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ISS Blog

Remembering 9/11

It was a rare overcast morning in Phoenix, and I woke up with a  blanket of angst draped over me. Sometimes it's like that. A piece of dream lingers in your consciousness, coloring your waking perceptions; or the alarm clock yanks you from sleep at just the wrong moment, jarring your awareness. Not being a morning person, I'm accustomed to this pall. I plunked my legs over the side of the bed, and braced for the day.

I'm thinking back to the morning of Sept. 11, 2001, when our world made a permanent shift to a slightly different universe. Like many people, I remember it like a damaged movie reel: disjointed, with pieces missing.

I'm not a newswatcher in the morning, and at the time, I lived alone. I showered, dressed and coffeed as usual. Got in my car and relied on music to calm my commuter's nerves—not that it was necessary. Traffic was sparse. But it wasn't until I entered office parking that I knew something was truly wrong. The garage was nearly empty. Quiet, like a tomb. I parked, bristling at the wispy chill rising through me. The world seemed eerily still, and I experienced a small panic as I tried to think what day it was.

At last a co-worker came shuffling around the corner. My relief at this human affirmation came up hard against his devastated gaze. I swirled a bit in confusion until he explained. The Twin Towers had been attacked. Thousands were dead. And our company was sending us home to be with loved ones.

The next few days are a blur, except I recall having to fly and being intensely anxious about it. We were hosting an Inside Self-Storage Expo in Nashville, Tenn., not a week after the travesty. We decided to move forward with the event, thinking time with industry friends and colleagues could be a salve on this horrible wound. Amazingly, people came. Not a lot, but some. We took comfort in each other. We focused on some business, but mostly on our shared sentiment and gratitude for our many blessings.

The memory of 9/11 may move farther back in time, but stays near to our hearts. Take a moment today to honor all that was lost those years ago, both tangible and intangible. And if you'd like to reach out to your industry community to share, please join us in this online discussion: Where Were You on 9/11/2001?

This weekend, savor something you really love, remembering how precious and wonderful it is.

IREM Awarded Management Contract for New CT Facility

Investment Real Estate Management (IREM) was awarded the management contract for Adams Street Self Storage in Manchester, Conn.

The facility, which opened in August, is in the suburbs of Hartford. It has a three-story climate-controlled building, flanked by two single-story drive-up access buildings to take advantage of the galley layout of the property. 

There are 572 units and 81,275 square feet. The facility also boasts a “customizable storage experience” with optional shelving, lighting, and sizing options. 

IREM currently manages more than 45 self-storage properties for third-parties in six states.  The Investment Real Estate Group of Companies provides self-storage brokerage, construction, management and consulting services to owners and investors in the Mid-Atlantic and Northeastern United States.   

Related Articles:

IREM Names Self-Storage Manager of the Year

IREM Acquires Two Self-Storage Management Contracts

AR&C Self Storage Opens in New Jersey

IRE Brokers Sale of Two PA Self-Storage Facilities

TSSA Survey Reports High Occupancy Rates in Texas

A survey by the Texas Self Storage Association (TSSA) shows self-storage facilities in Abilene, Texas, are experiencing high occupancy rates. Over the past year, major metro areas including Houston, Dallas/Fort Worth and Austin reported occupancy rates between 80 percent and 90 percent, according to the TSSA.

In the Abilene metro area, the number of storage units grew by nearly 100 from 2007 to 2008. In 2008, there was an estimated 62 facilities in the metro area. Although rental figures are unavailable for 2008, in 2007, the median monthly rental price was $48, according to the TSSA survey.

Source:  Reporter News,  In the Abilene Area, Storage Units Tend to Stay Full

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TSSA Welcomes New Board Members, Elects Officers 

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Self-Storage Talk: Are Things Picking Up for You?

Thunderstorm Causes Flood at Yuma Self-Storage Facility

A storm that rolled through the Yuma, Ariz., area on Saturday damaged Wellton Hills Self Storage and Nursery, causing several thousands of dollars in damage to the property. Facility owner Dan Ellis told The Yuma Sun that he has fairly extensive flooding damage, though his storage units were not affected.
The storm eroded most of the soil along 400 feet of the southern end of the property, Ellis said. Debris such as soil, tires and barrels from nearby residences wound up in a retention basin he built.
The severe thunderstorm blew through Wellton/Tacna, Ariz., with hail along with significant flooding, dust storms, heavy rains and wind gusts.

Source: The Yuma Sun, East county pelted by Saturday's storm

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Flooding Storage [Self-Storage Talk]

Heat Wave!! (and Related Storage Challenges) [Self-Storage Talk]

Here Comes the Flood(Self-Storage Flood Insurance)

Emergency Preparedness and Self-Storage Insurance

ONeil Software Announces 2010 Strategic Partner Conference

O’Neil Software Inc., a provider of records-management hardware and software, announced that it will host its 2010 Strategic Partner Conference at the Hilton Waterfront Beach Resort in Huntington Beach, Calif., April 21-23. The event will cater to records-management professionals and will sponsor a children’s charity, to be revealed sometime in September. The conference will include a presentation on “Techovation Opportunities,” educational sessions, networking opportunities, exhibits by strategic vendor partners, and an awards dinner and ceremony. For details, visit
O’Neil serves more than 850 records centers worldwide, ranging from startups to multi-nationals. Its software manages and tracks multiple types of data, including storage boxes, file folders, documents and tapes.

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Birmingham Self-Storage Facility Nearly Complete

A new 83,000 square foot self-storage facility on Acton Road in Birmingham, Ala., is nearly complete. Developed by Butch Chandler, the project sits on a 6-acre site. Chandler will sell off three half-acre lots zoned for office. This is his third storage facility, with the other two in Prattville and Tuscaloosa.
Source: Birmingham Business Journal, Developer completes storage facility on Acton Road

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Self-Storage Real Estate in the South-Central States

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Self-Storage in the North-Central States: Real Estate Snapshot

Compiling a Quality Self-Storage Loan Package: Get the Deal Done

One of the top questions self-storage professionals are asking during this recession is, “How are bankers looking at self-storage deals?” The answer is they are looking at loans with the proper level of interest and caution, just as they should always have done.

Over the last decade, there were many loans that shouldn’t have been made. Some deals have turned sour for the investor and banker. Most of these deals haven’t gone bankrupt or even entered foreclosure, but many have not realized the success the developer expected. Some have not broken 70 percent occupancy after four or five years. Anyone want to be invested in a deal that calls for more cash injection? Anyone want a deal in a market that is overbuilt by a wide margin? Anyone?

One of the best “war” stories I have is about a developer in Florida who contacted me about financing. It was around 2004, a time in which a lot of educated people were saying things like, “You just can’t go wrong in self-storage.” The developer had just exited a small apartment deal and decided to build a large self-storage business with approximately 800 units on five acres. This prospective developer, who had a little money in his pocket, said he was doing the deal because “all the competitors were full,” and he “knew the town like the back of his hand.”

Apparently, if I wanted his business, I would be competing with several banks that had already approved his loan. He e-mailed me a two-page loan request that summarized his rather marginal financial position, and two term sheets from competing lenders. When I requested the loan package, he replied, “I sent you my loan package.” No feasibility study. No tax returns. No balance sheet. He believed the project was good and, in his mind, he didn’t need to spend money on a feasibility study. Plus, he was going to get the deal done, whether I participated or not.

I asked the good questions: How would he manage the store? How did he know it would be successful? He did not have good answers. When I informed him I had one project under construction and another in permitting, both within five miles of his site, he seemed to think it didn’t matter. Needless to say, I was not interested in being his lender. But somebody was. The deal happened. He was the last of four new competitors to open in that market.

Not long ago, I was able to reconnect with this store, which was hovering around 60 percent occupancy—well below breakeven. The manager indicated the store had dropped prices by 50 percent since opening, and it had been at the current occupancy for more than a year. Six of its 12 competitors were below 70 percent occupancy. Rates were declining as everyone struggled to survive a severely overbuilt market.

The point is bad decisions make big problems. Who else has war stories like this one? Your banker.

Plan Your Strategy

The financial landscape has changed. When discussing how capital markets responded to the recession, my local banker put it this way, “We didn’t just turn a corner, we jumped off a cliff.”

Before you meet with your lender, you must have a solid strategy for how you will introduce your deal and gauge the bank’s interest in making the loan you need. You’ll likely need to educate the bank’s decision-makers about the self-storage industry, your market, and the expected investment performance of your deal to win a satisfactory approval. Banks are in the risk business, but the banker’s job is to effectively manage and mitigate those risks with the loan he puts in place for your business.

Your job is to provide the lender with as many reasons to do your deal as possible. A banker wants to invest with you after you have found the right deal, invested in the right research, identified and mitigated risks, and put together enough capital to leverage a loan. He also wants to know that when the deal is born, you have the proper team in place to make it profitable quickly.

Banks that have been bitten recently by regulators, deals gone bad and under capitalized clients will pay particular attention to the financial details you present. In this lending environment, it’s best to not discuss any particulars of a deal with a banker until you’re ready to answer the tough questions.

As you identify potential lenders, gauge their interest in self-storage. Some may come right out and tell you they don’t have room for another self-storage transaction. They may want to see the deal first. Keep in mind that most local bankers will have seen maybe only a handful of self-storage deals from the beginning of development.

Just because a bank has self-storage in its portfolio, doesn’t mean a banker will understand the nuances of the business—and it’s those nuances that are important. Don’t send pieces of the deal before you anticipate all of the potential questions a banker might have. Showing a banker only pieces of a deal might raise red flags before you have a chance to fully investigate a project.

After you’ve identified an acquisition or development deal, you need to do your own due diligence before sending any details to a lender. During your feasibility period, identify market trends, supply and demand dynamics, expected costs and financial performance, as well as create a pretty well-defined budget. A lender will probably require environmental studies, particularly if you’re dealing with a parcel that might have been occupied with another use by a previous owner.

Bankers will demand site plans, pictures, surveys, market reports, demographic analysis and pro forma financials related to your project. Put these items together before you sit down to make your presentation and request for financing.

Anticipate the Questions

Bankers want to identify the risks in a deal and be sure there is a counter-balancing mitigating factor associated with those risks. Your feasibility study should clearly identify the market risks or site risk of your project, and enable you to map out the answers to the questions. For example, a new self-storage project might take three years to achieve a stable cash flow or break even. You must be able to present the appropriate mitigating factor to bankers, because when they look at negative cash flow for two years, it will make them cringe.

In self-storage, however, a cash reserve, or dedicated supporting income, is a critical development cost. A banker will understand that it takes time to make a project’s cash flow positive. What he might have trouble with is the fact that operations deficit financing is a true development cost. You need a cash war chest in reserve from Day 1 or your project will not work. Quantify this risk with a careful, conservative, month-by-month pro forma, and let your banker see that the loan he is making is secure because you have the cash in reserve to pay the bills and his interest through breakeven economic occupancy.

Any banker who has studied a self-storage project will remember that a seasonal trend in occupancy may occur. Know what impacts seasonality in your market. Is there a college nearby that generates a high tide of rentals in the spring and summer? Are you in a vacation market that derives income from winter visitors? Be sure your cash-flow projections reflect seasonality during lease-up and following “stabilization.”

Many in this industry will build a pro forma for a new project based on leasing a certain percentage every month. Lease-up doesn’t work that way, so don’t try to sell that to your banker. You rent units, not percentages. People move in and move out. You give discounts to win business, and some people won’t pay you. Lease-up is rarely linear, and economic occupancy—the important measurement—doesn’t mirror physical occupancy. When you present a pro forma to your banker, make it tight and accurate and reflective of market conditions.

A good loan package will also include detailed information on the personal or corporate financials you present to support the deal. On the personal side, provide the highest level of detail on individual debts and assets, cash and investments. For example, if you own multiple companies that flow through to your personal tax returns, provide detailed descriptions of those entities, their cash flows, debts and assets, and how they impact your financial position. The more information you provide, the better your application looks to a detail-oriented lender.

Recall that bankers are in the risk business. When a banker looks at your loan application, he will grade it on the risk it poses to the bank. How things can change in a hurry is “top of mind” with lenders these days. Your job is to clarify that your deal, even in a stressed scenario, will perform well. Be certain to anticipate the correct “what if” scenarios, and prove to your banker that the loan he makes to you is secure and safe, even if the market softens, rents decline, interest increases, or leaseup is slower than projected.

A strong analysis is what bankers search for as they negotiate specific deals, so be ready to prove that your deal performs satisfactorily under stress.

Wrap It Up Nicely

The best way to apply for a loan is to provide everything in a nice binder with an easy-to-read table of contents. Bankers are used to asking for documents related to a deal, additional tax returns, or balance sheets that are not provided with the initial submittal. Do yourself a favor by removing this obstacle from the beginning. You need to spend time explaining details to your banker, not faxing tax returns. Here’s an example of a nice flow for your next loan-application binder:

Loan request: Name(s) of borrower(s), property description and address, loan purpose, amount, requested terms, loan-to-value, debt-service coverage ratio, project name, guarantor names and addresses

Detailed project description: Acreage, number of units, cost, engineer, architect, general contractor, project manager, location detail, aerial pictures of site, survey, site plan schematic, renderings of project, descriptions of other nearby significant locations (housing, shopping, highways, etc.), actual unit mix and schematic, office layout, signage

Due diligence: Feasibility study, phase I environmental study, pro formas, financial analysis, rezoning documentation, contract for sale, local governmental approvals

Personal information: Resumes of partners, contact information, borrowing and supporting entity documentation, three years of tax returns (personal and business, with detailed balance sheets with schedules of assets and debts), individual credit reports

Detailed construction budget: Line item budgets, bids and estimates, contracts, names of contractors, and construction draw schedule

Business plan: Marketing strategy, key personnel, training initiatives, management qualifications, third-party management information, goals and objectives, strengths, weaknesses, opportunities, and threats analysis (SWOT analysis)

Once you’ve compiled your loan package and prepared yourself and your team to answer the tough questions, set up the meeting. Allow yourself plenty of time to walk the lender through each nuance of your deal. Prove to him that your loan is a strong one, you’re a strong borrower, and your deal is a good one. Take the time to put together a quality loan package, and the conversations and negotiations over terms and financing options will materialize quicker, be more definitive, and cement a solid professional relationship between you and your lender.

Benjamin K. Burkhart is a principal of BKB Properties and He works exclusively with self-storage owners, developers and managers to develop strong sites, measure and respond to market trends, and maximize financial performance of self-storage operations. To reach him, call 804.598.8742; e-mail [email protected].

Related Articles:

Is Your Self-Storage Loan Overleveraged?

Financial-Crisis Survival Guide for Self-Storage Owners

Got Financing? What You Need to Get $$ in Self-Storage

Self-Storage Site Selection: Rules and Tools [By Benjamin Burkhart]

ISS Blog

Increasing Occupancy

With more people watching their budgets, self-storage owners across the country are struggling with the very real problem of declining occupancies. Referral programs or incentives such as discounting the first month's rent or offering a free lock with every rental work for some facilities, but for those in highly competitive areas it may not be enough. Often, these facilities lower rental rates just to keep up with the competitor down the street, regardless of facility amenities and services.

Recently, a Self-Storage Talk forum member asked how do owners and operators entice new customers without “giving away the farm?” There are number of ways to ensure you’re the best on the block, including having a solid marketing plan, excellent customer service and, most important, fabulous curb appeal. To be successful today, you really need the whole package.

And while it may seem daunting, we’re here to help. The ISS archives are packed with informative articles on all of these topics, including the ones I’ve added  hotlinks to above.

I also encourage you to visit the Self-Storage Talk forum. Many of the members are the managers in the trenches every day. These guys and gals ask each other for advice, swap ideas, share marketing and sales strategies, and even commiserate with one another.

Lastly, if you’re attending the Inside Self-Storage World Expo in Washington, D.C., Oct. 5-8, take advantage of the add-on intensive workshops, particularly the Marketing and Sales Boot Camp with Tom Litton, and the Management Workshop with Joe Niemczyk. Having attended seminars by both of these speakers, I can promise these sessions will be information-packed and entertaining. I hope to see you there!

Strategic Storage Trust Buys Two Facilities for $5.8M

Strategic Storage Trust Inc., a publicly registered, non-traded real estate investment trust, acquired two facilities for a combined purchase price of $5.8 million. 

The 600-unit facility in Montgomery, Ala., is six miles east of downtown. It sits on 5.5 acres and has approximately 94,600 rentable square feet. The facility was constructed in 1995 and remodeled in 2004. The Phoenix facility, built in 1974, has 520 units on 1.4 acres with 38,750 rentable square feet. Both properties were purchased from an unaffiliated third party.

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Sweepstakes Launched for Inside Self-Storage World Expo in D.C.

The Inside Self-Storage World Expo has launched a sweepstakes in conjunction with its upcoming conference and tradeshow in Washington, D.C., Oct. 5-8. Anyone who has registered for the show by midnight on Sept. 24 will be automatically entered to win one of six prizes. Sweepstakes details can be found at
The ISS Expo will take place at the Gaylord National Resort & Convention Center. Created for self-storage owners, managers, developers, investors and suppliers, it comprises four days of educational seminars, product and service exhibits, and networking opportunities. With a theme of “Today’s Challenges Are Tomorrow’s Profit,” the event focuses on strategies for generating revenue and perfecting business branding in a demanding economic environment.

For details and to register, visit

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