StorageVault Canada Inc. acquired 2051428 Ontario Inc., aka B&B Mini Storage, in Cambridge, Ontario, Canada, for $2,367,500. After customary closing adjustments, the purchase price was comprised of an initial cash deposit of $50,000, a final cash payment of $813,088, and bank-debt financing of $1,495,000. 

The 188-unit facility sits on 4.76 acres, 2.32 of which is excess land currently used for outdoor vehicle storage. StorageVault intends to grow the business through the development of a PUPS portable-storage franchise, which will be operational by September.
 
StorageVault owns and operates Canadian PUPS portable storage in Saskatoon, Trans Can Mini-Stor in Regina, and Kenaston Self Storage in Winnipeg. The Regina and Winnipeg sites are traditional self-storage facilities operating in conjunction with portable-storage franchises. The company intends to grow through the acquisition of self-storage properties and the development of portable-storage facilities in Canada. Its common shares are listed on the TSX Venture Exchange.

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Statesville, N.C.-based BETCO Inc., a manufacturer of self-storage buildings, added three new sales representatives in Texas.
 
Julie Farrar, a self-storage consultant and owner of a self-storage management firm, has an extensive background in the construction, development, marketing and management of self-storage assets. She has owned BETCO buildings since 1998. She also has experience in banking and real estate.
 
Christie Cook grew up in the self-storage business with parents who were facility owners and operators. She most recently did consulting work with Self-Storage Advisors. She also manages SelfStorageGuide.com, an online resource for self-storage professionals.
 
Brandon Brattlof has worked for self-storage property-management firm United Properties Group for the past five years. He serves as area manager for two self-storage facilities and has experience as a commercial real estate agent.

   
(From left to right) Julie Farrar, Christie Cook, Brandon Brattlof

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Bill Alter, of Rein & Grossoehme Commercial Real Estate, negotiated the sale of two Lock-it-Lockers self-storage properties in Arizona for a combined price of $3.5 million. The Tempe property has 441 units; the Phoenix property has 439 units. Both were sold by a Phoenix developer to an out-of-state self-storage operator.
 
Rein & Grossoehme specializes in the sale of investment properties and commercial leasing. These sales represent Alter’s 101st and 102nd successful self-storage closings in his 24 years as a specialist in this property type.

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In March, I attended the Inside Self-Storage World Expo in Las Vegas as well as the International Security Conference (ISC West), where one could find everything that’s anything to do with the security industry. ISC West featured all the latest equipment and trends, with Internet-protocol (IP) equipment being the highlight of the show. But before we discuss what’s new in IP, let’s look at the products unveiled at the ISS Expo.
 
Overlock Systems

Chamberlain Access Solutions featured its new wireless overlock system, AccessMaster Overlock. This unit allows self-storage owners and managers to automatically place or remove an overlock on a tenant’s unit. This is one of the more innovative approaches to the problem of keeping up with overlocks. It also helps solve a number of problems with kiosks and pay-at-the-gate systems that have become more popular in the last several years.  

The overlock system is integrated into the property-management software, much like an alarm system. When a unit comes into overlock status, the software, working in conjunction with the security-access system, sends a wireless signal to the unit. The overlock system then locks the slide latch so the door cannot be opened, even when the tenant’s own lock is removed. Once the unit comes out of overlock status, the management software sends another signal, causing the overlock system to unlock the slide latch.

The overlock system consists of a battery-powered locking unit, wireless repeaters and software. The locking device attaches to the facility’s roll-up door, in line with the slide latch. The repeaters are installed as required throughout the site and do require a power source. These are different from the repeaters used with some wireless door-alarm systems. Installation for the locking device is done from outside the unit using a drilling template and rivets; there’s no need to open the door.
 
New in Keypads

Another hot item found at the ISS Expo was high-tech keypads, which have become smarter in recent years, with new capabilities. Sentinel Systems Corp. has added some of the features from its high-end Model 3200i keypad into a new version of its Model 315. The 315 now has a standalone mode, so in the event the access system loses communication with the office computer the keypad will continue to function as normal.

Tenant status and unit codes are stored in the keypad and updated by the property-management software. As long as the unit has power, it continues to allow operation as normal. All of the keypad-activity data is stored in memory and, once communication is re-established, that information is sent to the office computer. This ensures the activity log stays up-to-date and has no gaps.

While on the face many keypads might have the same look, the technology has changed. We don’t often hear about all the upgrades and changes that take place on the component side of the equipment, but be aware there have been numerous changes in performance, stability and reliability. The keypads and other electronic security components we use are nothing short of small computers. Just as computers continue to evolve, so do these devices.

Also, like computers, keypads sometimes need an upgrade. If your system is more than five years old, check with your vendor to see what upgrades are available and what is recommended. 

Improved Cameras

IP-enabled equipment is fast becoming the standard in all areas of security. This boom in IP has affected the CCTV industry the most, but is now making its way into alarm and access-control equipment. This movement will soon allow all system components to “talk” to one another.

The first major improvement has been in megapixel cameras. These cameras are much the same as the ones you would use to take photographs in that they provide a digital image that can be enlarged or zoomed in on with little to no distortion during playback. There are now 1- to 16-megapixel cameras, and while the higher-end versions are expensive, cameras in the 2- to 4-megapixel range are affordable and offer several benefits for the self-storage industry.

With megapixel cameras, it’s possible to use one camera to cover a driveway where we might normally use two or three. This not only saves in equipment costs, but gives us better images with a higher definition. You can digitally pan the camera after you zoom in, allowing more in-depth viewing of the entire image. It’s also possible to set up more than one recording view for a single camera, so while recording the camera in full view, you can simultaneously record a second view of a magnified area.

For instance, let’s say you have one camera recording an aisle that shows the office and gate area. You could record a second, magnified view to show license plates at the gate, and a third magnified view of the office area―all simultaneously from the same camera. This approach can be used anywhere on site.

These cameras require a piece of storage equipment called a network video recorder (NVR). This recorder offers several benefits including larger storage capacity, off-site storage, and real-time off-site monitoring, which replaces after-hours guard services. NVRs also have analytics far superior to those of digital video recorders, which have become the norm for many self-storage sites.

NVR analytics allow for features such as virtual fencing, direction tracking, object counting, missing object and many other options in post- and pre-recording modes. They allow for easy viewing over any device that can connect to the Internet, including your smart phone. It’s now truly possible to monitor several sites and multiple cameras from anywhere you can get Web access. For owners with multiple locations, this can help you manage from a distance.

Another benefit IP has given us is the ability to use more devices. One that’s of particular importance to self-storage is a low-cost, mid-range radio. Along with IP cameras and POE (power of Ethernet) routers, these radios allow us to put cameras at the far end of a property with no wire runs (with the exception of one from the camera to the radio).

Now a site operator can add cameras, keypads, intercoms and other devices in locations that have no conduit runs back to the office―and at a lower cost than using traditional conduit and wire. Radios can be placed in multiple points throughout the property, allowing an owner to enhance the security and operation of his site.

This move toward IP is hastily becoming the norm of all that we deal with in security. Within in a few years, all items across the security market will become intertwined by way of IP. Soon we’ll have smart devices that notify us of their operational state and allow us to control them in ways we are yet to imagine.

It remains to be seen how the self-storage industry will adapt to IP. With the rest of the security industry quickly turning to the benefits of this technology, the manufacturers of self-storage security equipment will need to adapt to IP so the benefits can be used by our industry, too.

Chester A. Gilliam is the president of Wizard Works Security Systems Inc. in Centennial, Colo. The company specializes in self-storage security systems and has worked across the United States installing the latest technology for the past 19 years. For more information, call 303.798.5337; e-mail [email protected]; visit www.wzrdwrks.com.

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Over the last two years, we’ve seen real estate transactions become increasingly complex and difficult to complete due to the cautious nature of buyers and, more important, the exceptionally cautious nature of lending institutions. In that light, I thought it would be helpful to explain what a real estate broker does to help clients buy and sell self-storage facilities.

Typically, you hire an expert to increase the probability that a deal gets done—and done right. It falls into the same category as why you hire an accountant to prepare your tax return. But there’s more to a broker’s role than just completing paperwork. We’ll explore how these responsibilities can have a significant impact on the results of your transaction. 

Creating and Extracting Value 

In March, I presented a seminar at the Inside Self Storage World Expo in Las Vegas titled “Ready to Sell Your Storage Property? The Prep Behind the Sale.” My primary goal was to help owners understand that the selling process doesn’t create value, but rather the value of the property is created by the net operating income (NOI) and the current investment climate for income-producing real estate. In today’s market, 90 percent or more of the value is created by the NOI because real estate, including self-storage, is competing for investor dollars with stocks, bonds, CDs and other income-producing investments.

A broker’s job is to extract the value of the property by finding a buyer who recognizes the value and is able to purchase the property under current market conditions. A broker should also assist in the navigation of the complex marketing, pricing and negotiation processes. The buyers who are active in today’s market are sophisticated, as are their lenders, and more cautious than ever before. It’s unlikely you’ll find a buyer who’s unsophisticated and willing to pay a premium to the current market value; and it’s unproductive and potentially detrimental to the property if the transaction process is not executed properly.

Exposure Sells

It stands to reason that the more potential buyers who see information on a listed property, the more likely an owner will receive the highest possible offer. The only way to guarantee you’re receiving the highest offers on your property is to maximize the number of qualified prospects exposed to the listing.

Does a broker make a difference in this process? Absolutely! Only an experienced professional with a specialization in self-storage will have access to the necessary tools and relationships to ensure your property has maximum exposure within the self-storage and commercial real estate industries.

A good broker will employ marketing practices that expose a listed property to as many prospects as possible, not just ones a broker develops from his own list of contacts. A seller deserves to receive offers from all potential buyers. Some brokers feel mass marketing is just an additional cost and creates a hassle; but even though it creates more work and costs more, it’s an opportunity to get a better price for the client.

In short, a broad marketing approach helps a broker find the best buyer for the property, not just any buyer. Be sure to ask your broker about his marketing strategy when you discuss your listing. If he doesn’t have a marketing strategy for your property, it should be a red flag.

Your Broker Works for You

The real estate community has an industry standard that one broker represents the seller and, most of the time, another broker represents the buyer. These brokers then typically split the commission or cooperate in some manner so both participate in the commission paid by the seller.

Over the last few years, it has become common to see listing brokers who are unwilling to “cooperate” with other brokers. This is because they don’t want to share their commission or do the necessary work to qualify potential offers generated by a commission split. Not only does cooperating with outside brokers increase the potential market of buyers, it protects the seller by exposing all potential offers on the property. There’s no benefit to the seller if the listing broker doesn’t cooperate with outside brokers.

It’s important to understand the role of the broker before you hire one. If a self-storage facility is priced properly and a good marketing plan is executed, the property will sell in a reasonable amount of time and the client’s objectives will be met. Be sure to consider all these factors when you look to sell or buy your next self-storage facility, and you’ll put yourself in position for a smooth and successful transaction. 

Ben Vestal is president of the Argus Self Storage Sales Network, a national network of real estate brokers who specialize in self-storage. Argus provides brokerage, consulting and marketing services to self storage buyers and sellers and operates SelfStorage.com, a marketing medium and information resource for facility owners. For more information, call 800.55.STORE; e-mail [email protected].

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Public Storage, a real estate investment trust, released its operating results for the first quarter ending March 31, 2010. The self-storage company reported funds from operations fell from last year. Highlights include:

• Net income allocable to its common shareholders for the first quarter was $34.7 million or $0.21 per share, compared to $159.5 million or $0.95 per share for the year-ago quarter.
• Funds from operations (FFO) allocable to common shares for the first quarter was $131.2 million or $0.78 per share, compared to $254.5 million or $1.51 per share in the prior year quarter.
• Revenue declined to $398.06 million from $404.24 million in the same quarter last year.
• Self-storage rental income fell to $364.7 million from $370.8 million a year ago.
• Revenue for the same-store facilities decreased 2.2 percent or $7.7 million compared to the same quarter last year, mainly due to a 3 percent reduction in realized rent per occupied square foot, offset by a 0.6 percent increase in average occupancies.

The company recently entered into an agreement to acquire 30 self-storage facilities for $189 million, including $100 million of assumed debt and $89 million of cash. Twenty-eight of the facilities (1.8 million square feet) are in the Los Angeles area and the surrounding communities of Southern California. The other two facilities are in the Chicago area.

Public Storage also owns a 49 percent equity interest in Shurgard Europe, with the remaining 51 percent equity interest owned by an institutional investor.

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Strategic Storage Trust Inc., a publicly-registered non-traded real estate investment trust targeting the self-storage market, acquired two self-storage facilities in Tempe and Phoenix, Ariz., in an all-cash transaction.

The properties will be rebranded SmartStop. Bill Alter with R&G Commercial brokered the transaction with a regional partnership.

“These additions to our growing portfolio are especially attractive because of the potential for added value through renovation," said CEO H. Michael Schwartz. "We plan to make significant capital expenditures to improve the properties, including new roofs, door replacement, drive lanes, painting and new signage."

The Phoenix facility, located at 3636 E. Washington St., has 73,000 rentable square feet on 3.33 acres, and is comprised of 440 units. The facility is near several major highways.

The Tempe facility is at 1135 W. Broadway Road. It encompasses 55,500 rentable square feet on nearly 3 acres and has 440 units.

Source:  Earth Times,Strategic Storage Trust, Inc. Buys Two Self-Storage Properties in Phoenix & Tempe, Arizona -- All Cash

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Self-Storage Talk: Real Estate Listings and Investment Opportunities

U-Store-It Trust, a self-storage real estate investment trust, released its operating results for the three months ended March 31, 2010.

"Our first-quarter earnings reflect a stabilizing environment in the self-storage sector. While consumer demand has yet to return to pre-recessionary levels, we are seeing trends in sequential monthly occupancy that are returning to historical seasonal norms," said CEO Dean Jernigan. "We continue to focus on cost-control measures and creative marketing programs to maintain and enhance our market share. We are well-positioned to return to higher levels of profitability heading into our prime rental season as consumer demand for self-storage begins to return to normalized levels."

Highlights include:

• Funds from operations (FFO) was $0.12 per share for the first quarter
• Same-store revenue for the company’s 364 facilities decreased 3.2 percent from the first quarter of 2009.
• Same-store net operating income decreased 3.6 percent from the first quarter of 2009.
• Ending physical occupancy was 75.1 percent compared to 75.3 during the same time period in 2009.

Source:  The Washington Post,  U-Store-It Exceeds First Quarter FFO Guidance; Reports First Quarter FFO per Share of $0.12

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Gap Self Storage in Gap, Pa., has expanded to include a fourth building, adding 82 units to the facility’s existing 250. The $400,000 metal-clad building, designed to have a barn-like appearance, comprises 10,500 square feet. The new building also includes the facility’s first climate-controlled spaces―33 to be exact.
 
Opened in 1992, Gap Self Storage is owned by Dean Stoltzfus and is located behind Stoltzfus Feed & Supply.
 
The facility will host an open house on Saturday from 9 a.m. to 3 p.m.
 
Source: Intelligencer Journal / Lancaster New Era, Gap Self Storage completes expansion

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