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Value Store It Management Appoints Area Manager, VP of Operations

Miami-based Value Store It Management, which provides management services to independent owners and investors, appointed Bryan Lekas as vice president of storage operations for the company’s South Florida and Connecticut markets. Lekas has more than 14 years of experience in the self-storage Industry and has held similar positions with Sentry Management and Storage USA.

The company also named Jay Morris as area manager for South Florida. He will oversee employee recruiting, training and daily operations of the company’s five self-storage facilities in the Miami-Dade market. Morris previously worked for Sentry Management and Extra Space Storage and has more than 8 years experience in the self-storage industry.

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Extend and Pretend: Finance Regulators Support Self-Storage Borrowers

Agencies of the Federal Financial Institutions Examination Council have weighed in on the “extend and pretend” debate, and it appears they are willing to extend―given the right circumstances. The term refers to the practice of a lender extending the term of a maturing loan for a short period of time rather than forcing the borrower to pay it off or to right size it, given the pressure on commercial real estate valuations. Essentially, “extend and pretend” pushes the valuation issue off to a future date.

In October, the Council issued a policy statement on Prudent Commercial Real Estate Loan Workouts. The statement presented guidelines to lenders on how to address troubled commercial real estate loans and encouraged them to work with strong borrowers. The guidelines indicated: 

While commercial real estate borrowers may experience deterioration in their financial condition, many continue to be creditworthy customers who have the willingness and capacity to repay their debts. In such cases, financial institutions and borrowers may find it mutually beneficial to work constructively together. In addition, renewed or restructured loans to borrowers who have the ability to repay their debts according to reasonable modified terms will not be subject to adverse classification solely because the value of the underlying collateral has declined to an amount that is less than the loan balance. 

So what does this mean to self-storage owners facing maturing loans? Assuming you have sufficient cash flow to service the loan’s debt, the guidelines are good news. Regulators made it clear that modified loans can continue to be classified as “performing” even if the property is worth less than the loan amount. Regulators are encouraging lenders to go beyond the property’s current value and cash flow to consider a borrower’s entire financial picture when determining whether to extend a loan.

These new guidelines also provide examples of loan modifications considered prudent by regulators. Lenders can bridge the difference between a property’s loan amount and current market value by demonstrating there’s enough cash flow being generated from the property and the sponsor’s other assets (global cash flow) to service the modified loan. The guidelines also indicate the modified loan’s interest rate must be at a prevailing market level to compensate the lender for the additional risk.  If not, the lender will have to classify the loan as “non-accrual” or “non-performing.”  

Extension Criteria

Given these guidelines and the overall market environment, lenders will consider several criteria when determining which loans to extend. One of the terms cited frequently in the new guidelines is “borrower’s repayment capacity.” This refers to the borrower’s character, overall financial strength, and historical payment record on this and other loans. Lenders are also closely examining the historical basis and market conditions affecting the property’s cash flow and value, the borrower’s other contingent liabilities, and the ability to support repayment through personal guarantees.

In a nutshell, what this indicates is lenders will readily extend loans to well-capitalized borrowers demonstrating a strong payment history and with the ability to supplement the property cash flow with out-of-pocket funds to service any debt-service shortfall. Earth-shattering news? No. Common sense? Absolutely!

All of this sounds great for storage owners who meet the new guidelines. But what about poorly capitalized borrowers with less than sufficient global cash flow? Well, there’s a structure that might work in these situations as well. 

The regulatory guidelines present an “A note/B note” structure allows lenders to keep current the portion of the note whose market interest-rate debt service can be supported by the property’s cash flow (the A note).  Additionally, the A note’s principal amount must be within a prudent loan-to-value ratio based on current market conditions. 

The lender would classify the B note as non-accrual and structure it with a below-market interest rate and other terms not characteristic of prudent lending practice. This A/B structure allows the borrower to remain in good standing with the lender, and minimizes the lender’s non-performing assets with the potential to recapture part of the write-off (the B note).  If lenders did not break the loan into A and B notes, the alternatives of simply reducing the principal amount or adjusting the interest rate to below-market levels would require them to classify the entire loan amount as non-performing. 

The guidelines issued in late October clearly demonstrate regulatory support for lenders and borrowers to collaborate on finding solutions to today’s valuation issues. Remember, the above examples may apply to your situation, but each loan will most likely have unique attributes which will need to be negotiated and worked through with the lender. This highlights the need for borrowers to be proactive about approaching their lenders with potential solutions as opposed to waiting for lenders to raise the issue.

There is still tremendous pressure on commercial real estate valuations, inevitably resulting in foreclosure and losses. 
Devin Huber is a principal at Chicago-based The BSC Group, where he provides mortgage brokerage and financial consulting to commercial real estate owners nationwide. He can be reached at 312.207.8232. To receive a copy of the Federal Financial Institutions Examination Council policy statement, e-mail [email protected], or visit

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ISS Blog

Are You Familiar With Your Facility's Website?

The volume of unsolicited mail in this country appears to be out of control. In any given week Cochran Road Self Storage receives a dozen mailings from one large phone provider who promises a great business DSL product.

We finally bit the bullet and tried bringing in a redundant line from them, instead of our dependable existing company for various reasons. What a mistake that was! They didn’t deliver on what they promised. Yet I am inundated almost daily with their mailings to various forms of our business name.

Like the old adage, do things perfectly and your customer may tell one or two people. Do something wrong and they’ll tell 10 people about the bad experience. I won’t name the company, however their website promises the moon, the stars and the sky, but they didn’t score a victory in my book.

In visiting various storage websites the same thought crossed my mind: Do facilities really deliver what they promise? Do you? When was the last time you actually viewed your own company’s website?

The home page for our facility is our “Internet Specials” page. Whether there’s a special happening or not, our coupon is still there. I don’t have to update employees if a change is made overnight; it’s there for them to see. They should be aware of up-to-the-minute information regarding the property.

Do your employees know what’s on your website? Do they even have access to the Internet? If not, you should, at the very least, have a training day and printouts of what’s on your website. How embarrassing would it be if an inbound sales caller were to know more about your website and online offers than your own employees? Can you even imagine that?

Case in point: phone a couple of facilities in a neighboring city after viewing their websites and ask a few Web-related questions. You may be surprised at what you learn—or don’t as the case may be. I know I’m going to ask my employees to review our website more often after the few calls I made.

We’re far from perfect here, however this is just one more point I stumbled across in my quest for customer service from that big unresponsive, difficult-to-reach phone company. There’s always room for improvement, and there’s no excuse for promising what you cannot or had no intention of delivering in the first place.

If your site is over-inflated with promises, maybe you should tone it down a bit. Our customers are intelligent people and will figure it out if your site is full of hot air or something equally distasteful that you cannot or have no knowledge or intention of delivering.

If you're unsure what should be on your website, head over to Self-Storage Talk and join the discussion. There are several threads about websites, online marketing and more.

Munters Hires Lawrence for New Small Dehumidifier Sales

Munters, a provider of energy-efficient humidity and climate-control solutions for self-storage facilities and other uses, hired Stuart Lawrence as national account sales engineer for North America. Lawrence holds a masters degree in Mechanical Engineering and has 10 years of HVAC industry experience working throughout Europe.

Munters manufactures engineered products that can economically control humidity and temperature, provide energy recovery, and utilize direct or indirect evaporative cooling for comfort, process and environmental protection.

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Investors Get Info on Self-Storage Development at ISS Expo Las Vegas

Entrepreneurs interested in self-storage investing can get the information they need to get started (or avoid a bad investment) at the Inside Self-Storage World Expo in Las Vegas, March 1-3. Hosted at the Paris Hotel & Resort, the event will feature a complete track of education sessions dedicated to issues of self-storage development and real estate as well as a six-hour intensive Developers Seminar.
Presented by RK Kliebenstein, president of Coast-To-Coast Storage, the Developers Seminar will help potential investors decide if self-storage is the right business for them. The workshop is tailored to those interested in developing a new project or learning more about the industry, as well as small operators who want to grow their business. Touching on all the most critical aspects of developing and building self-storage, it will explain the how, what, where and when of developing a self-storage site, plus provide insight to finding financing for storage projects. The seminar will take place on March 3 from noon until 6 p.m.
The expo also offers a four-track education program including development-related seminars including: 

  • Conducting a Self-Storage Feasibility Study: A Checklist for Success
  • Now Is the Time to Build Self-Storage: Taking Advantage of a Down Economy
  • Self-Storage Acquisitions: Affordable Deal Structures for Today’s Economy
  • Creating the Most Effective Site Design and Self-Storage Layout
  • The Capital Markets: What’s on the Horizon for Self-Storage? 

Recognized as the self-storage industry’s largest conference and tradeshow, the ISS Expo includes 36 seminars, four workshops, two days of product and service exhibits, and five networking events. Special features include the Self-Storage Q&A, roundtable discussions, and a new Technology Marketplace where attendees can demo the latest security, software and Internet-based products.
To learn more about the ISS Expo and to register, visit

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United Stor-All Management Launches New Website With Help From G5

United Stor-All Management, a nationwide self-storage management firm, has partnered with G5 Search Marketing to create a new website that provides real-time facility information including unit availability, pricing, promotions and secure online-payment systems. The company’s aims in building the new site were to consolidate its business systems, increase efficiency, reduce costs, and generate brand awareness and Web traffic.
G5 helped United Stor-All achieve those goals through its Centershift Adapter, a software solution that integrates the G5 and Centershift self-storage management platforms, as well as a website redesign. The G5 Centershift Adapter is the first of several third-party integrations G5 has planned for release.
This new website is available only to United Stor-All clients, who will reap the benefit of search-engine optimization, pay-per-click advertising, increased Web traffic and online leads.
United Stor-All specializes in self-storage facility operation and management. The company has managed more than 125 facilities since its inception in 2000. It currently manages more than 80 facilities in 17 states and Washington, D.C.

G5 provides Internet-marketing services including website design, campaign management and local search optimization.

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A-1 Self Storage Supports Domestic-Violence Shelter in San Diego

California self-storage provider A-1 Self Storage has announced its support of the Becky’s House Emergency Shelter, a program of the YWCA of San Diego County.
The shelter is a confidential domestic-violence refuge offering safety to women and children in immediate danger. It provides them with 30 days in a safe environment to determine their next steps. Services to residents include individual counseling and support groups, legal assistance and an onsite school providing education to shelter children in grades K-12. After completing their shelter stay, families have the opportunity to move into Becky's House, an 18-month residential program.

A-1 Self Storage has 17 self-storage facilities in the greater San Diego area and more than 40 locations across California. A-1 is the self-storage division of The Caster Cos., a third-generation, family-owned company headquartered in South California since 1959. 

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Solo Lift Pro

The Lift Mates' Solo Lift Pro enables users to lift and carry boxes with one hand. Also available from NewVations LLC is the Dual Lift Pro, which has updated pins and colors to match the Solo Lift Pro.

The Solo Lift Pro creates a box handle and allows a user to lift and carry a box with one hand, freeing up the other hand. The Dual Lift Pro adds handles to any box. The handles have an ergonomically designed rubber grip area. To use the tools, the lifter simply presses the Dual Lift Pro handles into the sides of box.

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Online Comparison-Shopping Tool for Self-Storage Customers

Similar to online hotel search services,’s online tool can help simplify comparison shopping. now offers that same streamlined convenience in the market for self-storage facilities. Self-storage customers searching online for units are custom-matched with storage facilities in their areas.

The website also offers an “auction-style” interface, which enables users to enter their choices of unit size, proximity, climate control and how much they wish to pay. With complete anonymity, potential tenants can compare multiple self-storage facilities.

By listing their storage facilities on the website, self-storage operators are able to save more than 50 percent off Yellow Pages advertising, the company claims.

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Michigan Self-Storage Operators Await Lien-Law Amendment

Michigan Senate Bill 204, which would amend the state’s self-storage lien procedure, was presented to Governor Jennifer Granholm on Dec. 7 and awaits her signature. The bill, passed by both houses of the state legislature this fall, changes the tenant-notification procedure regarding lien sales and creates special consideration for tenants who are deployed military personnel.
SB 204, the “self-service storage facility act,” aims to exempt deployed military personnel from enforcement of a lien in the case of non-payment. It stipulates that if a self-storage owner receives notice that a tenant who was a service member was transferred or deployed overseas on active duty for at least 180 days, the owner cannot enforce a lien for non-payment until 90 days after the end of the tenant’s overseas service.
In addition, the bill allows operators to notify tenants of pending lien sales by First-Class Mail or e-mail rather than more expensive methods such as Certified Mail. It also allows sales to be advertised electronically rather than in print newspapers.
The bill is being championed by the Self Storage Association of Michigan as well as the national Self Storage Association.

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