Storage USA Franchise Program

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Inside Self-Storage recently had the opportunity to interview Ed Ansbro, vice president of Franchising For StorageUSA (SUSA). Following are his comments on the company's program, how it is growing, and what it can do for self-storage developers in all parts of the country.

Brief History of SUSA Franchising

Storage USA has been in the franchising business since 1998. The program was created to accelerate brand penetration into new or underdeveloped markets. It also provided a terrific built-in pipeline of acquisition opportunities for us. Since we started our program, we have purchased 20 facilities back from our franchisees. In essence, we are the exit strategy.

Initially, SUSA not only provided management and franchise services, but development capital for our initial group of franchise partners through a $200 million credit facility provided by the REIT. Our original plan was to recycle the facility by selling off loans and lending proceeds to new development projects. After the capital markets tightened up in early 1999, we were unable to recycle and essentially stopped providing capital to our franchisees. In 1999 and 2000, we continued to grow, albeit more slowly, by leveraging off our success systems.

Capital Again?

In late 2000, we realized that having a capital component in our franchise program was critical to accelerate our growth rate. Consequently, we created a mezzanine-loan program to provide gap financing for new developments. Over the last year, we have provided this program on a number of projects in select markets. Now that we are part of GE Capital, we see some exciting possibilities to provide more financing options within our franchise program on the equity and debt sides. We are currently working with GE Capital and hope to have something to role out by end of this year.

Choosing Partners

We look for developers who have a proven resume in developing commercial real estate. A number of our existing franchisees have experience with other product types, including mulitfamily housing. Ideally, we prefer to work with fewer franchisees who are capable of developing on a multiunit basis. We already have a great base of companies that fit into that category. SUSA currently has 42 different franchise partners.

Markets

Our development approach is going to be strategic rather than opportunistic. We have created a number of proprietary models that provide excellent tools to determine whether submarkets can support additional self-storage development. This information is shared with our franchisees when we are evaluating market opportunities. We also will be looking to increase scale in markets where we are not very management or marketing efficient.

For more information, call 866.264.0350 or visit www.sus.com.

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