"Self Storage," a horror movie by the Woodhaven Production Co. and Verdi Productions, is now filming in East Greenwich, Conn. The latest news from the set is the addition of Eliza Roberts ("Animal House," "Kicking and Screaming") to the cast, which includes Oscar-nominated Eric Roberts ("The Dark Knight," "The Expendables"), Michael Berryman ("The Hills Have Eyes," "One Flew Over The Cuckoo's Nest") and Jonathan Silverman ("Weekend at Bernie's," "Inkubus").

The premise of the film, written and directed by horror filmmaker Chad A. Verdi, revolves around a night watchman at a highly-secured self-storage facility. His friends are home from college and looking to party, so he invites them to the facility to indulge in a night of sex, drugs, and rock and roll. However, the characters find themselves trapped, trying to escape from a terrifying villain.

The video below contains an interview with members of the cast, who talk about what it's like to work together on a movie set.

In the past four years, it seems loans for construction financing have been on the edge of extinction. Such loans became unpopular due to the recession and the sudden over abundance of self-storage properties in certain markets, many of which have had lower than projected rents and disappointing lease-up velocity.

Between 2007 and 2011, it was not uncommon to see lease-up plateauing between 40 percent and 60 percent for some newly constructed properties. Coupled with leverage that, in some cases, exceeded 80 percent, plus the high cost of land, many lenders ended up being responsible for distressed loans and real estate-owned properties that sold well below the original loan amount. This made lenders leery of giving construction loans. Today, this once-flourishing loan type can certainly be considered an endangered species.

Fortunately, in the past year, there has been a glimmer of hope for those seeking to secure construction loans for self-storage. There are lenders familiar with the storage industry who know that just because one market is overbuilt or has had bad luck doesnt mean another market isnt in need of new supply. By knowing where and how to apply for a loan, as well as some of the particular considerations for self-storage construction lending, you can take these loans off the endangered-species list.

The Structure of a Loan: Some Things to Know

There are several terms you must first understand when it comes to construction financing. They include the following:

Term. One of the major lessons learned by borrowers over the last downturn in the cycle was to make sure you have a sufficient cushion in your loan term to allow for slower than anticipated leaseup. Prior to the market crash in 2008, many construction loans had a term of 36 months. However, due to a slowing economy, many facilities were not stabilized at the end of the loan term, leaving the borrower and the bank in a precarious position. To avoid this, I suggest negotiating a four- to five-year term with a few one-year extensions.

Rate. Interest rates are at historically low levels. For variable-rate loans, were currently seeing spreads between 275 and 450 basis points over the 30-day London Interbank Offered Rate (LIBOR) and -50 to 150 basis points over Prime, a rate of 3 percent to 5.5 percent. On a fixed-rate loan, active construction lenders are offering three- to five- year fixed rates between 4 percent and 7 percent. The low interest-rate environment makes this a very attractive time to develop, as it reduces the overall cost of construction.

Loan to cost (LTC). The LTC constraint is fluctuating between 50 percent to 80 percent, depending on the transaction specifics. The LTC is dependent on the bank, the strength of the borrower and the quality of the property. A strong borrower with a short track record in self-storage and a reasonable project may be required to contribute as much as 50 percent of the project cost in cash, whereas a strong borrower with a long track record and an excellent project, who bought the land or conversion property at the right price or below market, may be able to achieve 80 percent LTC. Higher LTC loans are also more easily achieved when the delta between the construction capitalization (cap) rate and the residual cap rate is larger.

Interest-only and interest reserve. Most construction loans today are still interest-only or have a period of interest-only. Interest-only refers to whats included in the payments made to the bank during the term. Because theres no cash flow during the construction period and cash flow is very tight during leaseup, banks will allow the borrower to pay only the interest due and not require any paydown of the principle loan amount.

Additionally, banks will create an interest reserve, which essentially allows the borrower to borrow the funds needed to make the monthly interest payments, which is extremely helpful during the construction process. If no interest reserve is set up when the loan is negotiated, interest payments need to be made out of the borrowers pocket. Its important to negotiate a large enough interest reserve to take you through leaseup and give you a bit of a cushion in case of construction delays or slower than anticipated leaseup.

Loan Sources: Your Local Bank

Local and regional banks are still one of the only sources for construction financing. Given the struggles many lending institutions have had over the last four years, it can be hit or miss as to whether a specific bank will entertain construction financing. The reason the majority of construction loans are done by regional and local banks is these institutions are best equipped to understand the dynamics of the local real estate market and are comfortable with many of the localized risks associated with construction projects.

A select number of national banks will finance construction loans nationwide, however, they typically work with more experienced developers. Many loans are relationship loans, which means a large part of the credit decision to lend is based on the strength of the borrower and his past banking transactions with the lending institution. So, if you have an existing relationship with a current bank, it may be the best place to approach regarding a construction loan. After that, I recommend other local banks in the area. The easiest way to access national and regional banks is through a mortgage banker.

Understanding the Market: The 'Feasibility Study'

The most important part of securing a construction loan is demonstrating a firm understanding of the market to the bank. A bank will want to see a feasibility study addressing the following:

Depth of the market. Based on the demographics of the surrounding area and the growth trends, how much square footage can the market absorb? Is this a first-rate location? Location matters to lenders. You need to prove your location is a sure thing. Currently, infill locations in top-tier markets are the easiest locations to finance.

Absorption. What is the anticipated lease-up rate? How have other construction projects leased up in the competing area, and where did they stabilize? The old idea that you can project 2 percent per month and stabilize the property at 86 percent is no longer true. When seeking a loan, you must go to great lengths to prove the absorption rate.

Pricing. Whats the most likely rent youll receive based on the market? How does the rent relate to the construction costs and demographics? If land and construction costs are too high, youll need to charge higher rents to justify them. However, are these higher rents supported by the economy in your designated trade area?

Competition. Who are the competitors in your area? What do their properties look like? What are their occupancy levels? The presence of competitors can indicate a need for self-storage properties, but it can also indicate market saturation that can make your business less profitable and turn off lenders.

Construction costs. The lender will want to see an analysis comparing your construction costs to industry averages and other units in the area. In several markets, existing properties are selling below replacement cost; therefore, it may make more sense to acquire as opposed to develop. Your feasibility study will help you determine which option is right for you.

Zoning. Its important to know the zoning regulations in the area in which you wish to build. Is the parcel properly zoned for self-storage? Zoning restrictions of future development are a major barrier to entry. Being able to quantify barriers will go a long way in getting your loan approved.

Return on investment. Based on the construction costs, anticipated rents, lease-up rates and other factors, what type of return can the investors expect?

All banks require this feasibility study, though how the study is performed will vary from institution to institution. Some banks may ask for a third-party feasibility study, while others will accept one generated by the borrower. Many times the bank will accept a borrower-generated feasibility study and rely on the appraisal to verify the claims. Regardless of whether you hire a third party to perform the study or do it yourself, as the borrower, you need to know the feasibility of the project before you seek a loan.

The Decision: What Else are Banks Looking For?

The financial strength of the borrower is as important as the feasibility of the project. Construction loans require a full guarantee from the owners of the borrowing entity. In the industry, this is commonly known as a full-recourse loan. As construction loans come back from extinction, it seems only the strongest borrowers are getting financing. Lenders consider a borrowers net worth, liquidity and global cash flow to determine if the borrower has the financial strength to pay down the loan.

Another important consideration for banks is the borrowers experience in developing successful self-storage locations. In my experience, it seems only the most seasoned developers have been able to access construction financing. However, based on the bank, the borrowers relationship with the bank, financial strength and the merits of the development, a bank may be willing to work with less experienced developers. Your relationship with your local bank can work in your favor here, as can a strong and compelling feasibility study.

Another consideration is the pro forma, the actual number crunching. Credit officers at banks are numbers guys, so an important part of any potential transaction is the financial projections that support the project. A pro forma should detail anticipated revenue and expenses on a monthly basis from the completion of construction through leaseup.

Its imperative you demonstrate a strong understanding of the economics behind the asset class (multi-family differs from industrial, which differs from self-storage, etc.). You need to demonstrate the project will be profitable, there will be sufficient income to pay the mortgage, and leaseup is fast enough to replace the construction loan with a permanent loan prior to the end of the construction-loan term.

Improvement in the permanent market is one factor thats bringing construction lending back from the edge of extinction. When the capital markets were at a standstill, construction lenders were hesitant to make loans because they didnt know what the exit strategy would be. The improved permanent market has alleviated this concern. The lender is going to want to see that the project is profitable enough to support a permanent loan greater than the amount of the construction loan.

When creating your pro forma, its important to be realistic with your projections. If youre too aggressive with the leaseup rate or your expenses are too low because youre trying to be optimistic, youll give the appearance that you dont understand the industry. Its also important to include different financial scenarios, including an expected case, an upside case and a downside case. Make sure that even in the downside scenario theres a strategy to pay off the construction loan. All of your projections must be supported by the feasibility study.

Lastly, consider your management group. Now more than ever banks are concerned about the management of the proposed facility. Management groups have received heightened scrutiny due to the number of transactions that have stalled prior to projected stabilization over the last few years. This has largely been due to a lack of experience or a misunderstanding of project scale.

In the banks eyes, an outside management firm is preferable unless the borrower has a significant track record in self-storage management. Hiring a third-party management firm gives the bank confidence that the people running the day-to-day operations have sufficient experience, thus mitigating a major risk.

Its a Great Time to Develop

Despite the difficulties, the endangered construction loan is ready to flourish. There has been virtually no development over the last three years in the self-storage industry, so many investors are looking to development as a way to grow their portfolio. Because of the lack of development, weve seen a better balance of supply and demand in many submarkets.

Additionally, inputs are cheap, as vendors are trying to put their people to work and move product. Combined with the low interest-rate environment, the aggressive cap rates for stabilized facilities, and the upward pressure on rates in certain markets, self-storage construction loans stand to make a comeback from being an endangered species to being a thriving opportunity for self-storage developers.

Devin Huber is a principal at The BSC Group, which offers financial and loan advisory, mortgage-brokerage and loan-workout solutions to commercial real estate property owners and investors, with a special emphasis on the self-storage market. Prior to helping found The BSC Group, Huber was a senior vice president at Beacon Realty Capital and a key member of the firms Self Storage Group. To reach him, call 800.605.7880; e-mail dhuber@thebscgroup.com; visit www.thebscgroup.com.

CubeSmart, a self-storage real estate investment trust (REIT), has been selected by American Storage to manage its 31 facilities in Georgia, North Carolina and South Carolina. The properties, which comprise approximately 1.2 million square feet, will be incorporated into CubeSmart's property-management program, bringing the number of facilities under the companys third-party services to 136.

Although CubeSmart will assume management of the portfolio beginning Aug. 1, the facilities will continue to operate under the name American Storage, officials said.

"The addition of the American Storage properties builds on CubeSmart's existing presence in the Southeast while further strengthening the scale advantages of our operational footprint," said Chris Marr, CubeSmart president and chief operating officer.

CubeSmart's third-party program offers a variety of self-storage management services, including operational, marketing, revenue-management and technological strategies.

CubeSmart owns or manages 479 self-storage facilities across the United States and operates the CubeSmart Network, which consists of approximately 850 additional self-storage facilities.

Boomerang Systems Inc., a manufacturer of automated self-storage systems and robotic parking systems, has closed $6.2 million in financing to help the company accelerate its growth trajectory. In particular, the company aims to expand its RoboticValet parking system, which transports vehicles on a flat, solid concrete slab without the use of a rail or track.

"We are very pleased to complete this offering with the investment and support of a diverse group of private and institutional investors," said CEO Mark Patterson.

The company conducted the offering pursuant to a transaction exempt from the registration requirements of the Securities Act of 1933, as amended. The final closing occurred on July 13.

In the offering, Boomerang sold 6 percent convertible promissory notes due in 2017 with an aggregate principal amount of $6.2 million as well as warrants to purchase 1.24 million shares of common stock. Gilford Securities Inc. acted as the exclusive placement agent for the offering.

Headquartered in Florham Park, N.J., with research, design, testing and production facilities in Logan, Utah, Boomerang sells, designs, engineers, manufactures, installs and supports its own line of automated self-storage and parking systems. The companys self-storage system delivers up individual storage units to customers at a buildings ground level, allowing operators of multi-level facilities to market drive-up accessibility, climate control and security as facility benefits. Other system advantages touted by the company include efficient land use, faster development, cost efficiency, reduced staffing needs, accelerated tax write-offs and more.

SpareFoot, an online self-storage marketplace and provider of Web-marketing tools, won $5,000 for Kure It Cancer Research after claiming the silver medal in an event called Summer Startup Olympics in Austin, Texas. Competitors from eight Austin-area tech startup companies competed in the second-year event, vying for monetary contributions to be donated to charities of their choice.

SpareFoots donation will help Kure It further its mission to raise awareness and research dollars for underfunded cancers. Since 2007, Kure It has raised more than $1 million for research.

We admire SpareFoots commitment to Kure It, and their culture of creativity, said Barry Hoeven, founder of Kure It. They are an example to other companies that you can give back and have fun while doing it.

SpareFoot also served as organizer for this years Summer Startup Olympics. Events included tug-of-war, basketball, tetherball, relay races and kickball.

BuildASign won the gold medal and will donate its $10,000 prize to Austin Pro Bono, an organization dedicated to connecting skills-based volunteers with nonprofits. Adlucent earned the bronze medal and will donate its $1,624 prize to Austin Pets Alive, a nonprofit dedicated to providing resources, education and programs to eliminate the killing of companion animals.

"The Startup Olympics were the most fun I have ever had raising money for a charity. The competition was intense, but everyone at SpareFoot brought their A-game and had the same goal of winning to raise money and awareness for Kure It, said Ryan Harmon, SpareFoot sales manager and the companys reigning tetherball champion. It was an honor to win $5,000 for such a worthy cause.

Founded in 2008 and based in Austin, Texas, SpareFoot.com helps consumers find and reserve self-storage units, with comparison shopping tools that show real-time availability and exclusive deals. The company also provides Web-marketing solutions for storage facility owners and operators including AdNetwork, SiteBuilder and GeoPages.

Big Jim Self Storage in Bradenton, Fla., was recently sold from Big Jim III LLC of Sarasota, Fla., to Storage Quest LLC of Winter Garden, Fla., for approximately $6 million. Located at 6403 State Road 64 E., the 90,964-square-foot facility sits on approximately 6 acres of land. It contains 626 storage units, 457 of which are climate-controlled, and was built in 2003.

Marcus & Millichap Real Estate Investment Services brokered the transaction. Both buyer and seller were represented by Michael Mele, a first vice president of investments for the firm and senior director of its National Self-Storage Group in the Tampa, Fla., office.

"This self-storage transaction is an indicator of how competitive the market is for class-A properties," Mele said. "I think it is fair to say that cap rates for high-quality facilities like Big Jim are back to pre-crash levels."

In February, Big Jim IV LLC bought a similar 57,000-square-foot property in North Port, Fla., from AERL LC, a subsidiary of American Equity Life Insurance Co., for $2.05 million. The building formerly belonged to Toledo Blade Self Storage LLC, a Naples, Fla., company that paid $972,400 for it in June 2006. Toledo Blade defaulted on a $3.75 million loan from American Equity Life in May 2010.

Like Big Jim III, Big Jim IV is a Sarasota company that lists Dora Maria Thomas as its registered agent.

The four U.S.-based self-storage real estate investment trusts (REITs)CubeSmart, Extra Space Storage Inc., Public Storage Inc. and Sovran Self Storage Inc.have announced when and how they will reveal their earnings statements for the fiscal quarter that ended June 30.

CubeSmart

CubeSmart will release its quarterly financial results on Aug. 2. An accompanying conference call will be held at 11 a.m. ET on Aug. 3. A live webcast of the conference call will be available from the investor-relations page of CubeSmart.com. The dial-in numbers are 877.317.6789 for U.S. callers, 412.317.6789 for international callers and 866.605.3852 for Canadian callers.

After the live webcast, the call will remain available on CubeSmart's website for 30 days. In addition, a telephonic replay of the call will be available until Sept. 3. The replay dial-in number is 877.344.7529 for domestic callers and 412.317.0088 for international callers. The reservation number for both is 10015566.

CubeSmart owns or manages 479 self-storage facilities across the United States and operates the CubeSmart Network, which consists of approximately 850 additional self-storage facilities.

Extra Space Storage Inc.

Extra Space will release its quarterly earnings on July 30 after the market closes. The company will host a conference call at 1 p.m. ET on July 31 to discuss the results. Hosting the call will be CEO Spencer Kirk, along with Scott Stubbs, executive vice president and chief financial officer, and Karl Haas, executive vice president and chief operations officer.

During the call, company officers will review second-quarter performance, discuss recent events, and conduct a question-and-answer period for registered financial analysts. All other participants will have listen-only capability.

The phone number for the call is 800.659.2037 for U.S. callers and 617.614.2713 for international callers. The conference ID is 92323989. The conference call playback, which will be available through Aug. 31, will be accessible at 888.286.8010 in the United States or 617.801.6888 internationally. The conference ID is 68277310.

The conference call will be available on the investor-relations page of ExtraSpace.com. Those who wish to listen online should visit the website at least 15 minutes before the event start time to register and install any necessary audio software. A replay of the call will be available online for 30 days.

Headquartered in Salt Lake City, Extra Space owns or operates 882 self-storage properties in 34 states and Washington, D.C. The companys properties comprise approximately 585,000 units and approximately 64 million square feet of rentable space.

Public Storage

Public Storage will release its second-quarter earnings on Aug. 2. A conference call is scheduled for Aug. 3 at 1 p.m. ET to discuss the results.

For the live conference call, the domestic dial-in number is 866.406.5408. The international dial-in number is 973.582.2770. The conference ID is 98799743. The live webcast will be available through the investor-relations page of PublicStorage.com and will be accessible on demand until Aug. 18. For the conference call replay, the domestic dial-in number is 800.585.8367, the international number is 404.537.3406, and the conference ID number is 98799743.

Based in Glendale, Calif., Public Storage has interests in 2,064 self-storage facilities in 38 states with approximately 131 million net rentable square feet. Operating under the Shurgard brand name, the company also has 189 facilities in seven European countries, with approximately 10 million net rentable square feet.

Sovran Self Storage Inc.

Sovran will issue its quarterly results after the market closes on Aug. 1. The company will conduct a conference call to review the financial results and discuss operations on Aug. 2 at 9 a.m. ET.

The call can be accessed at 877.407.8033 within the United States or 201.689.8033 internationally. Management will accept questions from registered financial analysts after prepared remarks. All others are encouraged to listen to the call via webcast from the investor-relations page at UncleBobs.com. The webcast will be archived for 90 days. A telephone replay will be available for 72 hours after the meeting by calling 877.660.6853 and entering pass codes 286 and 397145.

Sovran, which operates facilities under the brand Uncle Bob's Self Storage, operates more than 451 facilities in 26 states, with a large presence in Texas.

On The Move Inc., which provides a turnkey rental-truck program for the self-storage industry, has named Rebecca McMahan as its national sales manager and agency director. She will manage the company's sales and business development as well as play a pivotal role in SecureLease, its new tenant-protection program.

McMahan has experience in self-storage consulting, facility auditing, management training and owner assistance, having previously worked as owner and president of Management Onsite Training Inc. She has been active in the Texas Self Storage Association for many years, assisting in the creation and implementation of its grassroots training program and serving on the executive board. She is a past recipient of the association's Volunteer of the Year Award.

On The Move's rental-truck program provides self-storage operators with moving trucks, a rental-truck insurance program, and custom truck graphics that advertise the facility.

By Stephen Sandecki

Author's Note: This is part three of a series designed to educate self-storage operators on the basics of on-page search-engine optimization (SEO). To reach other installments in the series, search for "Sandecki" using the search box in the upper right corner of this Web page.

To clarify, on-page optimization relates to things done directly to your Web page(s). Everything explained in this series can be done by whomever manages your website. If you run your website on a third-party platform or use third-party CMS (content-management system) software, you may be limited to how effectively you can optimize your on-page SEO. To get the most out of on-page SEO, give it consideration during the website-development phase.

One of the most overlooked aspects of search-engine optimization (SEO) is image optimization. This is mainly because many SEO professionals and self-storage Internet marketers dont realize the benefits. By properly optimizing your images for search engines like Google, you help expose your Web pages to a larger audience and increase your overall on-page optimization efforts.

In this article, well go over all the things you can do to properly optimize your images for Google and other search engines, and how such optimization can be of great value to your self-storage facilitys website. The best part of image optimization is it usually doesnt require any major revising of your Web pages.

Optimizing Images

I bet some of you are wondering, Why in the heck would we want to optimize images? How will that benefit my website? Its a valid question. We all know large-scale updates and revisions to a website can be costly, especially if you have a third party managing and hosting your website. However, the on-page optimization value it carries will far outweigh the short-term cost of such an update.

Googles algorithm for display-search results is very complicated and uses hundreds of factors. Its believed that by using proper image optimization you can help boost the relevancy of a Web page to specific keywords and keyword phrases. You can also help get your images ranked higher in Google Images. Every image on your Web page thats informative should be properly optimized. Obviously, design images such as round corners, borders, etc., dont need to be optimized.

How to Optimize Images

Below is my guide on how to optimize images for Google Search\Images. I always like to mention that these are the best practices at the time of the articles publication. As times goes by, Google can and will make alterations to its algorithm, and those changes can negate these best practices. However, I dont foresee any of the below information changing anytime soon.

Proper image filename. This is actually a no-brainer optimization method for images. You want to accurately describe the image in a few keywords in the file name. For example, if we had a picture of a man riding a red motorcycle, you would name your image "man-riding-red-motorcycle.jpg." This tells Google this image is related to a man riding a red motorcycle. On a large website, this can be a time-consuming task, but in reality, its very simple.

Use of alt image HTML attribute. The alt attribute specifies the alternate text for an image if for some reason the image cannot be displayed, which can happen with broken links. The concept is if the image cannot be displayed, the reader will get a brief description of what the image should be. Google uses this attribute when determining what the image is relevant to. Here you can see an example of the alt attribute being used in an img html tag for an image of a man riding a red motorcycle:

<img src="/images/man-riding-red-motorcycle.jpg"alt="A man riding a red Honda motorcycle"/>

As you can see, I used the proper file name for the image as mentioned above, and also included a more detailed, simple, relevant description in the alt attribute. Remember, the alt attribute should never be used to spam or stuff keywords. Strictly use it to accurately describe the image in as few words as possible.

Relevancy of image to page content. While this may seem like common sense, youd be surprised at how many times images on a Web page have no real relevancy to the content. While there are many plausible cases where you might need to put a non-relevant image on your Web page, its always a good idea to keep them as relevant as possible.

Link properly to images. There may be many instances where you might link directly to an image internally (your website) or externally (another website). When linking directly to your images, its generally a smart idea to use proper anchor text (clickable text of a link). The anchor text should usually be a keyword or keyword phrase directly related to that image.

For example, if I was going to link to my image of a man riding a red motorcycle I would use: "man riding a red motorcycle." As you can see, this really isnt too difficult to figure out. Just make sure you dont stuff too many keywords into the anchor text and always make sure its human-friendly. When I say human-friendly, I mean the anchor text should make sense to a human and read properly in whatever content it resides within.

Dont spam or stuff via image optimization. Weve gone over four main ways to optimize your images for Google, but the most important is to not over optimize your images. It can sometimes be hard to not stuff keywords into image file names and alt attributes. However, when doing so, you risk harming your search-engine ranking instead of helping it. Google is always looking for ways to adjust its algorithm to prevent cheaters and spammers. By stuffing and spamming your images, you can accidentally trigger a negative response.

As you can tell after reading this article, it isnt very difficult to optimize your images for search engines. The process of image optimization can help you build your Web pages relevancy to specific keywords and keyword phrases, while also allowing you to rank your images at the top of the results in Google Images. Its important to remember this is just one of the hundreds of factors Google uses for ranking Web pages and isnt the main method to rank your Web page(s) at the top of the search results.

Stephen D. Sandecki is the Internet marketing specialist for LifeStorage Centers LLC. He has more than eight years of experience in search-engine optimization, paid search and Internet marketing, and six years of experience in the self-storage industry. LifeStorage has 18 facilities throughout the Chicagoland area. For more information on Chicago Storage, visit Lifestorage.net.