With changes in the general economy have come changes in the self-storage finance world. Self-storage lenders, like those for all commercial real estate, apply more stringent underwriting standards when evaluating the potential of a construction, permanent or other self-storage loans. Even the refinancing process has become more challenging for self-storage owners, who must weigh their options and exit strategies. Some negotiate with lenders in an attempt to salvage underperforming self-storage properties. Tax issues are also a significant concern for self-storage owners. Cost segregation and 1031 exchange are possibilities to be explored. Financial and operating performance is reported quarterly by the self-storage real estate investment trusts (REITs): Public Storage Inc., U-Store-It Trust, Sovran Self Storage and Extra Space Storage.
In the case of Hospital Corp. of America and Subsidiaries v. Commissioner , 109 TC (1997), the tax court concluded property qualifying as tangible personal property under former investment tax credit (ITC) rules would also qualify in the same manner for the purposes of tax ...More
When you decide it is time to sell your self-storage facility and move on to other ventures, can you have your cake and eat it too? That is, can you take your profit, avoid income taxes and move to Hawaii? Surprisingly, it has become easier and easier to shift real estate ...More
How About Those Cap Rates?
When determining the value of real estate, including self-storage, there are three commonly accepted methods: the cost approach, sales-comparison approach and income approach. The income approach involves the capitalization of income and, hence, the often-heard reference to ...More
State Of The Industry Report 2002
Jim Chiswell was with a client during the early morning hours of Sept. 11 when he heard about a plane crashing into the World Trade Center. "From the second floor of this building in New Jersey, we watched the second plane hit, not knowing what it was," says Chiswell, of ...More
Tea Leaves and Tarot
Throughout the centuries, those who would believe--whether out of simple curiosity or basic desperation--have sought forbidden glimpses of the future. They would hold out telling palms to those who could read them or weave stories in tea leaves and porcelain cups. They ...More
In today's self-storage financing market, most of the long-term, fixed-rate financing (10 years or longer) is provided by the Wall Street "conduit" market. These loans are pooled together, packaged and sold to investors by Wall Street firms as commercial mortgage-backed ...More
With interest rates at record-low levels and a sagging economy, would this not be a great time for self-storage finance? One would certainly think the banks would jump at the chance to finance self-storage properties, given the low interest rates. Lower rates make it easier ...More
Financing and Loan Types
Watching the economy during the past year has been like riding a roller coaster. The unemployment rate is up, corporate earnings are down, inventories are up and interest rates are down. So with all the talk from recession to recovery and hard landing to soft landing, how ...More
Who Wants to Be a Self--Storage Millionaire?
This was the most difficult article to write. I was presented with the task of writing it just before one of our country's most trying times: the terrorist attacks on the World Trade Center and the Pentagon. Like many other people, I now have a new understanding of how ...More
Financial FeasibilityProving it to your lender By Jim Oakley The good old days of scratching feasibility on the back of an envelope are gone. Yesterday's answers are not good enough for today's lenders. If you don't show profitability simply and clearly at the outset of ...More