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Eucalyptus at Beaumont Celebrates Grand Opening

Carlsbad, Calif.-based Mako Steel, a nationwide designer, supplier and installer of self-storage buildings, announced the completion and grand opening of Eucalyptus at Beaumont, a storage-condominium facility in Beaumont, Calif. More than six years in the making, the facility is one of only six of its kind in the state.
 
Facility owner Ted Deits will host a grand-opening celebration at the site on March 14 and 15. To sign up for an invitation or view facility details, visit www.rvstorage.biz. Attendees can see amenities first-hand including individual door alarms, a 2,700-square-foot clubhouse and a vehicle-wash area.
 
The facility’s general contractor was MSK Development. Construction photos can be viewed at www.myspace.com/makosteel.
 
Mako is a certified dealer for Nucor Building Systems. The company has locations in Jacksonville, Fla., Vancouver, Wash., and Washington, D.C. For more information, visit www.makosteel.com.

ISS Flash Report: Self-Storage in Cape Coral-Fort Myers, Fla.

The Cape Coral-Fort Myers, Fla., metropolitan statistical area (MSA) is comprised of Lee County, which includes the cities of Cape Coral, Fort Myers and Bonita Springs. Cape Coral-Fort Myers is one of the leading Florida MSAs with respect to personal income and population growth.

The locale has earned many accolades including being named best in the nation for job growth, according to the Milken Institute’s survey of “Best Performing Cities: Where America’s Jobs Are Created.” This new job creation is supported by a young, growing workforce. Moreover, the area’s labor pool has the second highest growth rate in Florida, growing by more than 25 percent over the last five years. 

Of residents age 25 or older, more than 85 percent possess at least a high school diploma, while nearly 24 percent hold a bachelor’s degree or higher.  The Florida Gulf Coast Technology and Research Park, along with a highly advanced telecommunications infrastructure, make Cape Coral-Fort Myers attractive to businesses. The MSA has drawn 55 foreign-affiliated companies to relocate there, adding approximately 1,200 jobs to the employment pool.

 

The Truth About Heart Health

Heart disease is the leading cause of death in the United States, but many don't have the right facts about its prevention.

Cardiologist Dr. Nieca Goldberg says conventional wisdom is typically way off the mark. New studies show long-held beliefs, including information about vitamins, weight and cholesterol, are shedding new light on the role they play in heart disease.

For example, many believe they're safe from having a heart attack if their weight and cholesterol are at normal levels. However, there are other factors, such as genetic ones, that might not be so obvious to the eye.

Source:  CBS News.com, Heart Health Myths Debunked

Due Diligence: Critical to Obtaining Self-Storage Financing

Organizing and professionally presenting your due diligence documentation always enhances the probability of consummating a sale. Excluding the buyer’s review process, lenders and appraisers more than ever are scrutinizing and analyzing all aspects of the due diligence documentation.

The current lending problems created by Wall Street and the subprime loan industry have virtually shut down the usual and customary lending practices. In the past, sellers and brokers could put a “happy face” on due diligence records and projections. This practice is no longer acceptable and does not work.

At a minimum, financial records for self-storage investment properties must corroborate and confirm adequate cash flow, market strength and historical financial stability. Without these general factors intact and verifiable, the probability of securing traditional bank financing is limited if not impossible. Therefore, absent of seller financing, accurate due diligence documentation will “make or break” the deal.

The Right Documentation

Every property has distinctive, idiosyncratic features. Be prepared to review your property with the buyer in order to conduct a thorough due diligence. The creation of a due diligence document binder is a critical step in the process. If possible, the information should be saved electronically for ease of transmission to interested parties.

The binder should contain all the necessary documents a potential buyer and lender will need to review during the evaluation period. This procedure will expedite the due document review process and flush out potential problems. A non-exhaustive list of information that may satisfy a prospective purchaser’s information needs includes:

  • Bank statements (two years)
  • Real property tax invoices (two years)
  • Rent roll including term and payment history
  • Tax returns (three years)
  • Insurance policy (including riders, risk assessments and carrier affidavit)
  • Deed
  • Personal property
  • Utility bills
  • Income statements (current year-to-date and last two years, both detail and summary information)
  • Occupancy reports (current year-to-date and last two years, both detail and summary information)
  • Service agreements (cancellation rights/penalties)
  • Preliminary title report and legal description
  • Site plan
  • Lot size and zoning information
  • Architectural drawings
  • Licenses (description and name of licensed entity)
  • Lease(s), sublease(s) and/or operating agreement(s)
  • Natural hazard disclosure report
  • Ground lease (if applicable)

Confirmation Checklist

As with any real estate transaction, unnecessary holdups or information gaps cause deals to be delayed or cancelled. The potential buyer needs to be provided with all due diligence information promptly and within the prescribed time frame documented in the purchase agreement. This will ensure the property will not remain off-market for an extended period of time in the event the buyer decides not to proceed with the transaction.

Provide the buyer with a detailed checklist of documents that were provided with a short description of each item and the source of the information (i.e., public records, tax assessor, court, etc.). Also include contact information, e-mail addresses, phone numbers, etc.

In the event a document is not included, provide an explanation as to why it was omitted. This procedure should prevent unnecessary delays during the buyers due diligence review period. Remember, any inaccuracies in the information provided to the buyer will cast doubt on the transaction and may lead to greater uncertainties, which may equate to increased perceived risk, possibly leading to a lower selling price or cancellation of the transaction.

A prudent and experienced buyer will look for omissions or the lack of accurate information. Inaccurate or incomplete disclosures predictably result in the buyer spending more time fully evaluating the property. This could also exert downward pressure on the property value as well as delay a timely closing.

It is always a sensible and practical policy for the seller to disclose all aspects of the property. Not doing so could lead to post-closing issues including but not limited to potential legal action.

Building Inspection

Carefully walk the exterior of the building and note any unusual items in need of repair. If any construction deficiencies are detected, contact a professional who specializes in potential construction defects. Any questionable construction that may not meet current building codes needs to be addressed with the seller and, if necessary, corrected.

Other general mechanical items that need to be examined include elevators, HVAC systems, security systems, fire sprinkler systems and telephone systems. Get a copy of the roof warranty, if available. If the document is not available, have the roof professionally inspected.

Your due diligence should also include a thorough interior inspection. Look for any problems you’ll have to fix in the coming years. Watch for water or fire damage or vector issues. Some fire departments will conduct a free inspection to verify the building meets current municipal codes. If possible, casually speak with some of the tenants without disclosing your identity and intentions. You don’t want to unnecessarily alert anyone to a pending sale. In short, leave no stone unturned.

What Really Matters

The primary and most important result of thorough due diligence is a smooth and uncomplicated financing and closing of the property. A secondary benefit will be your industry reputation. When you go to market with your next property, your track record will speak for itself, and investors will have a level of comfort with the due diligence information you provide.

Finally, I always recommend the seller and/or buyer consult with legal and financial advisors to confirm due documentation is acceptable for either party. This discussion is only intended as basic coverage of due diligence mechanics.

Stephen I. Grossman is a senior vice president with Lee & Associates, Newport Beach Inc., which specializes in self-storage brokerage. Grossman has been responsible for the sale of more than 800,000 buildable square feet of entitled self-storage land and the sale or escrow of more than 3 million square feet of existing self-storage facilities. For more information, call 949.724.4709; e-mail [email protected].

Choosing the Best Retail Boxes to Sell in Self-Storage

Have you ever bought something because it was cheaper and seemed “close enough” to what you really wanted, only to find out when you used it that the quality was much less than what you had hoped? There’s nothing like finding out firsthand the meaning of the saying: “You get what you pay for.”

Not long ago, a client noticed that the corrugated boxes ordered from a local box vender were very light in color and felt pretty flimsy, too. We sent the boxes for testing, which confirmed the recycled paper content was way too high, and glue coverage was downright skimpy. In fact, though they had the required “Manufacturer’s Certification Stamp” printed on every box, these boxes failed the test every time. In other words, though the client was paying a fair market price, he was getting a very unfair deal—inferior boxes.

Do you know how your own boxes really stack up? One simple test: When you see a stack of boxes leaning to one side, it’s most likely because the bottom boxes are being crushed. And that is a real-world failure to meet the edge crush test.

If this happens in one of your tenants’ units, you risk much more than crushed edges. What if the boxes you sold your customer topple over, damaging valuables or injuring the customer? That’s the problem with substandard “bargain” boxes.

Since so much can ride on the quality of the corrugated boxes you sell to your customers, you need to learn how to get what you pay for. Once you know how high-grade corrugated cardboard is made, you’ll understand why cheaper boxes are almost always inferior.

There are two key areas you’ll need to know if you expect to bargain with box vendors from a position of strength: construction and stock. Caution: Though the following is a bit technical, take the time to read it. It’ll make you a smarter box buyer.

Corrugated Construction

The strength of a box is in its design and construction. A corrugated sheet consists of two major components: the linerboard and the medium. Linerboard is the flat paper that covers both sides of the corrugated sheet; the medium is the “fluted” or arched paper found in between both liners.

It takes the right kind of glue, applied hot for the right length of time, to weld the three components together. If the fluted paper isn’t properly bonded between the two linerboards with a starched-based adhesive, it can weaken the strength of a corrugated sheet. How that fluted paper is shaped and how well it is glued in place determines how well it resists bending and pressure from all directions.

When the flutes are arranged on their ends, they form columns that can support a great deal of weight. There are five commonly used flute shapes. Each has its pluses and minuses. In moving boxes, the most commonly used is the “C-flute.” Though there are other designs, because the C-flute “waves” or “ripples” are taller than others, they have greater stacking strength, making them the better choice for storage situations.

Box strength is measured by two accepted industry tests: The Mullen Test measures the bursting strength of the corrugated, while the Edge Crush Test (ECT) measures stacking strength. A 200-pound Mullen box and the 32 ECT box would have comparable stacking strength, but they serve vastly different purposes.

The Mullen Test box, better suited for the protection of heavier contents, is popular for heavy-duty industrial shipping applications. On the other hand, the 32-pound ECT box was designed for those who need stacking strength. They are lighter in weight with the good stacking characteristics so important to those of us in the self-storage industry. Though a Mullen Test box would be stronger in every way, it’s a lot more expensive than a high quality ECT box. That is why 32 ECT boxes are the gold standard in self-storage.

The stock (or paper) that is used is as important as how a corrugated sheet is made. The amount of virgin pulp fibers and the length of those fibers in a corrugated stock add substantially to box strength. Though everyone supports recycling, in this case, more than 20 percent recycled content results in a weaker box.

Putting It All Together

Overall, box strength is determined by the combination of the flute shape, the quality of the paper used, plus the amount and type of adhesive and whether it is given time to adhere properly.

How do you know if everything has been done correctly? One way to be sure the material of the box you’re purchasing meets industry standards is to look for the Manufacturer’s Certification Stamp. Flip the box over. The stamp is usually printed on one of the bottom flaps.

Aside from giving the name of the maker, the stamp identifies the material as “single wall,” and is supposed to certify that it meets the ECT of 32 pounds per inch. Of course, the box mentioned at the beginning of this article had the stamp printed on it but clearly didn’t meet the declared standards. What then?

And this is where the games begin. To reach a 32 ECT, box makers can use many various combinations of paper and tolerances to meet or get close to the posted rating. Taking one or all of the following shortcuts usually gets a box maker to a lower selling price in the market.

Recycled paper. Remember, recycled paper is cheaper than virgin pulp but not as strong. The higher the recycled content, the weaker the corrugated. Reputable manufacturers use 80 percent or more virgin pulp fibers.

Manufacturing. Joining together the three pieces (those two linerboards and the medium) means using the best quality, mildew-resistant, starch-based hot glue applied at a high enough temperature and allowed enough time to stick. Since time is money, in order to lower their costs, some manufacturers will speed up the process, skimp on glue and play fast and loose with proper glue heat levels.

Dimensions. One new client was surprised to learn that the “small” boxes they had been sold were not the industry standard 1.5 cubic feet in size but an odd-sized 1.3 cubic feet. The slightly lower price they paid was for slightly smaller boxes. That meant that the glass and dish packing kits they were selling wouldn’t fit because the kits were designed to be set in standard-sized 1.5 cubic feet boxes.

Fudging on any one of these three, or any combination of them, is how some box suppliers can afford to sell at a lower price and still make a good profit.

Ways to Box Back

How can you protect your interests and those of your customers? First, don’t be afraid to ask for an independent test of the quality of product you’re buying. No reputable supplier would refuse.

Also, beware of small specialized vendors. Look for a supplier who sells more than just boxes. If your other business is riding on it, they would be foolish to risk it by selling you second-rate boxes. Plus, if the price seems too good to be true, it probably is. Finally, don’t focus on price alone. You don’t compete in your market on rental price alone do you?

Keep in mind that your customers can always get used, discarded, bargain-basement or otherwise crumby boxes anywhere. When you’re telling them that your boxes are worth a few cents more because only quality corrugated boxes can adequately protect their possessions, remember this line: You get what you pay for. It’s almost always true.

Rob Kaminski is vice president and general manager of Supply Source One, a division of Schwarz Supply Source, which has been a national retail supplier for more than 100 years. With 14 warehouses across the country, the company offers the self-storage industry a complete selection of retail products as well as office, maintenance and janitorial supplies. For more information, visit www.supplysourceone.com.

Self-Storage Unit Inventory: Site Audit Procedures

Performing regular site audits is an important part of any self-storage operation, and conducting a complete unit inventory is a critical piece of that process. This article covers some of the specifics of auditing and includes examples demonstrating why it is so significant. 

The inventory process is used to verify that a site's physical inventory matches its computer inventory. It involves running a rent roll or walk-through report from the management software and inspecting the property to verify the status of each and every unit. Your units are the life blood of the facility's income stream, so it's critical that they be controlled, counted and checked.

Requiring that all units be secured at all times is just good business. You wouldn’t leave vacant apartments unlocked if you owned an apartment building―the same goes here. Verifying all units is a good way to ensure tenants’ goods are secure, overlocks are used and removed as required, daily lock checks are completed correctly by staff, and there are no discrepancies between the computer logs and the property. If your units are not closely monitored, you may be losing rental income.

When conducting a unit inventory, look for the following:

  • All rented units have a tenant lock in place.
  • The lock is locked, the hasp is closed and the door is secured correctly.
  • A lock sticker is in place (if used at your site).
  • Overlocks are on if the unit is unpaid.
  • Tenants are closing and locking unit doors properly.
  • There are no rented units using company locks for any reason.
  • All vacant units are secured with a company lock and are clean and ready to rent.

The Audit

On the day of the audit, ask staff to open all vacant units. This will allow you to inspect these units quickly. If you can’t examine all vacant units, inspect random ones. If you discover something that is unsatisfactory, then check all vacants. It may be an isolated incident or an indicator of a bigger problem. Inspecting vacant units for cleanliness can uncover an unknown leak, bad door spring, rodent or pest troubles, or other issues you wouldn’t want revealed in the presence of a prospect.

Occasionally, you may find customer goods in a vacant unit. This could mean a manager is renting out the unit and collecting the money off the books. Or it may be a tenant had too much stuff to fit in his unit and is using this space as overflow without a lease or payment. You can also verify that the size listed in the computer matches the size of the unit. It's not uncommon, every now and again, to find a variance that was not caught in the beginning or somehow changed along the way.

Here are some other factors to be aware of while conducting an audit:

Holding vacates. Most agree that a unit should be vacated from the system on the day the tenant indicates he is moving out. Managers should first inspect the empty unit, making sure the lock is off, the unit is clean and empty, and all stipulations outlined in the rental agreement have been followed. Units that have been vacated by the tenant but not from the system will artificially inflate the occupancy at the site.

Units on site but not on the reports. Managers should not be able to add or delete units in the software system. It is too easy to delete a unit from the software and then rent it on the side for cash. An easy check for this is to make sure the total number of units in the management software remains the same―unless you have made changes due to conversions, unit additions, etc.

A tenant lock on a unit listed as vacant. This is a huge red flag. Did a tenant move into the wrong unit? Was the lease put into the computer incorrectly? Do you have a squatter who moved into an unlocked unit without your knowledge, a lease or payment? If you can't get to the reason, it's wise to overlock the unit so no one can enter and wait to see if someone inquires.

Overlock issues. If you find a number of units that should be overlocked and are not, your staff is not completing the delinquency process as they should. While this may not be manager theft, it is negligence of duty since your manager is not following the process in place to reduce your risk of monetary loss.

On the flip side, managers who do not remove the overlock from a paid tenant’s unit in a timely manner can cause unnecessary problems for tenants and your business. It's easy to identify when the overlock should have been removed by looking at when the payment was made. This is a simple training issue. Good managers understand the importance of keeping up on the overlock process. If this continues to be a challenge, there are likely other staff issues that have not yet been revealed.

Company units. Units used for golf carts, merchandise, HVAC, electrical, elevators and janitorial supplies should be reviewed during the unit inventory as well. Use this review as an opportunity to open all locked doors and see what’s inside. There should never be tenant goods in any of these units.

Company units should be clean, organized and well kept. Supplies and company equipment should be properly stored and maintained. Units holding critical elements that support site operation such as electrical, elevator or HVAC rooms are not intended to be packed with site supplies, decorations, excess merchandise and such. A manager’s personal property should never commingle with company items in any unit.

Determine if company units can be consolidated to free up space that can produce rental income. It may be nice to have the company unit right up front where it's convenient for staff use; but if it's a unit that can get a premium on the rental rate, is a size that's in high demand or limited supply, or is in a desirable location for tenants, it's best to move the company unit.

Manager units. Many sites offer the use of a storage unit to the site manager during his employment. These should be chosen by the supervisor and should also be in a less desirable location or unit.

Other valuables. While conducting your audit, make sure other items are locked down as well. These include items that shouldn't be used, manipulated or stolen such as electrical outlets, thermostats, breaker boxes, fire-extinguisher boxes, HVAC switches, etc. If it can be stolen or messed with, it probably will be. 

Your units are your money-makers. A regular lock check and unit inventory is the best way to ensure everything is clean, correct, secure and in good working order. An unannounced audit is the best way to get a true picture of how the inventory is being managed.

If the lock check reveals unsatisfactory results, use this as an opportunity to review and clarify policy, and retrain and reconfirm staff commitment to the required tasks. Follow up with another audit within a reasonable time frame to make sure the issues have been resolved and the results meet your expectations. You and your site staff should be confident that your income-producing inventory is always correct.

Linnea Appleby is president of Sarasota, Fla.-based PDQ Management Solutions Inc., which provides full-service facility management, consulting, startup, auditing, management and training services. For more information, call 941.377.3151; visit www.pdqmanagementsolutions.com.

Bader Co. Hires Insurance Expert

Bader Co. welcomed Matthew Schaller, CIC, CRM, to the Bader team. Schaller brings expert commercial insurance experience to the company and will help expand coverage options for storage owners and operators. He will be responsible for commercial and tenant insurance. 

“Matt is the perfect addition to our storage team and he is supported by a seasoned sales and marketing group," says Bob Bader, company president. "We are now able to expand our insurance offerings, commercial and for the tenant, even more."

For more information, visit www.baderco.com.

 

 

 

 

Wildeck Hires Systems Integration Sales Manager

Wildeck Inc., a manufacturer of mezzanines, material lifts and safety-guarding products, appointed Merlyn Jarman to the position of systems integration sales manager for its North American operations. Jarman will be responsible for further developing many of the company’s systems integrators as well as assisting them on major projects involving custom-designed mezzanines, the new MezzCrane system for lean manufacturers, material lifts (VRCs) and safety-guarding products.
 
Jarman is a graduate of Northern Kentucky University and has more than 20 years of industry-related sales experience from several manufacturing companies, including two major mezzanine manufacturers. He has served as a liaison between engineering and sales departments, responsible for “work platform structure” projects, and has extensive experience developing national sales programs, building distributor networks and O.E.M. account development. He can be reached at [email protected].

Dismal World Economy Causes Stocks to Fall

Despite the passage of an economic stimulus plan this week, worldwide fears about the state of the financing industry continue to wreak havoc on the stock market.

Stocks slid Friday and the Dow hit new 6-year lows as investors around the world sold shares on growing pessimism about the global economy and the banking industry.

The gloom that afflicted Wall Street on Thursday spread across the globe. Investors in Asia and Europe grew increasingly despondent that governments could do anything to reverse the deepest recession since the Great Depression.

On Thursday, the Dow Jones industrials average broke through a bottom reached in November, pulled down by a steep drop in key financial shares. It was the lowest close for the Dow since Oct. 9, 2002, the depths of the last bear market.

Source:  MSNBC.com,  Stocks Fall as Global Jitters Spread

 

 

Investment Real Estate Represents Buyer, Seller in $4.7M Sale

John Barry of Investment Real Estate brokered the sale of the 58,700-square-foot Stor-It Self Storage in Manassas, Va., to Strategic Storage Trust Inc. for $4.7 million. The 500-unit facility included 289 climate-controlled units and an onsite management office. It was 80 percent occupied at time of the sale. The five two-story buildings were built in 1996 and 2000 on 2.3 acres. For more information, visit http://www.irellc.com/.