As self-storage businesses seek to protect their bottom lines, it’s crucial that they take steps to ensure security for their property, customers and employees. However, most businesses must balance the need for security with the need to maintain an inviting appearance for potential customers. Therefore, installing unattractive, ominous-looking security fencing isn’t a desirable option. Fortunately, wrought iron fencing strikes an ideal balance between protection, curb appeal and long-term value, making it an excellent investment for businesses with various needs and goals.
Are you thinking about installing security fencing to safeguard your business property from thieves, vandals and other trespassers? Consider the following reasons to choose a wrought iron fence.
Timeless beauty. The exterior of your property reflects your brand and is often one of the first impressions prospective customers have of your business. Therefore, it’s crucial that all elements of the facility look appealing—even commonly overlooked features like fencing. As opposed to other types of fencing materials, wrought iron boasts a natural elegance that has been admired for centuries.
It may even be painted with a variety of colors and finishes. Due to its malleability, it may be shaped to suit the unique style of any property. For example, the style of wrought iron fences can range from simple and contemporary to ornate and decorative.
Superior durability. Wrought iron is highly durable compared to other common fencing materials, such as wood or aluminum. This natural strength enables the wrought iron to resist bending or breaking, making it a formidable barrier to trespassers. In addition, the pickets of a wrought iron fence are nearly impossible to remove, so intruders can’t enter the property by squeezing between them. Therefore, these fences—particularly when paired with wrought iron gates—serve as effective security measures for businesses. Aside from enabling businesses to protect their assets, wrought iron fences can help them minimize liability by keeping employees, customers and visitors safe from external threats.
Positive return on investment. The bottom line is a constant concern for any business, so major purchases must be considered in terms of the long-term value they’ll deliver. Wrought iron fencing promises a strong return on investment due to its natural durability. To further extend the lifespan of the wrought iron, this sturdy material may be galvanized or sealed with a protective zinc coating to shield against rust.
Galvanized wrought iron products will remain in prime condition for years to come—even when exposed to intense sunlight, rain, snow and other harsh conditions. By choosing a high-quality, galvanized wrought iron fence to enclose their properties, self-storage businesses won’t have to spend money on repairing or replacing the fence for many years.
Wrought iron fences offer a powerful way to enhance the beauty and security of any commercial property, while assuring storage owners that they’re making a sound investment. However, as with any capital expenditure, it’s important to work with a qualified professional when purchasing a wrought iron security fence.
Located in Phoenix, DCS Industries has more than a decade of experience in designing, manufacturing and installing custom wrought iron fences and gates for commercial, industrial and residential properties. The company works closely with its customers to ensure that the finished product fulfills their needs and complements the property’s style. For more information, call 623.825.7700; visit https://dcs-ind.com.
The Supreme Court of California ruled unanimously last month that self-storage tenant-protection plans don’t constitute insurance. This video examines the reasoning behind the court’s opinion and how the decision in Heckart v. A-1 Self Storage Inc. defines these plans differently from tenant insurance.
Mark V. Shoen, a major shareholder of U-Haul International Inc. parent company AMERCO and owner of one of the largest private self-storage operations in the U.S., has been identified as the richest person in Arizona by “Forbes,” which released a ranking this week of the wealthiest individual in each state. Shoen’s net worth of $3 billion comes from owning roughly one-fifth of AMERCO through a limited partnership called Willow Grove Holdings LP. His storage company does business with U-Haul, according to sources.
Contrary to the Forbes report, the Bloomberg Billionaires Index states Shoen’s net worth is $5.58 billion, with a 22 percent ownership in AMERCO. He and his brother James own self-storage facilities under the U-Haul and Private Mini Storage brands, as well as through Mercury Partners. Together, they control about 47 million square feet of storage space.
By comparison, Facebook CEO Mark Zuckerberg is the richest person in California, with a net worth of $74 billion. Amazon CEO Jeff Bezos is the richest man in the world at $132 billion, according to the source.
Willow Grove owned more than 8.3 million shares, or 42.6 percent, of AMERCO stock, according to an SEC filing last year. Shoen was the subject of a 2013 Bloomberg report, which indicated the billionaire had sole ownership of 359 U-Haul self-storage facilities and majority ownership in 78 others.
Established in 1945, Phoenix-based U-Haul owns more than 44 million square feet of storage space. AMERCO is also the parent company to Amerco Real Estate Co., Oxford Life Insurance Co. and Repwest Insurance Co.
Sources:
12 News, There's a New Richest Person in Arizona, According to Forbes
Forbes, Meet the Richest Person in Every State 2018
Bloomberg Billionaires Index, Mark Shoen
Self-storage owner and developer Hugh Horne has joined forces with HPI Real Estate Services & Investments to build a new facility in San Antonio. The property at 10126 Potranco Road, to be called HPI Horne Storage, will be managed by an unnamed industry real estate investment trust. It’s expected to open next April, according to the source.
Designed by Archon Architecture, the facility will comprise 134,000 square feet of net rentable space in 979 climate-controlled units. SBS Construction is the general contractor.
Last fall, Horne backed a music venue called The Lodge Room that opened in a building he owns in Los Angeles. The entertainment setting offers 500 seats in 8,000 square feet of space on the second floor of the Highland Park Masonic Temple.
Horne is CEO and president of Horne Developments Inc. and Horne RPC Storage I L.P. Prior to launching his own companies, he held several executive roles at Public Storage Inc., Storageworld LP and Storage Spot Inc.
Headquartered in Austin, Texas, HPI Real Estate is a full-service commercial real estate firm with additional offices in Dallas and San Antonio. The company has more than 25 years of experience as owners, investors and managers of commercial real estate, according to its website.
Source:
Rebusiness Online, HPI Horne Developing 979-Unit Self-Storage Facility in San Antonio
U.K. self-storage operator Big Yellow Group PLC released financial operating-performance results for its 2017 fiscal year, which ended March 31. The company reported same-store revenue of £114.7 million for the period, up 7 percent from 2016. It attributed the growth to strong gains in average occupancy across its portfolio, which closed at 81 percent compared to 78 percent a year ago. Occupancy drove 7 percent of revenue growth, according to a press release.
Same-store occupancy was 81.9 percent, up from 78 percent a year ago. Though it fell short of its total-portfolio average-occupancy goal of 90 percent, Big Yellow officials were encouraged by the positive movement and 2.7 percent increase in net rental rates.
"We remain focused on our core objective of increasing occupancy to 90 percent. As we have previously indicated, higher levels of occupancy deliver more traction on pricing and drive rate growth; and indeed, we have seen that materialize in the second half of the year,” said Nicholas Vetch, executive chairman.
Cash flow increased 13 percent to £63 million. The company could opt to use its financial flexibility to pursue more development projects. It has received planning approval for two developments in London and Manchester, England. Combined, the new facilities will comprise 132,000 square feet.
“As our vacant capacity has reduced, we have been more aggressively pursuing an expansion strategy. There are very few existing stores that are of sufficient quality available to purchase and brand as Big Yellow,” Vetch said. “We continue, therefore, to acquire raw land and develop our own stores, and are pleased to have secured a number of quality sites during the year. The development process, however, of which we have unparalleled experience, remains long, does carry risk, and is increasingly complex.”
Total revenue for the year was £116.7 million, a 7 percent increase year over year. Adjusted pre-tax profit was £61.4 million, up 12 percent from 2016. The group's pre-tax “statutory profit” was £134.1 million, a 34 percent increase compared to the previous fiscal year. The growth was attributed to increases in operating profit and revaluation gains in the company’s investment properties.
“Risks external to our business remain, and there will no doubt be setbacks in economic growth,” Vetch said. “It is for that reason that we keep the business very conservatively financed, thus enabling us to plan and execute the next phase of growth."
Big Yellow Group operates 96 self-storage locations in the United Kingdom under the Big Yellow Self Storage and Armadillo Self Storage brand names, with most concentrated in Greater London. Its total portfolio comprises 5.6 million square feet.
Source:
Big Yellow, Results for the Year Ended 31 March 2018
Variety Storage has opened in Glen Carbon, Ill. The self-storage property at 30 Kettle Drive comprises approximately 115,000 square feet of rentable storage space in 395 climate-controlled and drive-up units. It also offers covered and enclosed RV-storage units, some of which are heated, as well as a wash bay, electrical outlets for trickle chargers, a propane-fill station, air compressor and dump stations.
Security measures include keypad access and video cameras. The retail-oriented office sells moving and packing supplies, RV accessories, and ice. Customers also have access to online reservations and billpay.
An Aug. 1 ribbon-cutting ceremony will include facility tours and a raffle for free storage. Open to the community, it’ll be held in conjunction with the Edwardsville and Glen Carbon Chambers of Commerce, according to a press release from Storage Asset Management Inc. (SAM), the third-party management firm that will operate the site.
Based in York, Pa., SAM manages more than 90 self-storage properties and three UPS Stores along the East Coast.
Previously, many commercial real estate lenders kept their eyes tightly shut when it came to self-storage loans. They didn’t understand the asset class, had little interest in learning more about the industry, and instead focused their vision on more familiar property types.
Today, their eyes are open—wide open—as they’ve awoken to our industry’s vast potential. In fact, they’re aggressively pursuing financing for qualified storage properties. For instance, it’s not uncommon for commercial mortgage brokers to get calls from lenders saying they’re over-allocated on multi-family deals and want to complete more self-storage transactions.
Even with the storage industry’s massive success and growth, some lenders still focus on financing the “four food groups” of commercial real estate: industrial, multi-family, office and retail. Underwriting standards for these property types often emphasize the certainty of revenue based on the length of the lease term, underlying provisions and tenant credit. The key difference for lenders who actively underwrite self-storage deals is they understand the concept of property value rather than tenant value.
There’s a wonderful saying that “beauty is in the eye of the beholder.” So, why do some lenders gaze upon self-storage with such a loving view? Here are four key reasons.
Lenders have come to realize that a storage facility’s tenant base provides extraordinary insulation. Unlike the main groups noted above, self-storage offers a diversified mix of renters, which mitigates credit risk of losing significant revenue from just a few larger tenants. With hundreds of individual customers—none of whom independently compose a meaningful percentage of the rent roll—the loss of any given renter won’t cause major cashflow disruption.
In addition to having a large tenant base, a storage facility’s customers have different reasons for renting, such as relocation, change in family status and long-term storage needs. There’s also a mix of commercial and residential users. This diversification offers further insulation against a drastic change of occupancy due to a single macroeconomic event, such as a recession.
In essence, the risk profile of storage facilities is dramatically lower. The storage industry is well-hedged for economic changes and highly attractive to lenders who are accustomed to bankruptcies and other business developments that can adversely affect their deals with industrial, multi-family, office and retail clients who don’t offer such diversification.
With time comes experience. As the storage industry has matured, lenders have been exposed to—and come to appreciate—its success and viability. Countless lenders from capital sources including local, regional and national banks; credit unions; commercial mortgage-backed securities (CMBS) lenders; and life insurers have made loans to small, mid-size and large operators who’ve grown to become real estate investment trusts.
It’s a well-known fact that the storage industry has had the lowest default rate of all CMBS commercial property types for more than 20 years. Thanks to the support of capital providers, storage owners have expanded their portfolio holdings. Their lender relationships and experiences have proven strong through good economic times as well as during recessionary periods when storage fared much better than other commercial property types.
Experienced lenders have also come to understand that although storage tenants are on month-to-month leases, the length of stay is statistically predictable, with residential tenants often averaging more than a year and commercial tenants staying longer than two years. In addition, a month-to-month rent roll offers owners great flexibility in managing occupancy and revenue, being able to change existing tenants separately from new customers.
Compared to other commercial real estate assets, storage facilities have fewer physical improvements and are operationally less complex. For example, there’s no need to assess lease expirations and account for planned build-up of reserves for tenant improvements and leasing expenses. Addressing tenant turnover is routine and requires little-to-no capital.
Historically, many lenders would use more conservative underwriting parameters when analyzing self-storage loans and pricing would be costlier than other commercial real estate sectors. Self-storage is underwritten and quoted at more aggressive terms than most other commercial property types—other than multi-family properties, which can be financed through government-subsidized agency-lending platforms.
Along with many property owners, lenders are grappling with the changing nature of real estate uses and viability. Consider the drastic decline in regional malls. Once vibrant real estate, they’re now being torn down for alternative uses or, ironically in some cases, being partially converted into self-storage properties. While other commercial types are scrambling to find new ways to lease their space due to changes in how people shop, work and live, self-storage is thriving because its underlying fundamental needs are consistent.
Lenders cast a different eye when it comes to providing construction loans. Often it’s with a wary glance on the unique timing attributes related to lease-up, as they expect a portion of the property to be pre-leased before completion.
This isn’t the case for self-storage, which has a longer lease-up cycle and no pre-leasing. Accordingly, experienced lenders have learned to provide a longer interest-only period for storage properties, which can reach 36 months or more (not to mention extension options), compared to 12 to 24 months on other commercial properties. Given the lease-up time, self-storage loans often have larger reserves built in to cover the operating shortfall and interest-shortfall reserve.
As we’re now in the ninth year of economic expansion, lenders are more cautious of providing financing to borrowers seeking construction loans. However, even with the large amount of industry development during the past few years, construction money is very much available for storage properties that offer strong sponsorship in economically feasible locations.
With its unique attributes, self-storage has caught the eye of lenders and is now a preferred property type with many financing organizations. I recently told my teenage daughter, who was looking at college options, “Now it’s up to you.” She had the grades and admirable qualifications, but through the admissions process had to sell herself and ensure she found a college with the dynamics and academic program that was the right fit. For self-storage operators, there are many capital sources willing and able to financing options. Like colleges, there are many lenders in the market; it’s up to you to seek the right one for your needs.
With more than 25 years of experience as a national self-storage mortgage broker and advisor, Neal Gussis is a principal at CCM Commercial Mortgage, a mortgage-banking firm that secures financing for self-storage owners nationwide. He specializes in securing debt and equity for self-storage owners nationwide. He can be reached at 224.938.9419; e-mail [email protected]; visit www.ccmfinancing.com.
ASB Capital Management has purchased two StorQuest Self Storage facilities in Denver in separate transactions for a combined total of $36.5 million. The properties will continue to operate under the StorQuest name, according to the source.
Acting as 4501 Washington LLC, ASB paid $19.8 million for the .9-acre property at 4501 N. Washington St. The three-story facility was built last year and comprises 77,500 square feet of storage space.
The second site, a .7-acre parcel at 549 Kalamath, was constructed in 2015 after StorQuest purchased it from 549 Kalamath SP LLC. The facility comprises 63,000 square feet of storage space. ASB made the $16.65 million purchase under the company name 549 Kalamath LLC, the source reported.
Based in Bethesda, Md., ASB is an investment-management firm that concentrates on the Washington, D.C., area. The company helps pension plans, unions, corporations, insurance companies, endowments, foundations and charitable organizations across the country, according to its website.
StorQuest is the operating brand for The William Warren Group. Founded in 1994 and based in Santa Monica, Calif., the company acquires, develops and operates more than 125 self-storage facilities in Arizona, California, Colorado, Florida, Hawaii, South Carolina and Texas.
Source:
Business Den, Two New Denver Self-Storage Facilities Sell for $36M
Sohier Road Self Storage LLC is seeking approval to convert a roller-skating rink and indoor soccer field to self-storage in Beverly, Mass. Developer Eric Loiacano has applied for a special permit and site-plan review for the property at 130 Sohier Road, which currently houses Roller Palace & Soccer Etc. The venue will remain open until Loiacano secures permits from the city, said Ken Breen, whose father, Robert, purchased the property in 1979, according to the source.
The plans include transforming the single-story, 56,147-square-foot building into two stories comprising 118,953 square feet of storage space. A second 12,000-square-foot structure would be built alongside the main building. The property would contain 900 units and a 4,000-square-foot office. Loiacano has requested a reduction in the number of required parking spaces from 55 to 35.
The site is zoned for industrial use. “If you're going to have this type of industrial use, this is the district to have it in,” said Aaron Clausen, city planning director.
The Breen Family is approached by potential buyers several times a year, Breen said. The storage proposal came about a year after a Texas-based company withdrew its plans to transform the property into a short-term rehabilitation facility, the source reported.
Although the thought of selling the venue is “bittersweet,” Breen said his family is willing if the offer is right. “It's a solid offer but we’ve been through this before,” he said. “We run our operation like there's nothing on the table because this could be another year or two; it could be less before it actually changes hands.”
Sohier Road Self Storage is based in Gloucester, Mass.
Source:
The Salem News, Plan Could Turn Roller Palace Into Self-Storage
