Real estate developer Steven Reiter received approval this week from the Niagara County, N.Y., Planning Board for his proposal to build a self-storage facility on his family’s property at 1439 and 1441 Ridge Road in Lewiston, N.Y. The 9,500-square-foot storage building would comprise 69 units and be constructed on a 6-acre lot that also contains an unoccupied house and two restaurants, according to the source.

Reiter intends to convert the garage of the home into an office and keep the restaurants standing for now, although future expansion of the storage project could include up to four more buildings and a conversion of the De La Casa Restaurant at 1437 Ridge Road into climate-controlled units, he told county planners.

The storage project could mark a change of course for the property. Reiter had previously sought to build a $12.3 million senior apartment complex called Bridgewater Estates. Reiter told the source he hadn’t given up on pursuing the 139-unit residential complex but wanted to begin developing the land.

Reiter served on the Lewiston Board of Supervisors when it rezoned the property. The board was sued last year by neighboring property owner Modern Corp., which called the rezoning “illegal and unethical,” the source reported. Reiter told county planners on Monday that State Supreme Court Justice Mark Montour had denied the request for an injunction to stop the senior-apartment project and ordered the plan to go back to the town.

StoreRight Self Storage has hired Scott Kelly as director of operations. His responsibilities include streamlining operation and business procedures across the company’s growing portfolio as well as implementing directives to spur additional growth, officials said in a press release.

“Scott brings with him a wealth of experience, including 18 years of storage management on all levels,” said Matthew Clark, president. Kelly is also the 2016 president elect for the Florida Self Storage Association.

Since acquiring its first facility in 2011, Florida-based StoreRight set a goal of becoming a large regional player, according to the release. It recently acquired two facilities, growing its portfolio to 10 locations comprising more than 600,000 net rentable square feet.

"I couldn’t be more excited to partner with StoreRight. They have a sound business model and treat their facilities and staff like extended family,” Kelly said. “A once small, local company is well on the way to becoming a large player in the industry, and my job is to help facilitate that goal and the success of each acquisition along the way.”

Headquartered in Lakeland, StoreRight is actively seeking other acquisition opportunities. Its properties feature onsite managers, perimeter fencing, pest control, as well as video cameras and facility alarm systems for security. Locations also offer moving and packing supplies for sale.

The Anne Arundel County, Md., Council will vote on legislation this week that would require self-storage businesses to be developed on a minimum of 4 acres instead of 2. The measure was introduced by council chair Jerry Walker, who doesn’t believe the county’s C2 commercial designation is the right fit for self-storage. “It’s more of a retail-type zone,” Walker told the source. “[Self-storage], to me, that isn’t retail.”

The bill would preserve parcels zoned C2 for businesses that hire more people, according to Walker. “[Self-storage facilities] don’t create a lot of jobs,” he said. “Other businesses would create more jobs.”

The bill was last debated on July 6, when some supporters argued the limitation of land in commercial zones would help independent self-storage operators by preventing larger companies from buying up available property, the source reported.

The measure was strongly opposed by councilmember Derek Fink, who argued it would shut out businesses. “We knock out any potential and future competition, which is ludicrous,” he said. “It is very questionable legislation.”

The county executive’s office is also opposed to the proposal. “It is anti-competition,” said Owen McEvoy, public information officer. “It makes it harder to find plots of land.”

The council is scheduled to vote on the legislation on Monday night.

Chandler Properties, an owner of commercial, residential and self-storage properties, recently purchased Store Your Stuff Storage in Cleveland, Tenn., and rebranded it as Chandler Storage – South Lee. The property at 1692 South Lee Highway features 152 drive-up units, gated access and video cameras. The company now owns and manages 340 total storage units in the area.

“I am excited to add this storage facility to the Chandler Properties portfolio. Our other two facilities were rented up, and this will provide additional capacity to serve our Cleveland and Bradley County markets,” said Michael Rogers, owner of Chandler Properties.

Rogers is a Certified Public Accountant and a graduate of University of Tennessee at Chattanooga. He’s been involved in the management of rental property since 2001, according to the company website.  

Headquartered in Cleveland, Tenn., Chandler Properties operates Westland Drive Storage at 1853 Westland Drive in Cleveland. The company also owns and rents commercial and residential properties in Chattanooga, Tenn., including apartments, condos, homes and offices.

OpenTech Alliance Inc., a Phoenix-based provider of self-serve kiosks, call-center services and other technology for self-storage businesses, has partnered with StoreLocal Corp., a co-op of private self-storage operators in Canada and the United States, to develop a global distribution system (GDS) designed to “deliver real-time self-storage inventory in a standard, scalable and secure method to consumers and third parties on a variety of platforms,” according to a press release. The GDS network will be comparable to the Sabre Airline Solutions reservation system used by commercial airlines and is intended to lessen the dependency independent operators have on Google in connecting consumers with their facilities.

“[The GDS will] open their doors to many other less-expensive sources of renters. Consumers will be able to rent, reserve and pay through the GDS from any device,” OpenTech officials said in the release.

The idea is to create a platform “that will work with all participating facility-management software providers and provide potential renters and other companies, such as movers, truck-rental companies, apartment-management firms and even bigger players like Yelp, Amazon and Angie's List, with effective ways to drive more consumers to self-storage facilities using a fluid, intuitive digital rental experience,” the release stated.

“[OpenTech has] solved a difficult and ongoing connectivity challenge for their kiosks, call center and other applications, and now we're working together to solve the problem for other companies looking to help self-storage operators rent more units,” said Lance Watkins, CEO of StoreLocal. “The platform we're developing will expose self-storage to more people as well as change the way they experience it."

OpenTech officials estimate 9 percent of Americans use self-storage today, and their goal is to use the GDS to increase that number to 12 percent. “We totally enjoy working with innovative minds that are not afraid to think big. StoreLocal is a group of self-storage operators that are looking to make self-storage easier to use, and that concept aligns well with our mission. We are excited to be part of something that will help the entire industry grow," said Robert A. Chiti, president and CEO of OpenTech.

StoreLocal leverages the combined strength of its membership for services such as customer acquisition, financing, marketing and technology. The co-op acquired online self-storage directories StorageFront.com and SelfStorageHounds.com from Red Nova Labs Inc. in January.

OpenTech provides several models of INSOMNIAC self-serve kiosks as well as a range of self-storage rental solutions including the INSOMNIAC Live! Call Center, INSOMNIAC Online Web and mobile applications, LiveAgent! software products, and the INSOMNIAC ILock Security System, all available through the company's self-storage cloud.

David and John Cole, owners of The Space Place in Leicester, England, have criticized the city’s planning-application process after their proposal to refurbish their self-storage facility was rejected. The £50,000 renovation at 90 Sanvey Gate would have included the addition of fencing around the parking lot and the installation of nine signs over facility windows. The application was refused on the grounds that the building would look “visually intrusive” and the signs would have a “significant detrimental impact on the appearance and character” of the structure, the source reported.

“We are trying to improve the look of a building, which was empty for a long time before we moved in, and we are being hamstrung by the planning department,” David Cole told the source. "We are trying to succeed in a difficult environment with a building whose exterior belies its state-of-the-art self-storage interior, and they are causing us a major delay.”

While David Cole said he appreciates that signs shouldn’t be added “willy-nilly,” the planning-application process lacks consistency in its rules. "They say you can't put signs of a certain size above ground level, but that's being done all over the city,” he said.

A city council spokesperson agreed the building is in need of refurbishment, but said obscuring the windows with large advertisements wouldn’t benefit the structure or the area. "This is a key regeneration area and we're working hard to improve it, with other large advertising panels recently removed from Vaughan Way,” the spokesperson said. Recent renovations include new street art, repainted fencing and flowers along A50, a major trunk road between Leicester and Warrington.

"We welcome the re-use of the building and the investment The Space Place wants to bring in, and we're sure we can work together to agree an approach that balances the needs of the firm with our plans for the area,” the council spokesperson said.

The Coles are working on a new proposal to submit to the council soon, the source reported.

The Space Place opened in Leicester in 2005. The family-owned and -operated company has a second location in Telford, England.

Is the inevitable finally happening? Are interest rates starting to bounce from historic lows and begin their long-awaited climb upward? I don’t have the answer, but what I do know is Treasury yields are up significantly over the past six months. On Jan. 26, the 10-Year Treasury closed at 1.68 percent. On June 10, it was at 2.41 percent, a climb of 73 basis points or 0.73 percent.

The good news is a 10-Year Treasury of 2.41 percent is still a low yield when compared to historic levels, and borrowers can still lock in long-term, fixed-rate mortgages in the mid 4-percent range. Does it then make sense for a self-storage owner to refinance his facility? That depends on your view of the interest-rate markets and the direction you think rates are headed. You must also consider the prepayment penalty on your existing loan and whether the economic consequences are too costly.

There are three major prepayment structures commonly used by lenders today: fixed-percentage or step-down, yield maintenance, and defeasance. Each has advantages and disadvantages. Here’s what you need to know to make an informed decision about prepaying your self-storage loan.

Fixed-Percentage or Step-Down Prepayment

Fixed-percentage or step-down prepayment is the simplest structure. The lender states that a percentage of the unpaid principal balance is required as payment in the event that you pay off the loan prior to maturity. For example, the penalty could be 5 percent in year one, 4 percent in year two, 3 percent in year three, etc. This type of penalty often declines as the number of payments remaining decreases and is common with banks and many Small Business Administration lenders.

The benefit of this type of prepayment is you always know what the cost of the prepayment is regardless of interest-rate movement. However, as we’ll see below, a fixed-percentage prepayment structure isn’t beneficial if interest rates spike.

Yield Maintenance

Yield maintenance allows the lender or investor to maintain the same yield or return as they were generating from their loan. The lender usually looks to the Treasury market for the replacement rate and chooses the Treasury that most closely matches the maturity date of the original loan. The remaining loan payments are then discounted using the replacement rate as the discount factor. The present value of these payments is then compared to the unpaid principal balance of the loan, and the difference is the penalty—if the present value is greater than the outstanding loan amount. As interest rates rise and time passes, the resulting pre-payment penalty decreases and can become nil; the opposite happens if interest rates decrease.

However, lenders will often stipulate a minimum penalty of 1 percent. Yield maintenance is used with balance-sheet lenders making long-term, fixed-rate loans as well as insurance companies. It’s also becoming more common to see commercial mortgage-backed securities lenders using this structure. The advantage is, in a rising-interest-rate environment, it’s possible for the prepayment penalty to drop to 1 percent.

Defeasance

Defeasance is similar to yield maintenance in that the investor is looking to maintain the existing yield. However, with defeasance, the funds used to pay off the loan are employed to purchase a portfolio of Treasuries to emulate the cash-flow stream investors would have received had the loan not been prepaid.

As rates go up, the cost to acquire the replacement collateral goes down. If rates go up enough, you could find yourself with an asset on your hands. However, the opposite is true if rates go down. It should be noted that the transactions cost to defease a loan averages about $55,000 regardless of interest-rate movement or loan size.

Should You Refinance?

Now that you understand the different prepayment structures, you may be wondering if now is the right time to refinance. The easiest analysis to perform is to take the interest savings you would achieve in a refinance over the remaining term of your loan and compare it to the cost of prepaying. If the savings is greater, refinancing probably makes sense.

Of course, decisions are never that easy. There are many other factors to consider. Even if the savings of the new loan don’t justify the cost of prepayment, you must consider where interest rates will be when the existing loan matures. If you believe they’re rising, it may make sense to prepay and lock in a new, 10-year, fixed-rate loan that’s at historic lows so you’re not forced to refinance during a non-favorable interest-rate market.

Additionally, if you believe the real estate market will dip when your existing loan matures, it might make sense to refinance now and extend your term while capital is abundant and values are strong. Some of the storage owners who were hit hardest during the recession were those whose debt matured between 2009 and 2011. Their operations may have been strong, but due to factors out of their control that affected the capital markets, they weren’t able to refinance their existing debt load. Many borrowers were required to contribute equity to refinance.

Another reason we’re seeing borrowers pay hefty prepayment penalties—in excess of 10 percent of the outstanding balance—is they’re able to access significant amounts of cash equity. Over the past five years, the value of self-storage facilities has increased dramatically. This is the result of a lack of new supply, which leads to increased occupancy and higher rents, all resulting in record profitability. Couple this with capitalization-rate compression, and self-storage values are at an all-time high.

Many borrowers are refinancing and paying significant penalties to access this equity. They’re doing so because the return generated by reinvesting the cash more than makes up for the large penalty. In fact, many are refinancing and taking out cash to develop additional self-storage facilities in the current development cycle.

Refinancing your self-storage loan prior to maturation and incurring a prepayment expense won’t make sense for everyone. However, because we’re experiencing a record-low interest-rate environment and self-storage values are at an all-time high, everyone should take the time to perform his own analysis.

Devin Huber is a principal at The BSC Group, which offers financial and loan advisory, mortgage-brokerage and loan-workout solutions to commercial real estate property owners and investors, with a special emphasis on the self-storage market. Prior to helping found The BSC Group, Huber was a senior vice president at Beacon Realty Capital and a key member of the firm’s Self Storage Group. To reach him, call 800.605.7880; e-mail [email protected]; visit www.thebscgroup.com.

The self-storage industry has always been slow to adopt technology. In fact, when I first started in this business, the Internet was still trying to find an identity, Napster was destroying the music industry, self-storage management software was DOS-based, and hearing “You’ve got mail” was the norm when checking e-mail.

Fast forward 15 years and everything has changed. There’s more computing power in my iPhone than there was in my first desktop. Almost everything you could possibly want—or need—is available on demand, and many management-software programs are cloud-based. Not bad.

Although we have all of these new and great technological advances, we need to learn how to leverage them correctly. I’m not a proponent of “shiny-toy syndrome” or installing items because they seem cool or neat, but I also despise statements like, “Well, we can’t upgrade because this is how we’ve always done it” or “Our managers won’t understand.”

In any business, successfully leveraging technology requires meeting three criteria. Ask yourself:

• Will this technology make my self-storage more efficient?
• Will it have a positive effect on my net operating income?
• Do I have adequate ways of training my managers on how to use it?

Now that we’ve established the standards for evaluating new technology, what tools and ideas are working for other storage operators? Let’s take a look at three ways you can leverage technology to improve your business.

1. Maximize Your Management Software

Even though the majority of self-storage facilities use some sort of management software, there are still a few owners out there who are hesitant to install a program. This is the single-most important piece of technology you can purchase for a storage business. Yes, it costs money, but so does lost production. The idea that you can manage your facility’s data more efficiently by hand is ludicrous.

Management software gives you immediate access to your customer accounts, monthly deposits, rent roll, unit inventory, etc. It also allows you to audit a facility more efficiently and takes the “human error” out of the equation. In addition, if you decide to sell your facility or move forward with a refinance, having your numbers in one place, with correct accounting, will be an amazing head start in either process.

If you haven’t installed quality management software to help run your storage operation, you need to. Determine your business needs, then do some research to find the program that will best meet them. Software is well worth the investment.

If you already have a quality program, are you and your managers using it to its full potential? Today’s software is rich with features, including the ability to generate a variety of reports, assist in revenue management and marketing endeavors, and even provide remote management. Make sure everyone knows how to access and use your software’s modules, or provide training for those who don’t.

2. Streamline Communication

Instant communication is now a way of life. Between instant messaging, text messaging, FaceTime, Google Hangouts, Skype and Slack, the options to connect with your self-storage staff, co-workers and customers are endless. All you need to do is choose the one program with which you’re most comfortable. If you have multiple stores or you’re an owner/investor who’s not at the property on a daily basis, these tools can be invaluable.

Instant messaging and text messaging offer the easiest learning curve and allow you to keep in constant touch with your facility. FaceTime, Google Hangouts and Skype allow you to have video conferencing with your co-workers or employees. These are great for one-on-one or group training. Slack gives you instant-messaging capabilities across multiple platforms and also allows you to set up group-chat rooms.

One of the most important aspects of any business is the consistent and unimpeded flow of information. If there’s an issue, a manager can reach out to the owner or supervisor to receive an answer or even ask another one of his colleagues. All of these can be installed for free or at a minimal cost.

3. Manage and Track Projects

A self-storage manager is responsible for a number of tasks including maintenance, marketing, retail sales and unit rentals. Facility operation has certainly evolved. Previously, managers would wait for the phone to ring. Now they have to make it ring, and that means actively managing projects to bring that to fruition.

The worst project-management system in the world is the human brain. Not only will it fail you right when you need it, it has a tendency to remind you of things at 2 a.m., when you’re in no position to handle the problem. Basecamp and Teamwork.com are Web-based, project-management tools that can help you for a minimum investment. Each allows for individual projects to be assigned and tracked until they’re complete. This keeps a facility operator consistently aware of outstanding tasks and their status.

Another new tool is a software program called eTRACKER. Designed specifically for the self-storage industry, it helps operators manage their maintenance projects for individual properties using a smartphone, dedicated app and cloud-based management system. There are a number of other options available to help you streamline daily tasks. Just test and select the software that best integrates with your existing operation.

Correctly choosing and implementing technology is the key to creating greater efficiency at your storage facility. Take inventory of any issues or breakdowns in your current systems, and then pinpoint areas that cause you the most pain. Once you know where you need improvement, research possible hardware or software solutions that might help. Also reach out to family members, friends, industry vendors and your storage colleagues. They’ll be glad to tell you their experience with different tools.

Technology can be the difference between operational insanity and self-storage bliss. Which would you prefer?

Matthew Van Horn is vice president of Cutting Edge Self Storage Management, which specializes in facility management, feasibility studies, consulting and joint ventures. He’s also president of 3 Mile Domination, a full-service self-storage marketing and strategy company. For more information, visit www.cuttingedgeselfstorage.com and www.3miledomination.com, where you can download a free e-book.

Storage Station, which now operates three self-storage facilities in New Jersey, recently sold its only New York property for $1.9 million to a private investment group. The property at 1021 Dolsontown Road in Middletown, N.Y., opened in 1986. It features four buildings totaling 24,750 square feet of storage space in 224 units.

Just east of New York State Route 17A and near Interstate 84, the sold Storage Station is on 3.3 acres of land and has an additional 9,000 square feet for expansion. Property features include keypad access, metal roofs and perimeter fencing.

The seller received multiple offers, and the property sold close to the asking price, according to a press release from Investment Real Estate LLC (IRE), the real estate investment group that brokered the transaction and manages the Storage Station portfolio. “The seller had a great run in the storage industry, and we were happy to connect him with a buyer who’s actively growing a portfolio of properties in the northeast. The sale was a win-win for both parties,” said John H. Gilliland, president of IRE.

Founded in 1999 in New Jersey, Storage Station has acquired and rebranded several storage facilities in New Jersey and New York over the years. It currently operates two facilities in Toms River and one in Wayne, N.J.

Since its inception in 1998, IRE has provided brokerage, construction, development and management services to self-storage owners and investors. Its construction arm was founded in 2000 and has built more than 2 million square feet of self-storage space in eight states.