StorPlace Self Storage recently opened at 1010 Avondale in Hendersonville, Tenn. It’s the facility’s first location in Sumner County and the twelfth in the Nashville area. The facility has 358 climate-controlled storage units, and also offers boat and RV storage.

The facility’s first customer was the Forward Sumner Economic Council. The council recently downsized to a smaller office and needed storage for office furniture.

Judy Meadows is the director of community relations, and Laurie Tarter is the property manager. The facility plans to host a grand-opening celebration soon.

Source:  The Henderson Star News,  StoragePlace Opens in Hendersonville 

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Self-Storage Talk: How Was Your July?

With nearly 50,000 facilities totaling more than 2.1 billion square feet nationwide, self-storage is no longer a sleepy little industry that goes unnoticed. Every day, there are bound to be people considering a facility sale or purchase. If you’re one of them, it’s important to understand your true objectives and how to execute them if you want to maximize your investment.

Following are situations in which you might find yourself if you are an owner (seller) or buyer. See which applies to you and things to consider before taking the plunge.
 
Should You Hold?

Self-storage is a very good business with a bright future. If you agree and are sure you want to own and operate your facility for the next five to 10 years, then you’re a “holder.” If you fall into this category, you must follow these three important rules:  

• Lock in a low interest-rate loan for at least five years, longer if possible.
• Have enough money to weather the up and down revenue swings all income-producing real estate experiences over an extended period of time.
• Make sure your facility is positioned to be a market leader and you have the flexibility to adjust quickly to changing demand characteristics, such as lowering rates, free rent, etc.

These rules should enable your investment to capitalize on improving market conditions and remain viable when circumstances deteriorate.
 
Should You Sell?

There’s a difference between thinking about selling and actually becoming a seller. To clarify the difference, it’s important to understand your objectives. At some point, almost everyone will become a seller. Thinking through the following factors and understanding the current market will help you determine how close you are, and give you some options to maximize your investment.

I’ve recently had discussions with five facility owners who are selling or thinking about selling their properties. All are in this position because they face one or more pressing issues: retirement, divorce, estate planning, partnership problems, liquidity challenges, desire to relocate, health concerns, or worries about capital-gains tax.

These are just a few of the things that make owning an investment property difficult. About 80 percent of all self-storage sales are a result of personal issues rather than what some would call “taking advantage of the current market” or concern for the future market. This proclivity to make the final decision based on personal concerns is entirely appropriate, but with a little planning and realistic thinking about the market and what the future may hold, it can be very rewarding and lead to a higher return on investment.

Should You Buy?

Buyers might think that with prices starting to stabilize, this is not an ideal time to invest in self-storage; most buyers want to buy when prices are down. However, it’s a good time to buy if you’re able to follow the three rules for “holders” mentioned above.

It’s also important to consider that interest rates will likely rise at some point. The rate of cash-on-cash return goes down much faster with rising interest rates than when prices fall. The reality for a buyer in a period of rising interest rates is he winds up paying more interest than he saves on price—and by a large margin.

For example, a $1 million loan at 8 percent costs an owner $380,000 more in interest than a 6 percent loan over 25 years, not to mention the majority of the interest comes in the first few years of the loan. In other words, a buyer has to get a giant discount to make up for the rise in interest rates.

Rates of return work the same way. A project that has a 16 percent cash-on-cash return with a 6 percent loan would only yield a 12 percent cash-on-cash return with an 8 percent loan. Thus, even though prices are at stabilized levels, now is still a good time to acquire. Buyers should remember the seller isn’t getting the benefit from your new low interest-rate loan, and that’s what’s creating the increase in cash flow. Sellers take note: If it’s a good time to buy, it’s also a good time to find a buyer.

If you’re waiting for interest rates to rise so you can take advantage of lower prices, you’re engaged in a losing proposition. If you’re thinking of buying, now’s the time to capture the low interest rates still available and realize the benefit of arbitrage.
 
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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U.S. Door & Building Components expanded its executive team to include Dennis Owens, vice president of dealer development, and Craig Nehlsen, western regional sales manager. Owens, with 34 years of self-storage industry experience, will be in charge of the

 company’s National Dealer Program. Nehlsen, with 10 years of industry experience, will represent the company in the West United States and Canada. He previously worked for DBCI and Epic Doors.
 
U.S. Door is an international supplier of rolling steel, commercial sheet doors and products for the self-storage and metal-building industries. The company offers wind-rated products, building components, relocatable buildings, lockers, wine storage and mezzanines.

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U-Store-It Trust, a self-storage real estate investment trust, released its operating results for the three months ending June 30, 2010. Highlights include:

• Funds from operations (FFO) was $0.11 per share for the second quarter.
• Same-store revenue for the company’s 364 facilities decreased 0.6 percent from the second quarter of 2009.
• Same-store net operating income increased 2.1 percent from the second quarter of 2009.
• Ending physical occupancy was 77.6 percent compared to 76.7 percent during the same time period in 2009.
• The company managed 119 properties totaling 7.9 million square feet, generating $0.6 million in management fee revenue during the quarter.

“The solid performance of our portfolio was consistent with our expectations entering the quarter. We are pleased with our return to positive net operating income growth on our same-store portfolio and expect a return to positive same-store revenue growth over the second half of this year," said CEO Dean Jernigan.

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A Mini Flex Storage of Montgomery, Ala., and several of its business-incubator tenants won a total of 13 Readers Choice Awards for 2010 from the Montgomery Advertiser.

A Mini Flex Storage won awards in the categories of climate-control storage, moving supplies and self-storage. Alabama Truck Rentals, Montgomery Movers and Touch of Class Limousine and Transport―all business tenants of A Mini Flex―also won several awards.
 
A Mini Flex Storage is the largest family-owned and -operated self-storage facility in Montgomery. Its business-incubation service was created in 2007 and now consists of 15 family-owned businesses. The service provides startup businesses with low-cost rent, free utilities, free T-1 Internet connection, discount phone services, short-term leases, special rates on truck rentals, special rates on specialty storage, and other assistance.

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Keller Williams, a real estate company with 700 offices and more than 80,000 residential agents, has launched a referral program that teams its real estate agents with self-storage operators.  

The agents will visit all the facilities in their area and meet with self-storage operators about the referral program. They will also gauge each facility’s safety features, move-in specials and ancillary services so they can refer the facility to their clients. In return, they ask self-storage operators refer their tenants to the partnering Keller Williams real estate agent.

The company also offers a brochure to all its customers. “How to Sell Your House in Half the Time and For More Money” contains the results of a survey given to 2,000 of the top realtors in the United States. One of the tips is storing personal belongings such as knick-knacks, excess furniture and photographs so prospective buyers can envision the home as they want it, not how it appears. Because this requires removing most items from a house, many homeowners turn to self-storage for safekeeping.

The referral program is free. The Keller Williams National Self Storage Group is creating a national database of all the facilities their agents visit. In addition, the real estate company can act as a broker for self-storage operators looking to sell their property, or for those looking to purchase a facility.    

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Assured Self Storage in Plano, Texas, is among several businesses that oppose the building of a homeless shelter in the area.
 
Though the shelter hasn’t yet been approved by the city council, the self-storage operator claims it’s already having a negative impact. Laura Jones, facility manager, said a couple of tenants indicated they would move out of the storage facility if the shelter opens. Jones said the shelter would hurt her business and cause her to lose occupancy.
 
The proposed site for the homeless shelter is a 6-acre complex in East Plano, at the edge of the tech district. It would house 80 homeless families receiving job support and other aid. Several local business owners say the shelter could boost crime in the area and cause property values to decline. The area is currently home to several subdivisions, a gun range, and a beer and wine store.
 
The City Council is considering whether to spend $700,000 in federal grant money to buy land for the project, led by the Samaritan Inn of McKinney, Collin County's only homeless shelter. The land is owned by Temple Baptist Church of Allen, Texas. The shelter would cost $3.3 million to build over three to five years, and would be funded through donations.
 
Collin County, though very affluent, has a growing homeless population. More than 40 percent of Samaritan Inn’s residents are from Plano.
 
Opposition to the shelter began to flare last month. Opponents support the idea of a shelter but say it needs a different location.
 
Source: Dallas Morning News, Plano businesses oppose location of planned homeless shelter

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Self-storage real estate investment trust Public Storage Inc. has declared a quarterly stock dividend for the third quarter of 2010 of 80 cents. The dividend is payable on Sept. 30 to stockholders on record as of Sept. 15, 2010.
 
Glendale, Calif.-based Public Storage, a member of the S&P 500 and The Forbes Global 2000, primarily acquires, develops, owns and operates self-storage facilities. As of March, the company had interests in 2,009 self-storage facilities in 38 states and another 188 throughout Europe.

Source: ABC News, Public Storage Declares Dividend of 80 Cents

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Paramount Metal Systems, a Little Rock, Ark.-based design/build steel contractor, is now an authorized builder of Varco Pruden Building & Roof Systems, which manufactures pre-engineered steel buildings and metal roofing systems.
 
 “The combination of Paramount and VP Buildings will expand our ability to service a much broader market,” said Rick Dodge, paramount vice president.
 
Paramount is a licensed general contractor for Arkansas, Louisiana, Mississippi and Tennessee. The company installs retrofit roof systems nationwide.

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First Choice Self Storage in Fontana, Calif., sold for nearly $5.1 million to Union Development Financial, a large privately held real estate corporation specializing in the ownership and management of self-storage investments in Southern California. The seller, First Choice Storage Inc., is a privately held development company in Rancho Cucamonga, Calif.

The 90,439-square-foot facility, located at 14750 Foothill Blvd., is situated on nearly 4 acres and is comprised of 90,000 net rentable square feet of storage space with 663 units and 84 covered RV-parking spaces.

Stephen Grossman, senior vice president of NAI Capital Newport Beach’s Self Storage Investment Group, was the only broker in the transaction.

NAI Capital, a commercial real estate brokerage firm headquartered in Encino, Calif., has 14 offices throughout Los Angeles, Orange, Riverside, San Bernardino and Ventura Counties. The company is the Southern California affiliate of NAI Global, a worldwide real estate service network with 325 offices around the world.

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