Westport Properties Inc., a California-based real estate developer and self-storage operator, has appointed Charles Byerly as president and chief executive officer, replacing company founder Barry Hoeven in those roles. Byerly previously served as chief financial officer.

The board and I have complete confidence that Charles is the right person to lead Westport into its next phase of growth. Weve experienced nearly double-digit growth since 2009, and Charles has been instrumental leading us through that, said Hoeven, who will remain executive chairman of the companys board of directors.

Byerly has been with Westport for seven years. As CFO, he was responsible for all of the companys acquisitions, financing and dispositions, as well as investor relations. He also led Westports third-party management expansion from five facilities to 25 from 2010 to 2012.

Launched in 1985, Westport Properties is a full-service real estate company specializing in the self-storage industry. Westport acquires, develops, builds and operates facilities in major markets that feature barriers to entry, dense populations and future rental-growth opportunity. The company operates more than 30 self-storage facilities in California, Connecticut, Florida, Maryland and New Jersey under the name US Storage Centers. It also manages assets in California and Nevada. The Westport portfolio of owned and managed properties totals nearly 4 million square feet.

By Anita Byer and Martin Salcedo

Owners and operators of self-storage facilities understand delinquent and defaulting tenants are part of the business. When collecting money from overdue tenants, they might turn to their state  lien laws for guidance to ensure they follow legal procedures for collections and eviction. However, when it comes to tenants who are in the military, operators need to tread even more carefully and follow the Servicemembers Civil Relief Act (SCRA).

The SCRA is a federal law designed to provide for, strengthen, and expedite the national defense by temporarily suspending various judicial and administrative proceedings that may adversely affect the civil rights of servicemembers during their military service. This sought-after protection is generally obtained by giving servicemembers additional benefits and safeguards during their military service than those enjoyed by non-servicemembers.

In addition to dealing with default judgments, the SCRA applies to a wide variety of commercial situations, such as evictions, installment contracts, mortgages, residential and motor vehicle leases, and telephone-service contracts. In some cases, the SCRA applies to a servicemembers dependents.

So, why should self-storage owners and operators be particularly concerned about the SCRA? Consider the following:

• The SCRA applies to servicemembers in every state and can be enforced by the U.S. attorney general in some instances.
• Violations of the SCRA may lead to imprisonment, injunctions and liability for civil money penalties, monetary damages, costs and attorneys fees.
• The SCRA includes requirements that are aimed directly at self-storage facilities.

Enforcement of Storage Liens

The SCRA affects how a storage lien may be enforced against a servicemember. Before reading the actual statute, however, its necessary to understand the following definitions.

• "Servicemember" means a member of the armed forces, as well as members of the commissioned corps of the National Oceanic and Atmospheric Administration (NOAA) and the commissioned corps of the Public Health Service.
• "Military Service" means active duty in the Army, Navy, Air Force, Marine Corps or Coast Guard; qualifying active service authorizations of the National Guard for a period of more than 30 consecutive days; qualifying active service with NOAA or the Public Health Service; and any period during which a servicemember is absent from duty on account of sickness, wounds, leave or other lawful cause. Note that members of a reserve component ordered to report for military service, and individuals ordered to report for induction under the Military Selective Service Act, are entitled to limited protection under the SCRA from the date their order is received until they report for military service or induction.
• "Period of military service" starts on the date a servicemember enters military service and ends on the date the servicemember is released from military service or dies while in military service.
• "Lien" is defined broadly to include a lien for storage, repair or cleaning of the property or effects of a servicemember, or a lien on such property or effects for any other reason.

Under the SCRA, a person holding a lien on the property or effects of a servicemember may not, during any period of military service of the servicemember and for 90 days thereafter, foreclose or enforce any lien on such property or effects without a court order granted before foreclosure or enforcement.

Simply stated, the SCRA requires a lawsuit and an order from the court before a lien can be enforced against a servicemember. Importantly, this requirement extends 90 days beyond the servicemembers period of military service.

Additionally, in a proceeding to foreclose or enforce a storage lien under the SCRA, the court may on its own motion, and shall if requested by a servicemember whose ability to comply with the obligation resulting in the proceeding is materially affected by military service: (1) stay the proceeding for a period of time as justice and equity require; or (2) adjust the obligation to preserve the interests of all parties.

While the intent of this provision is clear, the result may not be. Since the SCRA grants the court broad discretion to either delay the lawsuit or preserve the interests of all the parties, including the servicemember, its possible a self-storage operator will not obtain the desired relief.

Differences From State Lien Statutes

What makes the SCRAs provisions significant is not how they restrict the enforcement of storage liens, but how they differ from some states statutory mechanism. In Florida, for example, the first step requires the tenant to receive written notice by personal delivery or Certified Mail to the tenants last known address. This notice, which must also be posted conspicuously at the self-storage facility or on the unit, must include:

• An itemized statement of the owner's claim, showing the sum due at the time of the notice and the date when the sum became due
• The same description, or a reasonably similar description, of the personal property as provided in the rental agreement
• A demand for payment within a specified time that is not less than 14 days after delivery of the notice
• A conspicuous statement that, unless the claim is timely paid, the personal property will be advertised for sale or other disposition and will be sold or otherwise disposed of at a specified time and place
• The name, street address and telephone number of the owner whom the tenant may contact to respond to the notice.

The second step requires an advertisement of sale be published once a week for two consecutive weeks in a local newspaper of general circulation. If no such newspaper exists locally, the advertisement must be conspicuously posted in at least three places in the same neighborhood as the self-storage facility for at least 10 days before the sale. Such advertising or posting cannot start until after expiration of the time given in the notice, which cannot be less than 14 days.

The advertisement must include:

• A brief and general description of what is believed to constitute the personal property contained in the storage unit, as provided in the rental agreement
• The name of the tenant and the address of the self-service storage facility where the unit is located
• The time, place, and manner of sale or other disposition, which cannot occur sooner than 15 days after the first publication.

Note the contrast between the SCRAs need for court approval and Floridas quasi-self-help mechanism. The difference is substantial.

Waiver of Rights

A servicemember may agree to waive any of the rights and protections afforded by the SCRA. To be valid, a waiver of rights that applies to the repossession, retention, foreclosure, sale, forfeiture or taking possession of property that is security for any obligation must meet the following requirements:

• The waiver must be in writing.
• The waiver must be executed as an instrument separate from the obligation or liability to which it applies. Since this requirement doesnt allow the waiver to be included within the lease or any other rental agreement, the waiver of rights should be made a separate, stand-alone document.
• The waiver must be executed during or after the servicemembers period of military service. Requiring a servicemember to add his serial number, or other military designation number, to the waiver may serve as preliminary confirmation that this requirement has been satisfied.
• The written waiver must specify the legal instrument to which the waiver applies, such as the rental or lease agreement, and if the servicemember is not a party to that instrument, he must also be specified.
• The written waiver must be in at least 12-point type.

Given the limitations posed by the SCRA, its beneficial to obtain a waiver of rights from a servicemember. However, care must be taken to ensure the waiver not only satisfies all of the SCRAs requirements, but its properly drafted to permit a self-storage facility to take prompt and appropriate action against a defaulting servicemember. Consequently, its advisable to seek the assistance of experienced counsel.

For many owners and operators of self-storage facilities, the decision to obtain a waiver of rights from servicemembers is an easy one, especially considering the manner in which the SCRA limits collection options. For those failing or refusing to obtain a proper waiver, the need to abide by the SCRA is underscored by the penalties awaiting violators.

Regardless of the chosen course of action, self-storage operators should respect the intent of the SCRA, which is to protect servicemembers who are unable to defend against a claim because theyre occupied elsewhere in service of their country.

Anita Byer is president and CEO, and Martin Salcedo is general counsel and self-storage risk management group member of Setnor Byer Insurance & Risk. Headquartered in Plantation, Fla., the company is an independent insurance agency dedicated to developing comprehensive insurance and risk-management solutions for clients throughout the United States. For more information, call 888.253.8498; visit www.setnorbyer.com.

The U-Haul Co. recently purchased three self-storage facilities comprising more than 163,640 square feet of net rentable storage space and more than 1,450 storage units. Two of the properties are in Florida, and one is in Colorado. No financial terms were disclosed.

The acquired self-storage facilities are:

• 24789 U.S. Highway 27 North, Lake Wales, Fla. The  property has 10 single-story, self-storage buildings offering more than 630 storage units comprising more than 85,250 square feet of net rentable space.
• 3425 Lipan St., Denver Formerly named The Storage Center, this three-story facility has 352 storage units comprising more than 29,890 square feet of net rentable space.
• 29008 U.S. Highway 27, Leesburg, Fla. The facility has more than 475 storage units comprising more than 48,500 square feet of net rentable space.

Established in 1945, U-Haul has 36 million square feet of storage space at more than 1,000 owned and managed facilities throughout North America.

CubeSmart, a self-storage real estate investment trust, recently purchased a four-property portfolio in the Houston area. The self-storage facilities comprise 235,793 square feet. Financial terms were not disclosed. HFF (Holliday Fenoglio Fowler LP) announced the sale and represented sellers Private Mini Storage and Clarion Partners in the joint-venture deal.

Two of the self-storage facilities are in Houston. The Katy Freeway facility has 52,488 square feet and offers 440 self-storage units, 45 wine storage units and 12 RV spaces. The Bellaire Boulevard facility has 52,020 square feet and offers 411 self-storage units, 11 office/warehouse units and eight RV spaces.

The Cypress, Texas, facility has 58,761 square feet and offers 437 self-storage units and nine office/warehouse spaces. The largest of the four properties is in Pearland, Texas. This facility has 72,524 square feet and offers 450 self-storage units and eight office/warehouse spaces.

CubeSmart owns or manages 511 self-storage facilities nationwide and operates the CubeSmart Network, which consists of approximately 850 additional facilities.

Private Mini Storage is a Texas-based self-storage operator with several facilities in Texas and one in North Carolina. The company specializes in climate-controlled units, boat and RV self-storage, small-office warehouses and wine storage.

Based in New York, Clarion Partners is a real estate investment manager. The firm has more than $24 billion in total assets under management for more than 200 international and domestic institutional investors.

HFF, a provider of commercial real estate and capital-markets services, operates out of 21 offices nationwide. The company and its affiliate, HFF Securities LP, are owned by HFF Inc. Together they offer debt placement, investment sales, advisory services, structured finance, private equity, loan sales, and commercial loan servicing.

The four U.S.-based self-storage real estate investment trusts (REITs)CubeSmart, Extra Space Storage Inc., Public Storage Inc. and Sovran Self Storage Inc.have released financial statements for the quarter that ended June 30. In general, all four entities showed gains in key areas and are displaying aggressive acquisition strategies.

CubeSmart

CubeSmart reported a funds from operations (FFO) per share of $0.18 and a 5.2 percent increase over last years second quarter in same-store net operating income (NOI) at its 330 facilities. The company attributed this to a 3 percent growth in overall revenue and a 0.7 percent decrease in property operating expenses.

The operation gained 360 basis points in physical occupancy compared with the same period last year. The same-store physical occupancy was 83.6 percent as of June 30.

The company also closed on $64.3 million in self-storage acquisitions during the quarter. This includes one facility in the Dallas-Fort Worth area for $5 million, as well as two former Storage Deluxe facilities for $59.3 million. CubeSmart's $560 million acquisition of Storage Deluxe is now complete. (Original story: "CubeSmart Announces $560M Acquisition of Storage Deluxe.")

On May 30, the company declared a dividend of 8 cents per common share. The dividend was paid on July 16 to common shareholders of record on July 2.

Extra Space Storage Inc.

Same-store revenue increased 6.7 percent and NOI rose 10.2 percent compared to the same period in 2011. FFO was 38 cents per diluted share, including lease-up dilution of 1 cent per share, resulting in 40.7 percent growth compared to the same period last year.

Same-store occupancy grew by 270 basis points to 90.4 percent, compared to 87.7 percent at the same time last year.

The company acquired four properties for approximately $21.3 million. As part of a public offering of 8.05 million shares of common stock, the company generated net proceeds of approximately $226.7 million.

Extra Space paid a quarterly dividend of $0.20 per share.

Public Storage Inc.

Revenue for same-store facilities increased 5.1 percent, or $19.2 million, in the quarter, as compared to the same period in 2011, primarily because of higher realized annual rent per occupied square foot. Cost of operations for the same-store facilities declined by 1.4 percent, or $2.4 million, in the quarter as compared to the same period in 2011.

FFO was $1.38 per diluted common share, compared to $1.39 for the same period last year. NOI for same-store facilities increased 8.3 percent, or $20.9 million, in the quarter compared to the same period in 2011.

During the quarter, the company acquired four self-storage properties (316,000 net rentable square feet), in California (two), Florida and New York, for approximately $46 million. Public Storage has entered into contracts to purchase two more facilities for a combined $31 million.

The company reported a regular common quarterly dividend of $1.10 per common share. It also declared dividends with respect to various series of preferred shares. All the dividends are payable on Sept. 27 to shareholders of record as of Sept. 12.

Sovran Self Storage Inc. (Uncle Bob's Self Storage)

Total revenue increased 17 percent over last year's second quarter, while property operating costs increased 9.6 percent, resulting in an NOI increase of 21.3 percent.

FFO for the quarter were 77 cents per fully diluted common share, compared to 67 cents for the same period last year.

Net income available to common shareholders for the second quarter was $11.7 million, or 40 cents per fully dilated share. For the same period in 2011, net income available to common shareholders was $9.7 million, or 35 cents per fully diluted common share.

Average overall occupancy was 85.6 percent, with units renting for an average of $10.31 per square foot.

Sovran acquired five properties during the quarter, one each in Miami and Norfolk, Va., (existing markets) and two in Chicago, which is a new market for the company. The properties cost a combined $43 million and comprise 311,000 square feet of rentable space.

The company paid dividends of 45 cents per common share.

Talonvest Capital Inc., a provider of self-storage finance services, has hired Carole Stanley as an associate. As part of her duties, Stanley will create financing packages, underwrite self-storage and commercial properties, conduct discounted cash flow modeling, perform market research, and analyze sales/rent comparable information. She also will process debt and equity assignments for the company.

Stanley joins Talonvest after working with its principals for more than seven years at Buchanan Street Partners, where she underwrote and prepared financing packages. She is a graduate of the University of California, Santa Barbara, and a licensed real estate broker.

"As our business activities continue to increase and we expand our platform, Talonvest will add more talented professionals like Carole to the team, said Tom Sherlock, a company principal. Based on her proven track record in financial analysis and her natural client-service orientation, shell make an immediate impact."

Founded in 2010 and based in Orange County, Calif., Talonvest structures debt and equity for self-storage and commercial real estate investors and developers nationwide. The firm has provided more than $3 billion in capital for self-storage owners through Talonvest, Buchanan Storage Capital and Belgravia Capital.

As we close out the third quarter of 2012, its time to start thinking about your self-storage facilitys goals and projections for 2013. How close were you in 2012? Were you above or below your projections for income, expenses and net operating income (NOI)? Were your move-ins, move-outs and net units at an acceptable level? Do you believe your facility provides the best customer service and amenities in the area? Are your managers fully trained?

All of these items can have a dramatic effect on the financial success of your business. In our never-ending quest to increase NOI, we must consistently review our facility expenses. Here are six expense areas you should review on a regular basis.

Payroll

This is one of the largest expenses in any self-storage operation. Between a managers salary, bonuses, insurance benefits, payroll burden, payroll services, allowances and workmans comp, the costs can add up very quickly.

Are your managers compensated correctly and at the market rate? Have you reviewed multiple vendors for your insurance and benefit costs? Is your facilitys bonus program based on real and measurable metrics such as an actual increase in NOI? Are the allowances you pay, such as a cellular phone or mileage, at an acceptable rate? Have you reviewed multiple vendors for your payroll services? Does your insurance company have your employees coded correctly for workmans comp?

While reviewing these costs, keep one thing in mind: The success of a self-storage facility depends greatly on the manager in the office. If you have a great manager, consider that variable when you review your payroll costs. Talented managers are hard to find, even in this economy.

Marketing

Marketing is an intriguing expense for the self-storage industry as a whole. Facility operators usually fall into one of two camps: They budget extensively for marketing or they budget nothing at all.

If your facility doesn't have a marketing budget, this section may not apply to you. But if you're not doing any active marketing, I guarantee the lack is affecting your facility revenue. Remember, having a marketing plan is not the same as advertising. A marketing plan is a consistent and well-thought-out course of action that takes into account available marketing campaigns, the timing of these campaigns, related expenses and return on investment (ROI).

The best way to measure the success of your facilitys marketing plan is to calculate the ROI of each individual campaign. For example, take a look at the costs associated with your website.

Lets assume the monthly expenses are $500, and your facility averages five online rentals per month. The facility has an average unit price of $100 per month, and customers stay an average of 10 months. In this scenario, the cost to acquire each customer is $100 (total monthly Web expenses divided by the number of online rentals). The profit on these customers should be about $900 each (average unit price per month times the average length of stay minus the cost of customer acquisition).

This is a very easy way to calculate the ROI on an individual campaign. There are other variables that could affect these numbers, but overall it will be pretty close. Review this scenario on each marketing campaign to decide which your facility needs to keep and which you should discontinue.

Utilities

Every year the utility costs at your self-storage facility rise. Regularly review your electric bill. If it increases, check to see if the electric company has raised its rates. Put your indoor lights on automatic timers, and make sure customers close the doors to all air-conditioned and climate-controlled buildings. Make sure outdoor lights are turned off during the day.

Internet and phone service are two other services you should bid out on a regular basis. Often a bundle pack or a multi-year agreement can reduce your phone and Internet costs by 20 percent or more.

Professional Services

Regularly review all of your facility's professional services. Lawn care, pest control, security monitoring, snow plowing and maintenance contracts are all services that can be put out to bid.

Insurance

Its not uncommon for a self-storage property insurance policy to increase 20 percent over the previous year. Try to find a broker who has multiple carrier contacts to find the best deal. If you have multiple properties, consider leveraging those facilities into a single policy. Often, there are significant discounts for this type of multi-property policy.

Office Expenses

Office expenses are often hidden. They may seem tame compared to insurance or utilities, but they add up quickly.

Look around your office. Do you have seven colors of Post-It notes, 25 types of pens, eight colored highlighters, six types of candy on the counter, and a gum-ball machine you dont remember ordering? Set standards for office supplies. Consider setting up an account with an office retailer like Staples or Office Depot and limit the office supplies your staff can order. It may seem like a small expense, but you can often save hundreds of dollars per year.

The year 2013 is coming quickly. Even though the self-storage industry has been very successful over the last few years, facility operators must regularly monitor their expenses. This simple exercise can add thousands of dollars to your facility value.

Matthew Van Horn is vice president of Cutting Edge Self-Storage Management, a full-service management company specializing in management, feasibility studies, consulting and joint ventures within the self-storage industry. Van Horn is well-known for finding hidden profit centers in self-storage operations. For a complimentary copy of Hidden Profit Discovery Session, send an e-mail to [email protected]. For more information, call 866.970.EDGE or visit www.cuttingedgeselfstorage.com. Follow the company on Twitter at Cuttingedgemgt, and on Facebook at Cutting Edge Self-Storage Management.

Stor-Age, the largest operator of self-storage facilities in South Africa, has begun development on a self-storage facility in Constantia Kloof, a suburb of Johannesburg. Expected to open in December, the two-story facility will feature 5,500 square meters of self-storage space and offer more than 500 units ranging in size from 3 to 30 square meters.

The property is near a retail mall and a business park. Its great to be able to position our high-quality brand of self-storage within a prime retail node, said Gavin Lucas, Stor-Age CEO. The location alone will contribute significantly to the value of our portfolio. The development of premium grade self-storage assets within mixed-use business zones continues to gather momentum in the local property market.

Stor-Age operates almost 20 self-storage facilities throughout South Africa, with a corporate office in Cape Town.