South Carolina self-storage operator Plantation Storage is hosting a food drive in October at its Bluffton facility to benefit Bluffton Self Help, a nonprofit organization that provides food, clothing and short-term financial assistance to community members. Donations of nonperishable canned or boxed food can be dropped off at the property at 1110 Fording Island Road from Oct. 1 to Oct. 25, 9 a.m. and 6 p.m., Monday through Friday. The storage company will post the drive’s progress on its Facebook page.

Bluffton Self Help was founded in 1988 by Bluffton resident Ida Martin. Initially working out of her garage, Martin obtained food and clothing donations from family, friends and local grocers. The charity moved to its current headquarters, 39 Sheridan Park Circle, last November. In addition to its core service, the charity coordinates a variety of service projects, including Thanksgiving dinners to families in need, toys at Christmas, Easter baskets, blankets and coats during the winter, and school supplies at the beginning of each school year.

Plantation Storage has one location in Bluffton, two in Columbia and one in Myrtle Beach, S.C. The company is managed by Southeast Management Co. Property amenities include moving and packing supplies, free use of the facility’s moving truck, and online reservations and account-management capabilities.

A U.S. district judge ruled on June 26 that Southern Mini Storage of Sanford in North Carolina violated the Servicemembers’ Civil Relief Act (SCRA) when it auctioned property belonging to a deployed special-operations soldier without a court order. The soldier, who requested to remain anonymous, stored personal items in the unit along with several thousand dollars worth of Army-issued equipment. Military officials found the soldier negligent for the loss and docked his pay as compensation.

After discovering her husband’s storage unit had been auctioned in December 2010, Angela Williams sought help from his Army unit and Fort Brag legal counsel. At the time, no one suggested the self-storage facility may have acted in violation of SCRA, and she didn’t know the federal law would apply to their situation, Williams told the source. Under SCRA, a lien foreclosure cannot proceed against a tenant, the tenant’s dependent who is in the military or a reservist without approval from the court.

The ruling by Senior U.S. District Judge W. Earl Britt led to an Aug. 21 undisclosed settlement between the soldier and the storage facility. Business owner Bertie Butler declined to comment, according to the source.

Williams told the source the items in the storage unit were valued at about $40,000. Some of the belongings were irreplaceable, such as three boxes of pristine Christmas ornaments from her great-grandmother and grandmother, and ornaments made by her children, she said.

The soldier was charged $8,044 for the lost Army gear, which was later deemed to be an overpayment. If a solider is found negligent, Army limitations cap the amount of liability to one month’s pay, according to the source. The monthly payments on the debt were a hardship for the family, Williams told the source. The couple was eventually refunded $3,500, but the soldier is still seeking a full refund and a reversal on the negligence ruling.

The solider and Williams filed a complaint with the Army Special Operations Command Inspector General and are awaiting a final report, but have been told the charge of negligence will stand. “There’s no doubt [the storage owner] violated the SCRA,” the solider told the source. “But what he did caused me to be found negligent by the Army. I don’t really care about the money. I would rather the Army said they made a mistake and I wasn’t negligent. I want to prevent them from doing this to other soldiers.”

Abba Self & RV Storage of Concord, Calif., recently added 148 storage units to meet an increase in local self-storage demand, according to a company press release. The new units range in size from 5-by-5 to 15-by-35.

This expansion was in addition to 20,000 square feet that was added to the facility last year. Company officials attribute the growth to an increase in business customers who rent units when relocating as well as for records storage or additional space for inventory.

“With the ease of no long-term contracts, no utility bills and no additional property taxes, businesses can retain those additional costs, which results in an overall savings,” said Jeff Smith, property manager. “The climate-controlled storage units are optimal for storing anything from business records to high-end furniture.”

Property amenities include free use of the facility’s moving truck, video cameras with 24-hour monitoring, online reservations and account-management capabilities, and individual unit alarms and sprinkler systems. The facility also provides large units for vehicle storage and an RV-dump station.

Abba Self & RV Storage is locally owned and operated. It serves customers in the East Bay area, including Concord, Martinez, Pacheco, Pittsburg, Pleasant Hill and Walnut Creek.

The threat of higher interest rates continues to lead many self-storage buyers and sellers to more closely examine their long-term goals. In this roundtable discussion, real estate experts in the northeast states offer advice to facility owners who are considering the sale or refinance of their storage assets. They also discuss buyer underwriting and the impact of new development in their markets. Participants include:

• Guy Blake, Pyramid Brokerage Co., Newburgh, N.Y.
• Linda Cinelli, LC Realty, North Branch, N.J.
• Chuck Shields, Beacon Commercial Real Estate, Radnor, Pa.

With the nation’s unemployment at 7 percent and the Federal Reserve’s bond-buying program beginning to taper, we’re most likely going to see higher interest rates. What should self-storage owners be doing to make sure they’re well-positioned to succeed in the coming months?

Blake: If you’re a seller, you should sell. If you’re not, refinance to a fixed-rate mortgage. Other than that, do everything you can to increase your occupancy and raise your rental rates when you can.

Cinelli: Owners need to bring their economic occupancies up. When reviewing a facility for purchase, this is where the buyers and lenders will evaluate whether the facility is performing efficiently. In the New York and New Jersey markets, buyers will look at the expense ratio of the property and compare it to the average for our area, which is between 40 percent and 45 percent. Real estate taxes are also a big factor in the northeast tri-state area.

Shields: Since interest rates are most likely to increase at some point in the future (who knows when), owners should review their current financing and determine what their options are for refinancing. Taking advantage of the low cost of debt and aggressive lenders will position owners to maximize their cash flow. Also, if owners are experiencing high occupancy, they should review the possibility of a rate increase.

With prices now 2 percent to 4 percent higher than the last real estate boom (2007), how have buyers adjusted their underwriting?

Blake: The big difference between 2007 and today is buyers and lenders are not putting nearly as much faith in pro forma numbers. Capitalization (cap) rates and internal rate of returns are being calculated using trailing 12-month income and expenses, period. Buyers are attributing very little value to vacant units and potential. There has probably never been a better time to sell. Record-high prices and record-low interest rates create the best value for sellers. Refinancing is also a good idea, as interest rates will not get any lower.

Cinelli: We’re seeing some buyers start to look toward the future income of the facilities and placing potential opportunity in the cash flow. Owners who are thinking of an exit strategy within the next five years should take the money and run! With low availability of self-storage facilities for sale, especially in the tri-state area, there’s a strong demand, and cap rates have come down significantly.

Shields: Like lenders, buyers are imposing more rigorous underwriting standards on the facilities they acquire. They’re looking more at historical performance vs. future or pro forma income, and there’s more focus on the actual net income. Outside influences such as the marketplace, competition and barriers to entry are also given more consideration to value. Owners should consider selling since values are high; but if they’re keeping their facility, refinancing should be considered since interest rates are so low. Additionally, it’s a great time to expand their portfolio since the cost of money is so cheap. So owners can’t go wrong whatever they decide to do.

Do you believe development will have a major impact on your local self-storage market?

Blake: The Northeast is a mature market, so I don’t expect a lot of new facilities to be built this year. I’m seeing a number of facilities expanding, however, which indicates an uptick in demand over all.

Cinelli: We’ve found over the last several years there was no demand for ground-up deals. With little inventory, the development will start popping up. This industry has strong demand for growth, and if the large operators can’t buy, they’ll build. We see developments coming up where the approvals were in place and they basically were ready to go. Some sites were sold as part of packages that were sold through foreclosed properties or where loans were taking from the backs.

Shields: I don’t see much indication for development of new facilities in Pennsylvania in 2014. Optimism in the economy is relatively recent, and the investment of time and money to new development in 2014 would have required a commitment in 2013. In most instances, the approval process and the barriers to entry are very challenging for development. I suspect we’ll see development going forward, but not much this year.

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]; visit www.argus-selfstorage.com.