What advice can you provide to managers that will help smooth the transition after a new management contract goes into effect?
Halverson: We believe in consistent, open lines of communication, so it’s important to meet with your company contact on a regular basis during the transition period. We also make available a wide range of training and transition materials so managers will feel more comfortable during this transition.
Payne: Be flexible, be ready for change and be patient! Keep in mind that all storage REITS have a tremendous amount of experience when it comes to transitioning a property. At Uncle Bob’s, everyone works hard to ensure the changeover goes smoothly for all stakeholders, including the employees and customers. From time to time there may even be a hiccup. That’s normal. What’s important is how that hiccup is handled. A professional management company—particularly a REIT—has likely encountered a similar situation and is poised to correct it without hesitation.
Shipley: Managers become employees of the management company. They should take comfort in the fact that they’ll now be even more empowered in the role—empowered with the support of a robust HR platform, state-of-the-art technology and management tools, upward career mobility, and a fun, service-oriented culture. They should approach the change with open arms, and if they do, they are sure to thrive professionally under the new arrangement.
Is the owner expected to change management software or make any other significant changes in equipment?
Halverson: Yes, at the time the property management is assumed by Extra Space, the technology equipment at the property is evaluated. If it does not meet an established standard, it is replaced.
Payne: Uncle Bob’s uses proprietary operating software at the stores, in our call center and in our revenue-management department. That said, the changeover is necessary for the property to realize the advantages of our systems and management.
Shipley: The owner will be expected to switch to the management company’s chosen point-of-sale system, but this transition process is facilitated by an experienced IT team with an established process. More significant equipment upgrades such as electronic banners and touchscreen displays may be optional but are subject to the discretion of the owner.
What is your training protocol for bringing existing staff up to speed?
Halverson: Extra Space Storage has a robust and experienced training team that’s spread throughout the country. This team has built and established award-winning training programs to work with each level of employee, from store managers to senior management. Career development is a key focus at Extra Space Storage.
Payne: Uncle Bob’s has established a comprehensive training program that combines hands on training with online development through our learning management system, eBob. Typically, we have an onsite certified training manager to train and provide support, at a minimum, the first two weeks of the transition. Based on the needs of the individual, we offer additional support, both in house and via the aforementioned online training tool. After this period, support and development is ongoing.
Shipley: We have a comprehensive training program for all employees new to CubeSmart. This includes one-on-one training with an experienced CubeSmart operations expert who will cover most of the day-to-day operational systems. The district manager will also spend significant time with a new employee acquainting them with strategies, objectives and expectations. Training on our technology and vast resources to empower our people is a critical component of bringing a new employee on board.
What percentage of third-party management contracts at your company evolve into acquisitions?
Halverson: We have a strong track record in converting our management contracts into acquisitions, but it’s really dependent on the performance of the individual store. Last year, 76 percent of our acquisition opportunities, excluding portfolio transactions of 34 properties, came out of our managed relationships.
Shipley: Of the stores that we added to our platform in 2010 and 2011, nearly 20 percent were acquired. This speaks to the efficient path to monetization our platform provides for owners, as well as their confidence in CubeSmart as a buyer of choice who deals openly and fairly. I would encourage owners to take the leap to at least initiate a dialogue to discuss the many ways in which we can improve their bottom line. Although owners are gradually becoming more aware of the scale and sophistication advantages of REIT third-party management platforms, they are generally blown away when we can open up the box and show them why third-party management is a game-changer for them.