Aston Properties, a commercial development, management and leasing firm based in Charlotte, N.C., has converted a former Kmart store in Monroe, N.C., to self-storage. The property at 2120 W. Roosevelt Blvd. will be managed by self-storage real estate investment trust Extra Space Storage and branded under its name, according to a press release.

Aston purchased the building a year ago for $4 million and then spent $1.7 million and nine months making upgrades, according to the source. The 70,000-square-foot, climate-controlled facility is across from the Monroe Crossing Mall shopping center. Unit sizes range from 25 square feet to more than 300 square feet. Security features include electronic gate access and video cameras.

Aston is also under contract to sell two outparcels of the site, one to a national restaurant chain and the other to the operator of a gas station and convenience store. Those transactions are expected to close during the fourth quarter, the release stated.

“With a highly visible location close to nearby residential communities, this property is well-suited for an attractive, safe storage facility,” said Jamie Kneisel, director of acquisitions and dispositions. “We’re excited to partner with Extra Space Storage and open our doors in Monroe.”

Although the project is Aston’s first self-storage conversion, it isn’t the first time the developer has transformed a Kmart store. The company acquired and converted a building in Harrisonburg, Va., into new retail space, and transformed another Kmart in North Charleston, S.C., into a 127,000-square-foot T-Mobile customer-care center. The property is expected to open in early 2018.

Founded in 1980 by G. Steele Dewey III, Aston has led the development and acquisition of more than 5 million square feet of retail properties throughout the mid-Atlantic and Southeast United States.

Phoenix-based U-Haul International Inc., which operates more than 1,300 self-storage locations across North America, is investing $7.4 million to expand storage space and other service amenities at three recently acquired locations in the Texas Rio Grande Valley. The projects in Brownsville, Harlingen and Pharr will be expanded to include climate-controlled storage units, according to the source.

In Brownsville, the company is adding $4 million in upgrades at 2400 Boca Chica Blvd. The conversion of the former Burlington Coat Factory already includes a showroom, boat/RV and secured parking, and a hitch bay, but the structure will now offer more than 100,000 square feet of self-storage space and a second floor, said Mark Reinitz, marketing company president for U-Haul Co. of Corpus Christi. When complete, the facility will have about 1,300 units.

In Harlingen, U-Haul will spend $900,000 to upgrade the former ProBuild lumber yard it acquired 11 months ago. The project at 1218 N. Ed Carey Drive includes 372 storage units, 224 of which are climate-controlled. Other improvements include a rental showroom that sells moving and packing supplies, hitch bays, covered loading and unloading areas, and controlled access.

In Pharr, the company has planned $2.5 million in upgrades at 4007 N. Cage Blvd. The project includes the construction of a climate-controlled building containing around 200 units and the addition of covered boat/RV spaces, a showroom and a U-Box portable storage warehouse, Reinitz told the source.

Established in 1945, U-Haul owns more than 44 million square feet of storage space. The company’s corporate sustainability initiatives, which support infill development to help local communities lower their carbon footprint, has led to dozens of conversion projects in recent years.

Update 8/3/17 – StorageVault has closed on the 24 self-storage facilities that were part of the Sentinel Storage portfolio. In addition to paying for the assets through the issuance of company shares, cash on hand and mortgage financing, the company used funds from a new revolving credit agreement of up to $270 million, which was advanced at the closing of the transaction, according to a press release.

The credit agreement, led by The Bank of Nova Scotia, also includes the Bank of Montreal, Canadian Imperial Bank of Commerce, Canadian Western Bank, National Bank of Canada, Raymond James Finance Company of Canada Ltd. and The Toronto-Dominion Bank.

“We are very happy with the credit agreement and its strong sponsorship,” said Iqbal Khan, chief financial officer. “It provides us with the flexibility to apply StorageVault’s operating system to the acquisition and the ability to reduce our cost of debt.”

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6/27/17 – StorageVault has officially acquired one of two Montreal self-storage facilities it agreed to buy last month. The $8 million purchase was made with funds on hand.

The company is also negotiating a purchase agreement with Access Self Storage, a major shareholder of StorageVault, to buy six Access facilities for $34.2 million, according to a press release. Those properties are in Nova Scotia, Ontario and Quebec, Canada.

The deal with Access is subject to approval by TSX Venture Exchange, the Toronto stock exchange. It would be paid for by issuing up to $7.5 million in common shares at $2.80 per share, along with cash and financing, the release stated. The deal is expected to close around Aug. 15.

StorageVault has been actively acquiring Access properties. The deals include five assets that changed hands for $48 million last September.

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5/17/17 – StorageVault Canada Inc. has agreed to purchase $429.2 million in self-storage assets in recent weeks. The agreements include all 24 Sentinel Storage locations across Canada, two unrelated facilities in the Montreal market and the third-party management business of Access Results Management Services Inc. (ARMS), a related entity to StorageVault, according to company officials.

StorageVault signed an agreement in March to acquire Sentinel by purchasing the outstanding shares from private company TargetCo ULC for $396.6 million. The portfolio is spread across Alberta, British Columbia, Manitoba, Nova Scotia, Ontario and Quebec. The purchase will be made by issuing $20 million in StorageVault shares at $1.70 per share, with the remainder paid with cash, debt assumption and mortgage financing, according to a press release. It’s expected to close by June 30.

StorageVault has also signed agreements to buy two unrelated self-storage properties in Greater Montreal for $16.6 million. The facilities will give the operator 10 assets in the local market. One purchase price of $8.6 million is payable by issuing $500,000 in common shares at $2.50 per share, with the remainder paid with cash and financing. The second asset is being acquired for $8 million through cash and financing, officials said. Both deals are expected to close by July 31.

In March, StorageVault also agreed to bring the management of its 50 locations in-house and acquire the third-party management contracts for more than 55 self-storage facilities from ARMS for $16 million. The purchase was expected to close March 31 and is being paid for by issuing $11 million in common shares at $1.70 per share and cash. The hold price for the shares expires Aug. 1.

“The third-party management platform is an important acquisition funnel for StorageVault, and it provides a separate and valuable revenue stream,” officials said in a press release.

StorageVault operates several self-storage facilities and more than 3,200 portable-storage units in Alberta, British Columbia, Manitoba, Nova Scotia, Ontario, Quebec and Saskatchewan.

The McLean Group, a Virginia-based investment bank, has hired self-storage developer Jeff Weber to lead its newly formed Real Estate Practice Group. The division will service the “lower-middle real estate market” by arranging capital or providing other financing solutions for real estate projects and enterprises, including self-storage, according to the company website.

“The product types we’ll work in are vast. There’s not much limitation. If there’s an appetite on the behalf of investors, then we’re going to try to find them that stuff to invest in. And, there’s a lot of guys who want to invest in storage,” Weber told the source. Interested parties include some who are “very long-term minded and looking to invest in quality storage platforms that want to grow with no time limit,” he said.

Weber has 36 years of commercial real estate investment and development experience in the business-office, industrial, medical-office, multi- and single-family residential, retail, and self-storage sectors, according to a company press release. He was most recently a principal with Resco Self Storage LLC, a Newport Beach, Calif.-based real estate investment group. The company’s history includes the development and construction of facilities for the Shurgard storage brand, which eventually was sold to real estate investment trust Public Storage Inc.

Weber’s career has included stints with Coldwell Banker Commercial Real Estate Services and SDC Development, as well as owned and managed projects for affiliates of J Weber Group, a company he founded in 1985.

In his new role, Weber will be based out of McLean’s Newport Beach office. “As a former real estate developer, I implicitly understand the issues confronting my sponsor clients, from escrow deadlines to governmental entitlements to financing challenges to construction problems to market acceptance,” he said in the release. “I also understand, from an investor’s perspective, the need to properly align a given opportunity with the investment mandate, risk tolerance and overall suitability. I am honored to work at an investment bank with the reputation of The McLean Group, where I can help match these operators with the right providers of equity capital.”

Headquartered in McLean, Va., The McLean Group provides strategic and financial advice on mergers and acquisitions, business valuations and capital formations.

Update 8/2/17 – The fatal shooting at a Public Storage facility in June has been ruled a case of self-defense by the Hennepin County Attorney’s Office. Lacount won’t face any charges in the death of Luetzow, according to the source.

“We declined to charge Mr. Lacount because he raised a self-defense claim, which the investigation showed was valid,” said Hennepin County Attorney Spokesperson Chuck Laszewski.

The attorney’s office declined to discuss the circumstances surrounding the shooting or the relationship between the two men.

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6/26/17 – An argument between two men at a Minnetonka, Minn., self-storage facility escalated into a fatal shooting on Friday morning. Thomas Edward Luetzow, 58, was shot in the head and neck just after 11 a.m. at a Public Storage location at 2825 Hedberg Drive, according to a source.

Officers were en route to investigate the dispute when they were notified that shots had been fired. When they arrived, they found the victim, who was pronounced dead at the scene, a source reported.

Police later arrested James Lacount, 65, without incident in connection with the shooting. They also recovered the gun used in the crime. Lacount is being held pending charges.

Though the investigation is ongoing, police aren’t looking for any other suspects, a source reported. Luetzow was identified by the Hennepin County Medical Examiner’s Office. Police haven’t disclosed what led to the shooting.

Based in Glendale, Calif., Public Storage Inc. is a self-storage real estate investment trust with interests in 2,354 self-storage facilities in 38 states. It owns approximately 155 million net rentable square feet. Operating under the Shurgard brand name, the company also has 220 facilities in seven European countries, with approximately 12 million net rentable square feet.

 

A new self-storage project being developed by GreenSpace Holdings LLC in the Houston suburb of Pearland, Texas, will be constructed using the company’s patent-pending building design, which makes use of surplus shipping containers. The three-story building at 2515 Westminister Road will comprise 95,565 square feet of rentable space in 1,017 storage units, according to a press release from JLL Capital Markets, the commercial real estate and finance firm that represented GreenSpace in the 2-acre land purchase.

“We have been working hand-in-hand with our general contractor for over a year on the feasibility of our design, which my partner, David Ledoux, and I sketched on a napkin more than two years ago,” said GreenSpace co-owner Rick Stockton. “This is truly the culmination of a remarkable journey for both of us.”

According to GreenSpace, the container-style design reduces multi-story self-storage construction costs by up to 50 percent and the schedule by four to six months. It also minimizes the  occupancy required for positive cash flow to approximately 45 percent. In addition, the has environmental benefits, both by recycling the containers and reducing the need for new structural steel and concrete. This saves enough electricity during manufacturing and construction to power more than 500 homes for a full year and reduces carbon-dioxide emissions by about 660 tons, release stated.

TMS Contractors LLC is the general contractor on the project. Once complete, the facility will be managed by self-storage real estate investment trust CubeSmart and branded under its name.

Located off a main thoroughfare in one of Houston’s fastest-growing suburbs, the facility will be near a mix of retailers including Lowe’s Home Improvement and an H-E-B grocery store. The Pearland submarket experienced nearly 100 percent population growth from 2000 to 2015, during which time there was little construction of climate-controlled storage, according to the release.

GreenSpace was represented in the real estate transaction by JLL associate Chris Bergmann. JLL also brokered the company’s acquisition of a 2-acre parcel in Houston for the development of another CubeSmart-branded facility. The developer plans to break ground at 1050 Brittmoore Road later this year. Upon completion, the 132,967-square-foot facility will contain 1,401 climate-controlled units.

Houston-based GreenSpace plans to build 50 multi-story self-storage facilities nationwide in the next seven years. The company launched its shipping-container design in 2015.

JLL is a full-service global provider of capital solutions for real estate investors and occupiers. Last year, the firm completed $140 billion in investment sale and debt and equity transactions globally. The firm’s Capital Markets team comprises more than 2,000 specialists globally.

The one thing nearly all self-storage owners have in common is a lack of time. They’re often so busy overseeing the top-level aspects of their business that it can be easy to lose sight of what’s happening at the facility level, which can leave them vulnerable to employee theft.

The suggestion that one of their managers could be stealing is almost insulting to some owners. They think, “He’s been working with me for years and I trust him emphatically. I can’t believe anything could be wrong.” Unfortunately, embezzlement can happen at any facility, and it can severely damage the business. Consider the following guidelines to prevent and detect employee theft.

Establish Good Policies

Most storage managers are trustworthy and would never steal from their employer. However, as the saying goes, “Trust, but verify.” Every owner or supervisor should complete a regular financial audit of his facility; but first, you need solid policies and procedures in place.

One of your most important procedures is the one that dictates the way deposits and cash are handled. Deposits should be delivered to the bank daily or as close to daily as possible. Each deposit slip should include a date, money breakdown and time stamp from the bank, which should match up with the end-of-day report generated from your management software. Copies should be forwarded to the accounting team, who should verify the reports and deposits to ensure they match. If there are any discrepancies, a valid reason is necessary.

Next, verify the money in the cash drawer and petty-cash accounts. If your cash drawer starts each day with $200, then at the end of the day, there should be $200 in the drawer plus the day’s deposits. If your property has a petty-cash fund of $200, there should be a mix of cash, receipts or vendor invoices that equal $200.

Remember, petty cash is to be used for approved facility expenses. All receipts or invoices should be in line with your stated policies and procedures. As with day-to-day deposits, there should be a valid reason for any variances.

Conduct a Financial Audit

The most basic way embezzlement takes place is directly from cash sources. Removing funds from cash drawers and petty cash or altering deposits are the easiest ways to steal from a company directly, but they’re also the most obvious places to check when conducting a financial audit. Experienced self-storage managers will embezzle in ways you won’t catch right away. A complete audit will check cash but also the rental side of the equation, including on facility discounts and write-offs.

We all need to accept a hard truth: A full-time manager can spend many hours each week using, testing and learning how to circumvent a property’s management software. There isn’t a program available that can’t be tricked with enough time, patience and ingenuity.

Typically, embezzling behavior starts with some kind of fee. Most storage facilities collect late fees, lien fees, administration fees, lock-cutting fees, etc. These are small amounts most owners or supervisors wouldn’t notice right away, if at all, and they can be targets for someone who understands how your software operates. It’s extremely easy for a manager to accept a cash payment from a customer and then write off the amount or issue a “credit.” The fee disappears into the abyss with a couple mouse clicks.

To combat this, set limits on discounts and write-offs. Review each individually and, if you have a question about it, ask. Once a manager gains a certain amount of confidence, the embezzlement often moves to full rental payments, which can total thousands of dollars per month in lost revenue.

Make Regular Site Visits and Be Vigilant

Vigilance and tracking are the most important tools in the fight against embezzlement. The best way to stop employee theft is to prevent it in the first place. This means being diligent.

Make regular site visits. During each visit, pull a current rent roll from your management software and complete a physical walk-through. Make sure all the units are locked. Those that are assigned to customers should have a customer lock. Those that are classified as vacant should be secured with a facility lock. If there are any variances, such as a vacant unit secured with a customer lock, then dig deeper.

Take the time to open all vacant units. Check to see if they’re truly vacant or if someone, possibly a member of your staff, is using the unit off the books.

Also, regularly check your customer leases. Every unit should have a contract, even one assigned to your staff. It’s very easy to “move in” a customer without ever having the person complete a lease and have him pay with cash in exchange for a discount. With no record in the computer, those funds will never be counted in your software.

Finally, check the retail inventory during your visit. Count all the merchandise and compare those counts to the product inventory listed in the computer. There should be valid reasons for any variances.

Watch for Red Flags

When it comes to your employees, watch for red flags. For example, a manager who embezzles rarely wants to take time off because it upsets the system. If one of his cash-paying customers were to visit the office in his absence and wasn’t found in the management software, another employee may start to ask questions.

Be aware of your manager’s lifestyle. If you notice sudden acquisitions or improvements that don’t necessarily fit within his pay grade, it could be a sign that you have problem. Now that doesn’t mean a storage manager can’t have nice things or these items weren’t acquired legitimately, but pay attention to scenarios that seem out of place.

A sudden drop in revenue or a significant increase in discounts and write-offs could also point to an issue. If you suspect something, take the time to make a few customer calls. It takes about three minutes to contact a tenant and ask if he received a rental discount or made a payment that was never entered into the management system.

What should you do if you discover a case of embezzlement? First, document everything. Next, keep a solid timeline that corresponds with the irregularities. Third, have someone verify the documentation you’ve collected. Finally, decide how you want to handle the situation. Termination is usually in order, with the possibility of criminal prosecution; but each owner has make that decision on his own.

The storage industry offers advanced management, accounting and security software. Use this technology to your advantage and let the machines help you. Remember, your business is only as strong as the systems you set up to protect it.

Matthew Van Horn is co-founder of 3 Mile Domination Self Storage Services, a full-service operations company specializing in self-storage management, marketing and consulting. He’s also co-author of “Self Storage Domination.” To speak with him about your self-storage operations, schedule a free 60-minute strategy session at www.3miledomination.com.

Inside Self-Storage (ISS) has announced the winners of its 2017 "Best of Business" reader-choice poll, in which readers voted for their favorite industry suppliers in nearly 40 categories. Voters chose their top companies in categories such as Best Building Components, Best Manager Training, Best Retail Product and many others. The winners for this year, based on verified voting through insideselfstorage.com from May 31 through June 30, can be viewed here.

ISS congratulates its esteemed winners, each of which will be featured in the November print edition of ISS magazine. The winners will also be honored with a special commemorative plaque at the Inside Self-Storage World Expo in Las Vegas, April 3-6, 2018. Details will be released as the event approaches.

For more than 26 years, ISS has provided informational resources for the self-storage industry. Its educational offerings include ISS magazine, the annual ISS World Expo, an extensive website, the ISS Store, and Self-Storage Talk, the industry’s largest online community.

Sentry Self Storage Management, an industry management and consulting firm, has released its second-quarter 2017 operating results showing year-over-year improvement in revenue, net operating income (NOI) and occupancy. The company reported revenue growth of 7.2 percent and a 2.2 percent increase in property expenses, which resulted in an 8.2 percent increase in NOI compared to the same period in 2016.

Occupancy at Sentry-operated self-storage properties was 90.2 percent as of June 30, a year-over-year increase of 20 basis points, according to a press release.

The company is expanding two properties in Lakeland and Tampa, Fla. Both are expected to be complete during the third quarter of 2018. The firm also has a site under development in Deerfield Beach, Fla., which will open this year, and another in Hollywood, Fla., slated to open in fall 2018.

Based in Coral Springs, Fla., and founded in 1997, Sentry owns or manages 26 properties comprising more than 2.2 million net rentable square feet. The company’s services include consulting, development, feasibility studies, acquisitions, renovations and facility management.