars is more competitive than any time in recent history.

The self-storage industry is still highly fragmented with a large preponderance of smaller operators; nonetheless it’s an industry that will be well poised to survive this economic cycle. Take aim at your strengths as a smaller operator to run your business better and manage your financial position, and you just may find that you’re too small to fail. 

Neal Gussis is a principal with The BSC Group, a Chicago-based commercial real estate financing advisory firm, where he supports self-storage owners nationwide. He can be reached at 847.922.3750; e-mail [email protected].

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Self-storage operators these days need to take a big step back and examine the claims they make about their rental spaces. The biggest issue I see revolves around a phrase we, as an industry, made up: climate control. I can’t find it formally defined anywhere, can you?

The claim of providing climate-controlled space is coming more into question. Jeffrey Greenberger, one of the self-storage industry’s most recognized attorneys, has long urged us to clearly define, in our rental agreements, what climate control means. Are we controlling humidity? Temperature? Within what range?

This has become such an issue in Nevada that advertising claims of climate-controlled units is now specifically regulated under the language in Nevada Revised Statute 597.890, a provision that outlines related requirements, penalties and civil liabilities. It reads:
 
1. The owner of a facility for the storage of personal property or a person acting on his or her behalf shall not advertise that the facility is “climate controlled” unless the advertisement specifies the range of the minimum and maximum temperature and humidity within which the facility is maintained.

2. If an owner or a person acting on his or her behalf fails to indicate the range of temperature and humidity of a facility in any advertisement that refers to it as being “climate controlled” or fails to maintain the temperature and humidity of the facility within the advertised range, the owner is guilty of a misdemeanor and is liable to the occupant for any damages that are caused to the occupant’s personal property as a result of extremes in temperature or humidity, notwithstanding any contrary provision in the rental agreement.
 
Nevada’s legislature felt the meaning of “climate control” to be so critical to customers’ understanding of our product that it made it a criminal penalty to not properly disclose it. But there are not many operators I know outside of Nevada who have taken the admonition to heart. Most don’t include the phrase in their rental agreements. Is it clearly referenced on your website or Yellow Pages ad?

Another set of claims that gets us into hot water are those revolving around unit size. Are all of your 10-by-10s really 100 square feet, and your 10-by-20s 200 square feet? I really doubt it. If the actual space you rent is smaller than what is claimed on your rental agreement, it could open you to possible litigation.

Here’s area where many of us have missed the disclosure boat—our websites. Often, the “unit reservations” page of a facility website is driven by the content of the software database, not manually inputted by the facility owner or manager. That means the page automatically populates with generic unit sizes.
 
It’s a simple fix. Your rental agreement and website should include a clear statement regarding unit size: “All sizes are approximate and for comparison purposes only.” 

Small-Business Employee Health Insurance

What does the new healthcare reform mean to small-business owners? Prior to the enactment of this legislation, roughly 46 percent of businesses with fewer than 50 employees provided healthcare to their employees. If you’re a self-storage owner with paid staff, it’s important that you understand how the legislation will affect you.

You can find an excellent summary and a link to the complete legislation on the website of the National Federation of Independent Business at NFIB.com. (Choose “Issues & Elections” from the top menu.)

There will be some adjustments ahead for us if the legislation stands as it’s currently written. For example, starting in 2012, one provision requires you to issue a 1099 at the end of the year for every business-to-business transaction of $600 or more; and the threshold appears to be cumulative. It may mean that if you have businesses or professionals renting units at your facility for a year at more than $50 per month, your accountant will need to get busy preparing those 1099s. Sounds like more fun for the small-business owner in the years ahead.

Despite the potential road blocks, the self-storage owner who perseveres and offer his employees health coverage will benefit in the long run by being able to hire and retain a superior work force than the one who simply lets employees fight for themselves. I remain optimistic that this is not the last we’ve heard about healthcare and small business before many of these provisions go into effect.
 
Jim Chiswell is the owner of Chiswell & Associates LLC, a provider of feasibility studies, acquisition due diligence and customized manager training for the self-storage industry. He has served for a number of years on the Inside Self-Storage Editorial Advisory Board and is a moderator for SelfStorageTalk.com, the industry’s largest online community. He can be reached at 434.589.4446; e-mail [email protected]; visit www.selfstorageconsulting.com.

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The California Self Storage Association (CSSA) and Belgravia Capital will co-host the sixth annual Self-Storage Owners Summit on July 22, 1-7 p.m., at the Balboa Bay Club & Resort in Newport Beach, Calif. Produced annually by the CSSA, the event highlights issues relevant to facility owners.
 
This year’s program will feature a keynote presentation by Ron Havner, vice chairman, president and CEO of Public Storage Inc. Self-storage valuation expert Charles Ray Wilson will present a session titled, “Self-Storage: It’s Not a New Ball Game, It’s a Game Change,” focusing on self-storage operating-performance trends.
 
In addition, the summit will include a panel discussion addressing recent acquisitions, current investment strategies, self-storage performance, and capital-market and industry trends. The panel consists of Dean Jernigan, CEO of U-Store-It Trust, Ben Eisler, president of BACO Realty, Brian Caster, president and CEO of A-1 Self Storage, and Michael Knott, an award-winning analyst of self-storage real estate investment trusts.  
 
After a reception, attendees are invited to participate in a poker run held by the Kure It! Kidney Cancer Research Fund.

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Self-storage finance expert Jim Davies, with more than 28 years of commercial and self-storage lending experience as a direct lender and structured finance advisor, has joined former executives of Belgravia Capital and Buchanan Street Partners to provide Belgravia clients with capital stack investment solutions.
 
Davies previously served as a senior vice president and shareholder of Buchanan Street Partners, and was a co-founder and principal of Buchanan Storage Capital. He and his team have long-term relationships with key players in the financing industry including banking, investors and special servicers.
 
Belgravia is a full service real estate investment banking firm headquartered in Orange County, Calif. In addition to providing debt and equity to owners of self-storage and commercial real estate, Belgravia continues to source debt and property-investment opportunities for its preferred investors nationwide.

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Space Plus self-storage of Boynton Beach, Fla., could be foreclosed on and seized by a commercial mortgage-backed securities (CMBS) fund.
 
According to Palm Beach County Circuit Court records, Bank of America, representing a CMBS fund originated by Bear Stearns Commercial Mortgage Securities, filed a $3.5 million foreclosure lawsuit on Wednesday against Mega Mini Co. Data from CMBS analysis firm Trepp LLC indicates the mortgage was more than 90 days past due in late April.
 
Space Plus is a 119,893-square-foot storage facility sitting on 10 acres.

Source: South Florida Business Journal, Space Plus storage faces foreclosure

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Shafiq Self Storage in Waldorf, Md., was vandalized by graffiti artists earlier this week.

The facility, located at 11870 Acton Lane, reported the vandalism to police May 12. A preliminary investigation shows the vandalism happened between May 5 and 12.

The graffiti included cartoon characters, and ethnic and racial slurs spray painted on a cinder block wall facing a wooded lot. The investigation is ongoing.

Charles County Crime Solvers offers cash rewards of up to $1,000 for information that leads to an arrest or indictment. Callers may remain anonymous by calling 866.411.TIPS; texting CHARLES plus the tip to CRIMES; or visit www.ccso.us.

Source:  The Baynet.com,  Graffiti Artists Vandalize Local Business

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