The self-storage real estate investment trusts (REITs) do more than just operate their own businesses. Some of them also offer business solutions to smaller operators including third-party management services and industry exit opportunities. Here are some things to consider if you’re planning to hire a REIT to manage your facility or you’d like to sell your property to one of these publicly traded companies.

Third-Party Management

The decision to turn over the day-to-day operation of your storage facility to a management company should come only after intense research, consideration of your long-term goals and an understanding of what you hope to gain from the relationship. Then the real work begins. You must decide which firm will best meet your needs and desires.

With many great companies in the industry from which to choose, the task may seem overwhelming. An owner must determine if a smaller company is the right choice or if he’d like to capitalize on the brand name and economies of scale that come with larger teams. Three of the four publicly traded REITs—CubeSmart, Extra Space Storage and Sovran Self Storage (Uncle Bob’s)—offer management services, which can bring an independent operator new growth opportunities, an expanded Internet presence and greater revenue.

Management by a REIT comes with a number of benefits, in large part because of the firm’s sheer size. A bigger company translates to better economies of scale on many fronts including marketing, manager hiring and training, and other operational tasks. “These benefits translate into higher occupancy, revenue and net operating income,” says Guy Middlebrooks, vice president of third-party management for CubeSmart.

REIT management companies are also backed by a big name. “The property instantly becomes part of a nationally branded storage provider with a solid reputation. The owner may then take advantage of the breadth of the REIT’s marketing, revenue-management and technology capabilities at a fraction of the cost of attempting it alone,” says Dale Payne, client relations and sales manager for Uncle Bob’s Management. “Further, the audit controls that apply to a REIT also apply to the stores it manages. This provides an owner the peace of mind that his facility is being watched with a high level of scrutiny.”

When real estate investment firm NitNeil Partners began its search for a management company to oversee its new facility in Chattanooga, Tenn., its executives sought a partner with a national presence under a single brand name. “The REITs had the technology, marketing and management infrastructure necessary to keep our properties competitive in their respective submarkets,” says Neil Sapra, principal.

Ultimately, NitNeil turned to Uncle Bob’s to operate the property. Giving up control of the day-to-day operation freed NitNeil to focus its time and resources on developing new properties, Sapra says.

Similarly, Johnson Development Associates Inc. turned to CubeSmart to oversee its American Storage Rental Spaces brand. “By using a REIT to manage our facilities, we are able to leverage their platform and experience to manage our stores in a very competitive manner,” says David Berry, asset manager. “The access to the REIT’s marketing and revenue-management professionals provide our facilities and employees with the tools necessary to compete with all other facilities in the market place and region.”

Another bonus to hiring a REIT management company is obtaining a “second set of eyes” on the property, Berry says, to ensure it stays in superb shape and capital improvements are well-funded and not overlooked.

Finding the Right Partnership

Even with all the potential benefits, hiring a REIT to manage your multi-million-dollar asset should be based on more than a brand name and potential cost savings. Naturally, you should seek a company that has a proven track record of success and has shown steady growth year over year; but there’s much more to it.

“Occupancy is only one component of the equation,” says Noah Springer, vice president of strategic partnerships for Extra Space. “Operators need to look at the sophistication of the third-party management company’s operation—strength of online presence, ability to drive rates to achieve optimal occupancy, field personnel availability, skills, training and corporate support.”

Because the fee schedule—which is generally a percentage of the business’ revenue—among REITs and independent management companies is fairly comparable, owners looking for a partner can instead focus on finding the right fit, rather than scrutinizing out-of-pocket costs.

“Look for a third-party management company that considers you a partner, not a client,” Springer advises. “It’s critical the operator really understands how the management company operates. A good management company will have proven proprietary systems in place so they are not experimenting with your facility.”

Springer also suggests owners consider the company’s operational footprint. “The right management company for you should currently operate in your area or within a short drive from your facility,” he says. “If it doesn’t currently have properties in your market, it probably isn’t the right fit.”

Costs and performance aside, the true factor to choosing one REIT over another lies in the nitty-gritty details. “Relationships are key for working with a third-party management group,” Berry says. “Make sure the relationship is a good fit for your organizations. Be sure not to solely focus on revenue or budget projections provided by the third-party group management group.”

Sapra suggests owners visit the corporate offices and spend time with any personnel with whom they’ll be working on a regular basis. “Each REIT has a different approach to management. Determine which one is the best fit on a property-by-property level,” he says. In addition, ask the company for references so you can get a first-hand account of how it operates and other feedback from its current customers.

Owner Expectations and Input

As with any partnership, owners who hire a REIT should have certain expectations. This will depend on several factors, including how much involvement the owner desires. While some like to have a bit of skin in the game, others feel comfortable turning over operation completely and only seek to be updated on the property’s progress.

“An owner can choose to be completely hands-off or take an active role in the management of his facility,” Middlebrooks says. “This allows the owner to focus on growth, development, acquisitions or spending time away from business.”

In general, the management company should keep you apprised of revenue and expenses, ongoing maintenance or property improvement, competitive market analyses, and staffing concerns. The key to a healthy long-term partnership with your management company is understanding its responsibilities upfront, Berry says.

REIT as an Exit Strategy

There’s yet another component to consider in the REIT-owner equation: potentially selling your business. Often, owners who’ve partnered with a REIT on management will consider the company as their first potential buyer when it comes time to sell their facility. Having an established relationship—and being satisfied with the results—can make the transition from owner to seller a little easier. In addition, a REIT may be more inclined to consider the acquisition if it’s currently managing or has previously managed the property.

Regardless of whether an operator has previously partnered with a REIT, he may consider selling to one when the time comes. He should be aware of the attributes these big players seek when looking for a new investment, including market demographics and property profiles. At the top of the list is a coveted location in a major market. All of the REITs have some presence in just about every large city, so adding a second or third location in a specific market requires a highly desirable property.

“The old real estate mantra is still strong, ‘location, location, location!’ We look for sites that are well-positioned in the market, near central-business districts and other retail corridors, and close to multi-family and densely populated residential neighborhoods,” says Zachary Dickens, senior director of acquisitions for Extra Space.

REITs also seek properties that show growth, or at least have the potential to generate solid revenue. “We love turnaround opportunities, but we’re also exceptional at taking a highly occupied property to the next level—both from an occupancy standpoint but, more important, from a revenue perspective,” says Michael Rogers, vice president of real estate and asset management for Uncle Bob’s.

Getting on the REIT radar for a possible acquisition takes what most owners are already doing—running a successful operation. “An operator considering selling to a REIT should ensure the physical condition of the property is superb, delinquent tenants are vacated, financial records are tidy and deliverable, and the tax consequences of a potential transaction are understood prior to embarking on the process,” says Jonathan Perry, senior vice president of investments for CubeSmart.

Then all it takes is a phone call. “Simply reach out to the REIT via their published Web-based address or by telephone to begin the conversation,” Perry says.

The UPREIT Option

When it comes time to sell your storage facility, there are more options available than just the traditional buy-sell transaction. One alternative method is the use of operating-partnership (OP) units. When a REIT operates as an umbrella partnership, known as an UPREIT, investors have the opportunity to own OP units, which represent limited-partnership interests in an operating partnership that owns the properties.

Typically, one unit is equivalent to one share of common stock in the REIT and, at the discretion of the seller, is convertible into common stock. “Each OP unit receives the same annual distribution, the dividend, of income as a share of common stock, and has the same upside or downside potential as shares of common stock of the REIT,” Rogers says.

The principal benefit of opting for an OP sale is it allows an owner or investor to receive OP units instead of cash or REIT shares and defer his tax liability until he exchanges them for REIT shares or cash, says Charley Allen, chief investment officers for Extra Space. “In most instances where a traditional REIT has competed with an UPREIT to purchase property, the UPREIT usually ends up being the successful buyer if the seller seeks tax deferral.”

The selling option is beneficial to both the owner/investor and the REIT looking to purchase the property. “UPREITs and OP units offer buyers and sellers a unique tool to allow for advanced tax planning, and allows Extra Space Storage the opportunity to work with sellers to work out a transaction that is as unique as the property itself,” Allen says.

Whether you’re looking for a short-term solution for the daily management of your storage business or thinking ahead to the day you sell, the industry’s REITs offer a number of options. Ultimately, your goal is to find the right fit for your business, your family and your future.

Westy Self Storage in Norwood, N.J., is helping a Boy Scout earn his Eagle Scout designation by donating one free month of storage and boxes for his service project. Brendan Leddy, a member of Norwood's Boy Scout Troop 120, is collecting books for the Worldwide Book Drive (WBD), which promotes global literacy and education through book recycling and donations. Leddy has collected more than 9,000 books, according to the source.

“Westy has helped me solve a major issue. I originally thought I could store the books in my parent's garage until we were ready to deliver them; however, I did not realize the overwhelming response I would get with my collections,” Leddy said. “I am thankful to Westy Self Storage for their generous donation.”

“It is with great pride that we help young adults achieve their goals,” said Tim Mincin, district director of the local self-storage facility. “It is important to share in their motivation and encourage their growth.”

Eagle Scout is the highest rank attainable in the scouting program of the Boy Scouts of America. More than 2 million men have earned the ranking, which is held for life, since it was introduced in 1911.

Founded in 2005, WBD works with a number of organizations to distribute hundreds of thousands of books locally and internationally. To date, it has donated 3 million books.

Founded in 1990, Westy Self Storage is headquartered in Stamford, Conn. The company's portfolio of facilities spans the tri-state area of Connecticut, New Jersey and New York.

Inside Self-Storage and BOS Container USA, a manufacturer of quick-build storage containers, have released a new market brief, “Self-Storage and the Need for Quick-Build Space: BOS Container USA Shows the Way.” The free resource highlights the company's portable-container products and how they can help operators quickly and efficiently expand their unit inventory. It takes an in-depth look at the BOS product line and features, container assembly, accessories, and more. The market brief also includes pictures of various BOS products, including one demonstrating how to assemble a unit.

The market brief can be downloaded for free from the ISS Resource Center at www.insideselfstorage.com/whitepapers. Whitepapers on additional topics can be downloaded from the same page.

BOS Container USA is the U.S. importer and sales representative for Germany-based BOS GmbH Best of Steel, which was launched in 1967 and manufactures a range of steel and stainless-steel products including door and window frames, material containers, and quick-build warehouses. With more than 350 employees, the company distributes throughout Europe. BOS Container has provided its quick-build storage containers to the North American market since January 2014.

For more than 25 years, ISS has provided informational resources for the self-storage industry. Its educational offerings include ISS magazine, the annual ISS Expo, an extensive website, the ISS Store, and Self-Storage Talk, the industry’s largest online community.

Self-storage directory Storage.com announced the winners of its inaugural Scholarship Contest, which awarded $2,500 to a chosen applicant in each of three categories: a recent high school graduate, a currently enrolled college student, and the parent or guardian of a college student.

To be considered for the scholarship, student applicants were required to submit an essay or create a one- to two-minute video answering the question, “Given that you already have the necessities for college, if you could only take what fits into a backpack, what would you bring?” Parent/guardian applicants were asked to respond to: “In a perfect world, when your child moves out for college, what are you going to do with [his] bedroom?”

The two student winners are recent high-school graduate Olivia Fish of Edmond, Okla., who’ll attend Chapman University in Orange, Calif., and Lauren Bechtel of Lancaster, Pa., who’s enrolled at Houghton College in Houghton, N.Y. In her application, Fish said she would take her novels, tennis shoes for Zumba and photos that remind her of favorite memories. Bechtel said she would pack a deck of cards, an umbrella and her sense of adventure. Her love for travel makes packing a backpack second nature, she said.

The parent/guardian winner is Ruben Terrazas of Dallas. In his essay, he wrote that he would turn his daughter Astrid’s room into a “Batcave,” complete with oversized chairs, an underground gym and a motorcycle ramp. Astrid is enrolled at Pratt Institute in Brooklyn, N.Y., where she plans to continue studying visual artistry and design.

“Our team reviewed nearly 2,000 applications from across the United States. Selecting a winner in each category wasn’t easy because there were so many great entries,” said Bill Hipsher, co-founder of Omaha-based digital-marketing firm B² Interactive, which operates Storage.com. “It was great to see how creative the students and parents were with the entries and how they got their fans to support them online.”

“We had a great response to the Scholarship Contest and look forward to having it again next year,” said Nick Bilava, director of sales and marketing.

Based in Omaha, Neb., Storage.com is an online directory and marketing tool that delivers exclusive reservations and provides a complete search engine optimization package.

StorageMart, an owner and operator of 149 self-storage facilities in the United States and Canada, is among the 10 businesses and two charitable organizations that will receive a Torch Award on Oct. 14 from the East Missouri and South Illinois chapters of the Better Business Bureau (BBB). Winners are chosen based on their “commitment to customer service through exceptional standards for ethical business practices,” according to the BBB website.

Companies and charities may nominate themselves or can be nominated by customers or other businesses. The awards committee, made up of previous winners, looks at how each applicant benefits customers, employees and the larger community. Recipients must also meet BBB ethical, advertising and selling standards.

This year’s winners will be presented with a crystal trophy during a luncheon at Chase Park Plaza in St. Louis. The event will feature motivational speaker Mark Whitacre, who was once a rising star at Archer Daniels Midland Co. He became internationally known as a whistleblower after reporting on the company’s price-fixing practices. Whitacre’s story was the basis for the movie “The Informant.” KMOV News Anchor Steve Savard will emcee the event.

Tickets for the ceremony can be purchased for $60 per person or $600 for a table of 10. Patron sponsorships, which include luncheon tickets, are available for $1,500. Those interested in attending can visit www.bbb.org/stlouis/events.

“I love a challenge,” said StorageMart President Cris Burnam. “For me, a challenge comes with constantly reinventing how we do business.”

StorageMart pays close attention to customer reviews on its own website as well as third-party review sites to ensure customers are happy, according to a company press release. “I read every single review,” Burnam said.

StorageMart is the latest incarnation of a self-storage business started by homebuilder Gordon Burnam, Cris Burnam’s father, in 1973. The current company was founded in 1999 after the previous business was bought by a competitor.

Headquartered in Columbia, Mo., StorageMart employs 390 people. The company’s charitable arm, StorageMart Gives, is a charter member of Charity Storage, which provides financial assistance to nonprofit organizations across the United States, including Kure-It Cancer Research.

The BBB is a nonprofit, business-supported organization that provides accreditation to businesses nationwide. The organization offers consumers objective advice, free business reviews on more than 4 million companies, 11,000 charity reviews, dispute-resolution services, alerts, and educational information on topics affecting marketplace trust.

By Todd Trepke

With boat and RV ownership on the rise in the United States, many storage-facility operators are eager to capitalize on consumers’ need for quality, safe vehicle storage. In the past, boat/RV storage may have been relegated to open dirt or gravel areas. Now, vehicle owners are demanding more secure and sheltered environments for their toys and are willing to pay a premium for storage space.

There are different types of storage that can be built at varying costs and financial returns. If you’re building a new facility or expanding an existing one, here are some design considerations to help you best serve the expanding boat/RV-storage market.

Building Types

When building boat and RV storage, there are a few things you need to consider at the outset. The first is your building type. There are three basic kinds of storage for vehicles: open canopies, rigid-frame buildings and fully enclosed suites. Each has its own advantages and construction costs but can be designed based on the criteria your target demographic might demand.

Open-canopy storage is the least expensive type of construction and can offer a great deal of flexibility. It’s very similar to the old pole-barn type of construction. Supporting walls are comprised of columns with cross members, and purlins/rafters run longitudinally to support the roof.

Typically, these structures feature individual bays separated by the bearing walls. In many cases, there are no bay dividers, and the end walls are left open so you can “double stack” the bay if you have access from both sides of the building. The bay depth can be infinite, and widths of up to 20 feet are achievable.

Rigid-frame buildings offer the storage developer an abundance of options. These structures allow for wide openings, can be easily racked, and can be built to huge dimensions without obstructive center columns. Further, with these buildings, parking configuration can be easily changed.

The boat/RV suite is a newer concept in the industry. Usually offered to high-end clientele, these buildings typically offer private, fully enclosed bays, built in the same fashion as standard self-storage buildings, but with a few exceptions. Suites can vary in their amenities, but most share common features including climate control and plug-ins for electrical, water and, in some cases, waste. Some suites are so big that they can double as media rooms with large-screen TVs and refrigerators.

Building Design

After deciding on the type of building you want to build, there are a few crucial considerations left: ingress/egress, eave height and bay width.

First, you must have easy ingress and egress for customers. Narrow drive aisles, blind curves and narrow bay entrances will not work. For customers to navigate their RVs and trailers through your property, you’ll need to add 45-foot drive aisles. In some cases, you may need to go larger. You can mitigate some of the drive-aisle width requirements by racking the building to allow for angled ingress and egress, thus maximizing the usable land space.

Next, consider your eave height. It’s prudent to have an eave height of no less than 14 feet, 6 inches. While most outboard boats can be stored in buildings with eave heights as low as 10 feet, you’ll find the majority of RVs cannot fit under this eave. Thus, to make your building more versatile—so it can store anything your customers can imagine—it’s often sensible to go with a higher height.

Second, the bays for these buildings need to be wider than your standard storage bay. While it’s conceivable that boats and RVs can be stored in a standard 10-foot-wide bay with an 8-foot, 8-inch door opening, this is not a wise practice. To give your customers room to maneuver and walk around their vehicle, 12-foot-wide bays with at least 10-foot openings are advised. This will save you from having to make repairs in the future, as your customers will be less likely to run into the building. It will also make it easier for them to access their vehicles.

Offering boat and RV storage can be an excellent opportunity for a storage-facility owner to generate additional income. When developing a new project or capitalizing on undeveloped land at an existing site, keep the above design considerations in mind.

Todd Trepke is vice president of operations for Compass Building Systems Inc., a supplier and erector of self-storage buildings, including boat and RV storage. Based in Powder Springs, Ga., the company also offers design and consultation services. For more information, call 800.243.8438; visit www.compassbuilding.com.

Stuf’N Storage received approval on Aug. 18 to add a new two-story building to its self-storage facility at 2820 Holly Springs Parkway in Canton, Ga. The property currently has six single-story buildings.

Owner Daniel Curtis got approval from the Holly Springs City Council to construct a 14,000-square-foot, 220-unit, climate-controlled building near the back of his property. The new structure won’t be visible to adjacent businesses, a provision that aligns with the city’s buffer requirements, according to the source.

Stuf’N Storage is in an area designated as the “Town Center” on the Future Development Map, which is zoned for commercial and mixed-use development, the source reported. Opened in 2011, the storage facility offers U-Haul truck rentals, vehicle storage, drive-up access, mobile storage, and packing and moving supplies.

The U-Haul Co. of Southwest Ohio recently opened U-Haul Moving and Storage at Glencrossing Way in Cincinnati, the company’s first location in the western part of the city. Built in 1992, the property at 5131 Glencrossing Way is just west of the Glenway Crossing Shopping Center. It encompasses 96,713 square feet of storage space on 9.3 acres. The facility currently only offers truck, trailer and U-Box pod rentals, but self-storage and a showroom will be added in the future.

"It is exciting to see how well this location is developing already," said Drew Case, marketing company president. "We serve as an excellent force for revitalizing the area, and our customers are already looking forward to the addition of self-storage to our location."

The opening of the Glencrossing Way property was driven by U-Haul’s corporate sustainability initiatives, which supports infill development to help local communities lower their carbon footprint, according to a company press release. U-Haul’s adaptive reuse of existing buildings eliminates the amount of energy and resources required for new-construction materials and helps local cities diminish their unwanted inventory of unused buildings, U-Haul officials said.

Established in 1945, U-Haul International Inc. has more than 40 million square feet of storage space at more than 1,000 owned and managed facilities throughout North America.

Update 8/27/14 – SpareFoot, an online marketplace for the self-storage industry, has added an informational blog to Militarystorage.com, its website designed to help members of the military find storage.

"The goal of The Military Storage Station blog is to offer tips and insights for military families who are going through a transition, such as a permanent change of station,” said John Egan, SpareFoot’s editor-in-chief. “The blog will provide information that can help make these transitions smoother."

Blog topics will cover self-storage, moving, home organization, households and military life, SpareFoot officials said.

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3/18/14 – SpareFoot, an online marketplace for the self-storage industry, has launched a website designed to help members of the military find storage. Militarystorage.com will also benefit the National Military Family Association (NMFA), a nonprofit that provides programs for military families.

SpareFoot is working with self-storage facilities nationwide to secure discounted rental rates for active-duty and retired military members, company representatives said in a press release. Available discounts are listed on the new website. In addition, for every reservation made on the website that results in a move-in, SpareFoot will donate $1 to the NMFA.

"SpareFoot honors the brave men and women who serve our country. That's why we're committed to making the self-storage experience quick and painless for our military personnel and their families,” said Chuck Gordon, co-founder and CEO of SpareFoot. “We want to help protect the belongings of military men and women who are protecting our freedom.”

"The National Military Family Association is pleased to partner with SpareFoot to help members of the military and their families find self-storage," said Joyce Wessel Raezer, the association's executive director. "We're even more pleased that SpareFoot is generously donating money produced by SpareFoot Military Storage to boost our military-spouse scholarship program, our Operation Purple camps for military children, and our other programs and services."

Founded in 2008, SpareFoot.com helps consumers find and reserve self-storage units, with comparison shopping tools that show real-time availability and exclusive deals. With a network of more than 7,000 storage facilities ranging from mom-and-pop operations to real estate investment trusts, the company reaches prospective storage renters though partnerships with brands including SelfStorage.com, Apartments.com and Penske Truck Rental.

Based in Alexandria, Va., NMFA provides families of the Army, Navy, Marine Corps, Air Force, Coast Guard and Commissioned Corps of the U.S. Public Health Service and National Oceanic and Atmospheric Administration with information and a variety of programs. The organization has been in service for 44 years.