California self-storage operator A-1 Self Storage is providing monetary support for Alzheimers disease research through the American Health Assistance Foundation (AHAF).

The most common form of dementia, Alzheimers is a terminal, progressive brain disorder with no known cause or cure to date. The disease is characterized by memory loss, confusion, impaired judgment, personality changes, disorientation and eventually the inability to communicate. Millions of Americans are diagnosed with Alzheimers.

AHAF is an international nonprofit organization dedicated to finding cures for age-related degenerative diseases. The foundation funds research on Alzheimer's disease, macular degeneration and glaucoma and provides the public with free information about risk factors, preventative lifestyles, and current treatments and coping strategies.

A-1 Self Storage has 16 locations in the San Diego County area and more than 40 locations statewide. It is the self-storage division of the Caster Cos., a third-generation, family-owned company headquartered in South California since 1959. Caster Cos. develops and manages A-1 Self Storage, A-1 Car Storage and other commercial properties in California. Its portfolio includes more than 4 million square feet of real estate.

A man was stabbed to death June 7 outside a self-storage facility in San Mateo, Calif.

The victim was identified by police as Justin Lockwood, 33, of Pacifica. Police were called to All American Self Storage on East Third Avenue and Detroit Drive around 1:30 p.m. to find Lockwood dead from a stab wound. The death was ruled a homicide, and investigators do not believe it was a random act.

This week, police said Lockwood or the assailant may have been a tenant at the self-storage facility. Investigators are still reviewing surveillance footage.

The facility was blocked off for several hours on the day of the stabbing as police investigated the crime. Investigators have released few details about the slaying or what may have led up to it. 

The owner of a self-storage facility in Columbia, Calif., was robbed at gunpoint Saturday afternoon.

A man walked into Springfield Mini Storage on Brian Lane around noon, and demanded money from the facility owner.

According to the Tuolumne County Sheriff's Department, the man grabbed the money, then fled in a car driven by another man. Investigators have not released a description of the gunman or the vehicle. The robbery is still under investigation.  

All Canadian Self-Storage of Leaside, a neighborhood in Toronto, Ontario, Canada, will host a family-barbecue fundraiser to support the expansion of the Leaside Arena on June 9, 6-8 p.m. The event will include free barbecue, drinks and ice cream, and activities such as a bouncy castle, face painting and more.

Leaside Arena is part of Leaside Memorial Community Gardens, which opened almost 60 years ago. The complex includes a single-pad ice rink, a curling rink, an indoor swimming pool and a large auditorium. Community residents gather at the Gardens to play hockey, figure skate, swim and socialize.

The Leaside Arena Expansion Project is raising funds to add a second ice pad. According to LeasideArena.com, all the available ice at Leaside Gardens is fully rented out, making it difficult to keep up with the growing demand for ice-based programs. Local hockey players and figure skaters have been forced to use other arenas and pay private ice-rental rates to skate.

The estimated capital cost for the project is $9.5 million. The City of Toronto has agreed to permit the borrowing of $7 million against projected future operating revenue. The Leaside Gardens Board of Management Expansion Committee and local supporters need to make up the difference.

All Canadian Self-Storage has operated since 1997. According to the company website at Canada-storage,com, It was the first company to offer mobile storage in Ontario and has the first and only drive-through self-storage facility in the province. In addition, it is the first public storage facility to offer $25 unit rentals, the first nationwide to offer Air Miles bonus cards, and the largest self-storage U-Haul dealer in the country.

Security Self Storage has acquired the former ABC Storage Center at 2100 Main Ave. E. in West Fargo, N.D. The 89,800-square-foot facility provides temperature-controlled storage, outdoor boat and RV storage, and office-shop units for small businesses.

Security Self Storage also has locations in North and South Fargo, providing traditional self-storage, temperature-controlled storage and Budget truck-rental services.

Kent Hochgraber will continue to manage the West Fargo facility.

By Ben Vestal

Nows a good time to buy, sell or refinance a self-storage property. The effects of the continuing low-interest-rate environment and increased investor confidence have been a boon for owners looking to sell or refinance as well as buyers on the market.  

During the relatively brief history of the self-storage business (35 to 40 years), public perception of the industry has changed dramatically. Wall Street has embraced self-storage, and life-insurance companies and conduit lenders have come back to the market, enamored once again with lending on properties with terms similar to core asset classes such as office, retail and industrial.

Along with the respect the self-storage industry has earned over the years has come an increase in competition. Facility owners are now realizing that sophisticated operations and economies of scale are imperative to business survival. This is more apparent than ever before as we see large operators winning business away from smaller ones, whether by pricing, advertising or property amenities. In general, the large operators are able to get a rent premium over small operators with similar properties in the same markets. This leads me to believe the industry has reached a crossroads, and operators need to make the necessary adjustments to compete as self-storage matures.

The effects of the continuing low-interest-rate environment have had a dramatic impact on self-storage investments over the last six to nine months. The most obvious and positive result is owners are able sell their properties at close to historically high prices (reflecting on 2006 and 2007) or refinance and keep a larger share of their hard-eared income by paying less to lenders. Lets not forget that just 12 to 18 months ago, the general consensus in the commercial real estate industry was that many owners would be facing maturity defaults, as property values had fallen as much as 40 percent and there were very few lenders willing to commit to new loans.

Were now seeing values rebound faster then anyone thought possible. Low-leverage refinancing deals are again able to achieve non-recourse loans with terms very similar to the peak of the market. Higher-leveraged deals also seem to be finding a home, albeit at higher interest rates and with strong personal guarantees. This is not to say ill-conceived projects or properties bought with unrealistic expectations during the boom of the mid-2000s are not still struggling. These projects will continue to struggle and slowly work their way through the system. As they say, time cures almost anything; this seems to be also true about the real estate business.

The other noticeable impact of low interest rates has been on the pricing of self-storage facilities in relation to their income. This is, of course, in recognition that new buyers will be able to obtain financing at lower rates and achieve higher returns. In essence, each dollar of income becomes worth more to a buyer. Using typical market rates (capitalization rates) for computing this increase in value, on average a project would have gone up about 15 percent over the last year or so, with no increase in net operating income, largely because of the compression in cap rates over the last six to nine months.

However, it is important to note that as the self-storage industry matures, the sophisticated capital and operators who are able to pay the highest prices are now drawing a line in the sand between institutional- and non-institutional-grade properties. This has led many small operators to wonder why they cant achieve the same low cap rates as other properties in the market. This bifurcation in value between large and small properties and large and small markets will continue, and many of the smaller operators will be faced with a difficult decision.

A Perfect Environment?

Maybe the most important indicator of where the market is headed is investor confidence. According to PricewaterhouseCoopers first-quarter 2011 real estate survey, its on the rise. The improvement in the national economy has translated into increased investor confidence and commercial real estate fundamentals in general.

The real question is whether this will continue and how long the recovery will last. The current low-interest-rate environment and investor confidence has created an almost perfect environment for anyone thinking about buying, selling or refinancing. I know that this sounds like a broker talking, but lets see if you agree:

• Buying: Buyers today can purchase good properties and achieve cash-on-cash returns not seen in last few years because of low interest rates. They also have the strategic advantage of understanding how a property has performed during the worst downturn in the last 40 years.
• Selling: Sellers can enjoy near historically high prices, which are also being fueled by the low interest rates and increased investor confidence, all while enjoying some of the lowest capital-gains taxes in history.
• Refinancing: After the last few years, if an owner does not understand the importance of locking in a loan at a low interest rate for as long as possible, he needs more help than a new loan.

With these thoughts in mind, the next logical question is whether this improvement will continue and at what pace. Pursuant to the liquidity crisis of 2008 and the subsequent quantitative easing programs by the Federal Reserve, investors have become increasingly concerned about the prospect of inflation, particularly in light of the rapid rise in oil and global food prices. The question, of course, is when to jump into action.

Since we have discovered the dramatic impact of interest rates, it might be helpful to review their history. The accompanying chart shows the 48-year history of U.S. 10-year Treasury bonds. Interest rates on these bonds, plus a spread, are most often used to set the pricing on self-storage loans. The spread has ranged in the last 20 years from 1.15 percent to 5 percent, so a graph of self-storage loans would be even more exaggerated in its swings. As a general rule, all spreads increase as interest rates increase and money tightens.

 

As you can see, interest rates can be very volatile, changing as much as 2 percent to 4 percent in just a few years. Following are a few observations. Give some thought to whether the risk of inaction outweighs the probability of improving your position through lower interest rates.

• There have only been five years out of the last 49 when the 10-year Treasury bonds have been consistently below 4 percent: 1963, 2008, 2009, 2010 and now 2011.
• In addition, rates over the last 49 years were 3.5 times as likely to be in the 6 percent to 8 percent range as where they are today and equally likely to be in the 12 percent to 14 percent range.
• A 2 percent increase in the interest rate on a normal loan (6 percent, 25-year amortization) has the same impact on cash flow after debt service as raising your operating cost 23 percent.

These extraordinary times have created opportunity if you are considering buying, selling or refinancing. It all comes down to your objectives and the actions you must take to reach them. Now is a great time to make a move. If not now, when? 

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. For more information, call 800.55.STORE; e-mail [email protected].

A woman was arrested last week in connection with stolen cash recovered from a self-storage unit in St. Louis.

Yolanda Willis, 37, faces federal charges in connection with a robbery at ATM Solutions last summer. Roughly $6.6 million was stolen Aug. 2 from ATM Solutions, an ATM cash replenishment and maintenance company.

Investigators said Willis and relatives stored and then retrieved large sums of money from the self-storage facility after the robbery. Willis had been given the storage security entry code and storage unit number by Latunya Wright, who has already pleaded guilty and admitted to her role in hiding money, according to court documents. Stolen money was also recovered at Wrights home. Two men have already been sentenced for their roles in the robbery.

Lancaster, Texas-based Access Self Storage & Truck Rental is expanding its community enrichment initiative to include summer car washes to benefit local organizations.

Company owner Doug Hunt is constantly looking for new ways his six Dallas-area facilities can give back to the communities in which they operate. Im surprised it hasnt popped up sooner, Hunt said. Car washes are simple ways for student groups or churches to raise funds.

In June, Dallas drivers will have the opportunity to wash off the summer grit accumulated by their daily commute and know that their donations are making a difference in the lives of their neighbors. This is Access greatest goalcommunity enrichment, Hunt said. We want to encourage people to get involved in their communities, in small ways and in big ways.

Student, church and community groups interested in staffing a car wash are encouraged to contact an Access Self Storage facility or the corporate office.

The Burns Planning Commission in Burns, Tenn., on May 23 unanimously approved a proposal and final site plan to build a self-storage facility on State Route 47. However, to move forward the facility still needs a storm-water permit from the state, and co-developers Beth and Tom Fiala must also submit a landscaping plan.

The first phase of development calls for five self-storage buildings on more than four acres of land. The Fialas have wanted to bring the business to Burns for several years. They explained to the source a plan to build the facility was approved about three years ago, but because of the recession and the tight credit market, they lost financing for the commercial retail component, which was initially proposed to be built alongside the self-storage facility. The Fialas most recent development plan, which the commission approved, does not include the commercial retail space.

Burns is a small town of about 1,300 people located 35 miles west of Nashville.