Alert on Self Storage

"America's Premier
Self Storage Brokers"

May 2006

2953 S. Peoria Street
Suite 207
Aurora, CO  80014

1-800-55-STORE

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Argus Sales

Property Pick

New Listings

Argus News

Financing Focus

Vendor View

Industry Insights

Upcoming Events

Spring is my favorite time of year.  You never know what the day will hold - rain showers, sunshine, snow, or maybe all three!  Despite the uncertainties, we know that the seeds we plant in springtime will grow and bear fruit for us in the future.  Are there any seeds that you can plant right now for your business?  Maybe it is time to take a look at some new ideas and give them a try!  You may be surprised at the fruits that will come from a small investment of your time and efforts this spring!

  Amy Hitchingham is the Director of Marketing & Operations for the Argus Self Storage Sales Network and www.selfstorage.com.  She can be reached at 303-785-6086 or via e-mail at amy@argus-realestate.com.

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New Argus Listings

• Navarre, FL:  $2,540,000; 32,850 RSF.   Contact Broker Affiliates Bill Barnhill or Stuart LaGroue at 888-801-4534. 

• Atlanta, GA:  $1,000,000; Development Site.  Contact Broker Affiliate Dale C. Eisenman at 843-342-7650.

• Altoona, IA:  $1,750,000; 28,800 RSF.  Contact Broker Affiliate Dustin Whitehead at 319-961-6545.

• Hickory, NC:  $950,000; 31,900 RSF.  Contact Broker Affiliate Dale C. Eisenman at 843-342-7650.

• Stanfield, NC:  $1,600,000; 35,325 RSF.  Contact Broker Affiliate Dale C. Eisenman at 843-342-7650.

• Winchester, NH:  $195,000; 4,300 RSF.  Contact Broker Affiliate Joe Mendola at 603-668-7000.

• Albuquerque, NM:  $1,125,000; 20,732 RSF.  Contact Broker Affiliate David Laney at 505-286-2060.

• Stanfield, OR:  $235,000; 9,000 RSF.  Contact Broker Affiliate Richard Arnold at 503-203-1911.

• Milwaukee, WI:  $750,000; 33,300 RSF.  Contact Broker Affiliate Peter Hitler at 262-236-0612

 Check out all of our Current Listings

Property Pick

Altoona, IA
$1,750,000

• RSF: 28,800

• Units: 274 total, 169 climate controlled

• Total Land Area: 2.45 acres

• Built: 2005

• New facility opened in March of 2005

• Excellent location in bedroom community to Des Moines, IA

• Surrounded by new commercial and residential development

• Located directly behind Target, Lowe's and Staples retail stores

• Property features include manager's office, keypad entry system and security cameras

For more information on this opportunity,
please call Argus Broker Affiliate

Dustin Whitehead at 319-961-6545
or send an Email Request

Argus News

Did you miss last month's teleconference on The Three Greatest Risks to Your Value?  No need to worry - the teleconference and presentation notes are now available on the Argus website for you to download and listen to at your convenience!  This is an important discussion on the current trends in Interest Rates, Cap Rates and Overbuilding and how the value of your facility can be significantly impacted by these factors.  To listen to the teleconference recording, simply click here to visit our website and download the audio and PowerPoint presentation files.  You'll be glad you did!

Financing Focus

This is the final installment in the series of three loan case studies provided by Collateral Mortgage Capital, LLC.  For more information, visit www.collateral.com.

Loan Request
Two permanent loans totaling $4.5 million were arranged for the refinance of two existing self-storage facilities.  One property, a 475-unit (378 climate and 97-unit non-climate) controlled facility was built in 2001.  The other property, a 448-unit (145 climate and 303-unit non-climate) controlled facility was built in 1990.  The same individual borrower owned both self-storage properties.   

Challenges
1.  One property had experienced a drop in occupancy rates in the months preceding the refinance, which would have led to a reduction in loan dollars.     
2.  The other property had existing loan payoff time constraints, along with a defeasance prepayment stipulation that had to be achieved within the 60-day rate lock window. 
3.  Both properties were impacted by the recent statewide increase in insurance premiums (approximately 300%) and the mandatory requirement by the lender for terrorism insurance on all property types.   

The Plan
1.  Because there were indications of an upward trend in occupancy, as well as an increase in rental rates for the property, a request that the lender consider these trends in their underwriting parameters, rather than factoring in the typical income collection stream used on this type of property. 
2.  Request a waiver of terrorism insurance on this property type.

Loan Terms
A ten-year fixed rate (mid 5%) non-recourse permanent loan, amortizing over a 30-year schedule was provided by one of Collateral’s national CMBS lenders.   

What Made It Work
Given Collateral’s strong self-storage relationship with the lender, and the relationship history with the borrowing entity, the lender agreed to accept the upward rental trends in order to attain the maximum loan dollars being sought by the borrower, and still maintain the initial low spread. Additionally, the borrower was able to negotiate a waiver of the mandatory terrorism insurance requirement by conduit lenders in exchange for a very small increase to the spread, which subsequently did not have an impact on the loan dollars.  Additionally, the waiver yielded the borrower considerable cost savings in annual insurance premiums over the life of the loan.

Industry Insights

Sovran Self Storage Reports First Quarter Results:  BUFFALO, N.Y.--(BUSINESS WIRE)--May 3, 2006--Sovran Self Storage, Inc. (NYSE:SSS - News), a self-storage real estate investment trust (REIT), reported operating results for the quarter ended March 31, 2006.Net income available to common shareholders for the first quarter of 2006 was $8.0 million or $.45 per diluted share. Net income available to common shareholders for the same period in 2005 was $6.5 million or $.40 per diluted share. Funds from operations per share for the quarter increased 17.6% to $13.3 million or $.75 per fully diluted common share compared to $11.3 million or $.70 per fully diluted share for the quarter ended March 31, 2005. Strong revenue and operating income growth contributed to the Company's performance this quarter.  Read Full Article

U-Store-It Puts Industry Veteran at Helm:  U-Store-It Trust, a Middleburg Heights-based self-storage real estate investment trust, said Monday it has hired self-storage industry veteran Dean Jernigan as its president and chief executive.  The move comes after the resignation this month of Steven Osgood, U-Store-It's former president and chief financial officer, and a minor uproar about compensation of the company's senior management. Jernigan, 60, is also joining U- Store-It's board of directors. Jernigan was founder, chair man and CEO of Storage USA, a large, publicly traded self-storage company based in Memphis, Tenn., for almost 20 years until it was sold in 2002. He most recently served as president of Jernigan Property Group LLC, a Memphis company that owns and operates self-storage facilities.  Read Full Article

Door to Door Storage Celebrates 10 Years of Growth:  KENT, Wash.--(BUSINESS WIRE)--May 10, 2006--Door to Door Storage Incorporated marked its ten year anniversary this May by opening four new markets and a new commercial services group. Over the past ten years Door to Door has seen business grow from an initial seed of an idea from an executive of Shurgard Storage to a nationwide business with over 300 employees serving over 22 major metro markets.  To celebrate the tenth anniversary the company spent the first quarter of 2006 opening service in Everett-Woodinville, Washington; Denver, Colorado; Cincinnati, Ohio; Riverside, California; and Houston, Texas. "The addition of these key markets to the Door to Door portfolio increases our footprint to more than 1/3 of the total US population," stated John Rogers, President. Read Full Press Release

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Argus Sales

Congratulations to:

• Bill Barnhill and Shannon Barnhill of Omega Properties, Inc. on the sale of Sylacauga Self Storage in Sylacauga, AL!

• Larry Goldman of Prudential CRES Commercial Real Estate on the sale of AAA Moore's Mini Storage in Mount Vernon, MO!

• Dale C. Eisenman of Midcoast Properties, Inc. on the sale of Maple Street Storage in Simpsonville, SC!

• Peter Hitler and Tricia Olson of Investment Real Estate Specialists on the sale of Intown Storage in Stevens Point, WI!

The Argus Self Storage Sales Network
"America's Self Storage Brokers"
1-800-55-STORE
info@argus-realestate.com

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Vendor View

Cost Segregation Services, LLC

Cost Segregation Services provides self storage owners with Cost Segregation Studies that help create cash flow from tax savings within the first 5 years of building ownership.  They have extensive knowledge and expertise in this very specialized area of accelerated depreciation which helps maximize tax deductions and cash flow for their clients. 

For more information, contact:

Scott Casey
504-482-3676
slcasey@bellsouth.net
 

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Upcoming Events

“The Building Blocks of Self Storage”
Trachte Building Systems
Free Informational Seminars
May 9 - Brampton, ON
May 11 - Edmonton, AB
May 18, South Plainfield, NJ
May 23 - Madison, WI

Call 1-800-356-5824 or visit online
www.trachte.com/seminars

Mississippi Self Storage Owner's Association Conference and Tradeshow
May 19, 2006: Canton, MS

For more information visit www.msssoa.org.

Arizona Mini Storage Association
Conference and Tradeshow:
May 23-24, 2006
Phoenix, AZ

Call 480-838-6780 for more information

Great Lakes Self Storage Expo
June 8-9: Columbus, OH
Hosted by the Illinois, Indiana, and Ohio Self Storage Associations

Call 800-528-5230 for more information or e-mail mike@p-a-m-s.com.

"Building Your Future in Self Storage" and
"What Every Self Storage Owner Should Know"
Free Seminars hosted by BETCO Inc.
June 22 - Raleigh, NC

Call 888-817-9422 for more information

List your event for free...
alert@argus-realestate.com

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Put America's Finest Self Storage Brokers to Work for You!

Click Here to Contact Us     Phone  303-785-6085     Toll Free  1-800-557-8673     Online  www.selfstorage.com