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Huge in the US, gaining ground in UK

Self-storage is big business in the US where it has been established for over 40 years and everything we are seeing anecdotally suggests the concept is gaining in popularity here too.

The concept of self-storage is simple enough. It is basically do-it-yourself warehouse storage space for businesses and households on a pay-as-you-go basis. Every customer is provided with a set of keys and access to goods is 7 days a week. The installation of CCTV cameras, fire alarms and remote monitoring systems provides for high level security at all times. Our research indicates that the average price for a 50 sq ft box is £65 per month, dependent on location, so this is a low-ticket item.

In addition demand tends to be price-inelastic because it is based on the growing need for flexibility. Key industry growth drivers include a rising level of consumer familiarity, an active housing market, increasing population mobility and cultural changes that have led to a rise in the divorce rate and single parent families.

In the business category, Lok’nStore says retailers, removal companies, manufacturers and even councils and universities are all using self storage to cope with peak trading periods such as the run up to Christmas, for instance.

Latest industry estimates suggest the US has over 35,000 self-storage centres, or c.4.5 sq ft per head of population. The numbers for the UK are c.400 selfstorage centres providing the equivalent of c. 0.2 sq ft per head of population. Lok’nStore management believe the UK could potentially support at least 1,500 self-storage sites.

Presently, 70% of the available sq ft in the UK is based in the South of England, partly because of high catchments of A-B-C socio-economic groups, but also because of high penetration rates that allow for multiple stores in any one location.

Obtaining external estimates on the growth of the UK self-storage industry is difficult – this is an immature market that has only truly been established since the early 1990’s. Anecdotal evidence from the industry’s 5 biggest players, Shurguard, ACCESS, Safestore/Mentmore, Big Yellow and Lok’nStore (which between them control 45% of the market in terms of developed space) all point to growth of 20% 4 plus over the past five years however, and most industry observers believe this trend is set to continue.

In its latest results to end March 2004, Big Yellow reported sales growth in its mature outlets of 17% while the growth reported by Lok’nStore’s eight stores over 5 years of age in the year to end July was 17.8%. Below the 5 leading players, we believe the selfstorage market in the UK is still very fragmented with a high proportion of small operators running between one and five units.

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Safestore, five months to integrate two large self storage companies

It’s doubtful if a textbook has been published on how to take over another self storage company and integrate it with your own. This meant that Steve Williams and his newly formed integration team had to rely on experience to take them through the process when Safestore completed the acquisition of Mentmore (Spaces) in June last year.

The addition of the Spaces stores means that Safestore is the only national UK self storage company, trading from 70 stores and three business centres across Scotland, Wales and all regions of England. In addition there are seven stores in Paris, trading under the Une Piece en Plus (UPP) brand.
When it became apparent that Mentmore could be up for sale Steve Williams and Dave Davies (head of operations) went on an investigative tour visiting every Spaces store.
“We visited every one to get a view of the business and the people,” said Dave. They built up a comprehensive analysis of the portfolio on a store-by-store basis that was to prove invaluable in the following months.
An integration team of Dave Davies, Stuart Beavers, Avril Jones and Bijal Dohdia was selected because they each had relevant experience and expertise. Steve had started his career as store manager at Payless DIY in 1971 eventually becoming operations director for Payless and thence for Wickes and Pet City/Petsmart before joining Safestore.
At Payless DIY and Pet City he was involved in both acquisitions and re-branding. Dave (operations), Stuart (administration), Avril (human resources) and Bijal (IT) also had extensive on the job experience of mergers, acquisitions and integration. The team concentrated on putting together an acquisition strategy document supported by a detailed critical path and action plan. The document covered every aspect of the business and acquisition, including a full assessment of risks, threats and opportunities. The plan is still reviewed on a very regular basis.
“One of the most important factors was to start working towards ‘one company – one team’ from the off and for all staff to understand the benefits, opportunities and responsibilities associated with being the UK’s number one self storage company,” said Steve.
To this end, “A national managers’ conference was held within a week of the two businesses coming together where we got everyone together and outlined our plans for the integration of the larger business. Two senior managers from France were also there,” recalled Steve.
“We decided not to impose policy on the French operation – it was up to them to accept or ignore our suggestions, but they have accepted 80% of our operational procedures as well as increasing merchandising and larger and more open reception areas,” said Steve.
The major thrust of the integration was around the “way forward” programme, which was a 24 week programme designed to introduce common working practices, the achievement of a minimum store standard and a unified approach to sales and customer service across the whole enlarged business.
Over a four-week period following the merger, every manager and assistant manager attended a training course in sales skills and customer service, and new policies and procedures were introduced via regular managers meetings throughout the programme.
Without doubt, however the biggest challenge was to get all stores to a consistent standard of cleanliness and appearance. The responsibility for this was given to the store managers and their teams who personally undertook a co-ordinated cleaning and painting programme over September, October and November, after which they remain responsible for the ongoing cleaning.
The reason for this, Steve stresses, is to give the store team ownership of, and pride in their store. For the record some 2.5 million sq ft of floor has been painted and over £100,000 paid in bonuses to staff at all levels upon successful completion.
“Alongside the staff’s efforts to paint and clean, we had outstanding work and repairs completed on the newly acquired stores, and we have had over 1,000 urgently required units built since June, said Steve.
All stores will be re-branded Safestore by the end of 2005, with the first store completed at Orpington in Kent in early December 2004.
One of the first, and biggest tasks facing the team was to amalgamate three head offices, two of Mentmore and one of Safestore’s, in to one combined function. This was achieved within seven weeks, and the head office now occupies an impressive modern and spacious open plan office adjacent to the existing Safestore store in Borehamwood.
As head of IT, Bijal took responsibility for integrating the management information and finance data for the two companies. The management information system chosen was Spacemanager for Windows, which was the system operated by Safestore.
This had been running on a centralised server for over 18 months and was proven, efficient, reliable and allowed the production of real-time information in a timely manner.
To run the enlarged company an enhanced trading board headed by Steve and including Dave Davies and Glen Sullivan Bissett, respective divisional directors for North and South, finance director Richard Hodsden, property director.
Neil Moulder, HR director Avril Jones, and marketing director Ian Nash was formed.
The day-to-day operation of the stores is the responsibility of the divisional directors who have seven regional managers and two auditors – who monitor security, health and safety and administration – reporting to them.
“The principle of having auditors works well as they help ensure each store delivers compliance to company policies and a standardised service to all our customers. Each site is graded red, amber or green on a number of criteria, which identifies items which need addressing on a store by store basis,” said Steve.
To date both Spaces and Safestore have performed above budget. “We are the No.1 self storage provider in the UK in terms of customer numbers, square footage, revenue and profit, but in this industry, where we are all basically selling the same product, it is your people that will make the real difference. This is why so much emphasis will be put on training and inspiring our people, alongside our investment in improved services and facilities,” said Steve.
He is on record as saying that competition in the industry will continue to intensify and any business that wants to remain successful must respond and continue to up their game if they want to survive long term.
“Standards will continue to rise and to remain successful you have to keep improving; this business is improving at a rapid pace and you need to keep running to just to stand still. With new stores such as Staples Corner and Charlton we have stores that are equal to any.”
Safestore is targeting to open 30 more stores in the UK and France over the next five years. In addition it may continue on the acquisition trail if any good quality and reasonably priced companies come their way. This could be in the UK or mainland Europe.
“We are not here for the short term,” says Steve, who stated that one of the company’s key visions was “to build a profitable and sustainable business”.
This means that the company will continue to invest in the business and its staff, through both the opening of new stores and the continued enhancement of services and facilities across the existing portfolio.
Safestore have a very detailed property strategy to aid expansion. The next new store is due to open on Pentonville Road in London this April followed by two further stores in Paris during the summer. Several further potential sites are currently under active discussion.
They are also becoming increasingly innovative in attracting details of potential sites, including an offer to all Focus readers and everyone in the industry of £10,000 for the introduction of a site, which the company is not already aware of, and that it subsequently develops.
Details of potential sites should be communicated in the first instance to Neil Moulder, property director at property@safestore.co.uk
The company operates with approximately 60% freehold and 40% leasehold property. “We are not a property company, we are a retail business offering customers a service,” said Steve.
Safestore’s latest store opened at Staples Corner, London on 25 November 2004, adjacent to Big Yellow.
The store is bright throughout. Light is everything with continuous runs of florescent lighting in the passageways. This means that customers feel secure even when they visit the site in the middle of the night, as it is open 24 hours a day.
Security is very visible, with a bank of three monitors in reception and a swipe card entry system. Security is further enhanced by individually alarmed units. The store has 212 Active Supply and Design-built units varying from 10 sq ft to 200 sq ft, on the ground floor, and 210 on the first, with capacity for same-again on the top floor when it is fitted out.
Being on the Staples Corner Business Park its mix is inevitable weighted to business lets. A month after opening, its occupancy was 70% business to 30% domestic. No one is complaining, and the success follows the extensive marketing drive that North London area manager Andy Thomas and store manager Patrick Kennealy have led.
The team keep the store spick and span by carrying out their own cleaning; they also carried out the local marketing supported by the central marketing function. For instance, when the store first opened, they hired three Smart Cars and liveried them in the company colours and toured, in convoy, a five mile radius catchment area to carry out leaflet drops. With the company’s updated website and the marketing drive of the staff, the fill rate has exceeded target. “We’ve started very well,” says Andy.
The store has four staff – manager, assistant manager, and two reception staff. It is open 24/7, but the reception is open 8 to 6 Monday to Saturday, with late opening until 8pm Thursday, on Sundays 10 to 4 and Bank Holidays 8 to 2pm.
“We offer a one stop shop for businesses with offices now being refurbished, van-hire and units – it’s an ideal location for a small or start-up businesses,” says Patrick.
The new store endorses the company’s philosophy that it is a retail business. You can not fail to be impressed by the inviting shiny-floored, air conditioned, glass-walled reception area with over 80ft of well displayed storage items such as cartons, tape, bubble wrap and everything you would need to pack, store or move your goods. In addition Safestore offers it’s customers saver kits of cartons that come in three size options, all meaning a considerable saving over the individual price for the customer. Following the company’s philosophy the staff assemble the saver kit themselves.
“Our lowest price guarantee gives our managers confidence that they cannot be undersold,” said Steve, adding that if any competitors was to offer silly prices in competition to one of its stores Safestore would always go 5% under that.
Safestore simply will not be beaten on price or value.
Much of the integration process is now complete, but the company is continuing to work towards the “one company, one brand, one team” philosophy and building a first class business.
Steve says he is proud of what the team have achieved over the last few years but is now focussed on the future and continuing to improve the business for both customers and employees alike. We simply want Safestore to be the preferred choice of our employees and our customers.

This article first appeared in Focus, the official journal of the Self Storage Association. www.ssauk.com

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Conférence Annuelle du Self-Stockage 2005

SSAUK organise la conférence 2005, du 2 au 4 Mars 2005 à l’hôtel
Princesa Sofia, de Barcelone.

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Résultat du sondage sur la notoriété du self stockage.

Les résultats du sondage effectué en décembre 2004 donnent 59% des sondés estimant que la connaissance de la profession évolue lentement.
26 % estiment qu’elle évolue rapidement. Ce qui est encourageant c’est qu’il y a malgré tout une évolution sensible du taux de reconnaissance au sein de la population, même si cela reste insuffisant.

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Le marché du self-stockage en France

Le self-stockage existe en France depuis bientôt vingt ans, mais ce n’est que ces dix dernières années qu’il s’est vraiment développé.

Aujourd’hui, on compte pas moins de 110 sites ouverts en France, détenus par 31 entreprises de self-stockage. Toutefois le marché est capitalistiquement concentré, avec 58% des sites détenus par les trois principaux acteurs : Shurgard, Access, et Homebox. Il est aussi géographiquement concentré avec 54% des sites en région parisienne.

Après un grand nombre d’ouvertures en 2000, 2001, 2002, on a vu un ralentissement en 2003 et 2004. Cela s’explique par l’arrêt du développement de plusieurs intervenants comme Devon, Homebox, Access, et Une pièce en plus.
Les raisons de ce changement de stratégie sont multiples, mais la principale est tout simplement que le marché n’est pas encore là. Aucune des grandes enseignes n’arrive à gagner de l’argent sur l’exploitation lorsqu’elles intègrent la charge immobilière.

Avec une croissance de 50m² de plus loués par mois, la croissance des sites de self-stockage reste faible en France en comparaison avec les Etats Unis ou même l’Angleterre. Les raisons en sont la méconnaissance du grand public pour ce service et les prix pratiqués en moyenne deux fois supérieurs au Etats-Unis.

Avec le temps la grande majorité des sites de self stockage atteigne un seuil de remplissage qui reste en dessous de leur seuil de rentabilité, sans espoir de gagner de l’argent avant plusieurs années. L’exemple type, est ce site de 4 300 m² louables, qui a un seuil de rentabilité à 3 500 m², et qui à du mal à progresser de plus de 100 m² par an, alors qu’il n’a que 2 800 m² de loués. A ce jour moins de 15% des sites en France ont plus de 3000 m² loués.

Les acteurs du self-stockage :

Le leader français Shurgard, a pour ambition de développer chaque année une vingtaine de sites en France. Les difficultés pour trouver du foncier et pour obtenir les permis, ne lui ont pas permis ces dernières années d’ouvrir plus de huit sites par an. Shurgard pourrait se rattraper en rachetant Access, qui est à la vente depuis plusieurs mois.

Homebox est en pleine restructuration avec comme grand projet de mettre tous ses sites en location gérance. Les manageurs en place ont la primeur, mais nombreux seront ceux qui seront amenés à prendre en location gérance un autre site que celui qu’il gère à l’heure actuelle.

Box Avenue continue sont développement tout azimut avec l’ouverture de trois nouveaux sites cette année en région parisienne, un site à Nantes et un à Bordeaux en préparation pour 2005.

Annexx, le nouvel arrivant, ouvrira deux sites de plus en 2004 sur Toulouse, et trois sites pour 2005 sur Toulouse et Bordeaux.

Dans l’année qui vient le nombre de sites sur Bordeaux devrait donc passé de 2 à 7, sur un marché qui s’est développé très lentement jusqu’à présent. Ceci laisse présager une année 2005, riche en enseignement.

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ACCESS vend ses sites britanniques.

Des sources proche d’Access Self-Storage, affirment que l’intégralité de ses 30 sites britanniques, auraient été vendu à Precis Self-Storage

Les sites rachetés devraient être exploités sous l’enseigne UK self-storage. Le marché anglais est en pleine restructuration depuis 6 mois, avec notamment en juin 2004, le rachat de Mentmore par Safestore. Safestore est devenu le plus gros opérateur de self stockage au Royaume-Uni avec 68 sites.

Access a été crée en 1998 par la fusion de quatre opérateurs : Acorn, Abacus, Abri-Stock et Access. La société appartient à Security Capital Realty, elle même détenu par GE Capital.
En décembre 2003, Precis Self-Storage avait déjà acquis 12 des sites britanniques d’Access. Par la suite, deux autres sites Access était vendus à un autre opérateur de self stockage.

Quant au 17 sites français d’Access, les rumeurs vont bon train quant à leur avenir. Plusieurs opérateurs ont audités la branche française sans pour l’instant être arrivé à un accord avec Security Capital Realty.

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Shurgard Europe Forms a 240 Million Euro Development Joint Venture

Shurgard’s European subsidiary, closed a development joint venture with Crescent Euro Self Storage Investments II SARL, an investment vehicle sponsored by First Islamic Investment Bank, E.C., based in Manama, Bahrain (Crescent).

The joint venture, known as Second Shurgard SPRL (Second Shurgard) is expected to develop approximately 37 self storage properties in Europe through early 2006. Total capitalization of the joint venture is anticipated to be approximately Euro 240 million.

Second Shurgard will initially be funded with equity contributions of Euro 12.5 million from Shurgard Europe and Euro 50 million from Crescent, with the possibility to increase the commitment with additional equity of Euro 7.5 million from Shurgard and Euro 30 million from Crescent. The joint venture has obtained debt financing of Euro 140 million provided by Royal Bank of Scotland and a syndicate of banks, Euro 52 million of which is contingent upon the additional equity commitment. The debt financing is a non-recourse five-year term facility.

Pursuant to the terms of the joint venture agreement, the joint venture will invest in stores developed or to be developed in six European countries: Denmark, France, Germany, the Netherlands, Sweden, and the United Kingdom. Shurgard Europe has the exclusive right to manage these stores for a term of 20 years. Shurgard Europe will receive development and management fees from the joint venture during the investment period, in addition to various arrangement fees at closing. Shurgard Europe will also receive performance related fees based on the achievement of minimum levels of return, which shall be paid at the end of the life of the joint venture. Under the terms of the Agreement, on or before the fifth anniversary of the formation of the joint venture, the partners can either form another joint venture to hold the stabilized assets long-term, sell the assets to Shurgard Europe, or sell the assets to a third party subject to Shurgard’s long-term management contract. The sales price for the assets under each of the scenarios is their fair market value as determined by either mutual agreement or appraisal.

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Du changement au siège de Homebox.

Jean Pierre MINCEL le président de la FEDESSA, quitte son poste de Directeur général de Homebox

Courant septembre le Directeur Construction de Homebox, Christophe GAUDE, avait lui aussi quitté l’entreprise, pour reprendre la direction de Steel Storage France, au poste laissé vaquant par Marc LE DELLIOU.

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Trustees : met en place une offre globale de sécurité pour le self stockage.

La société Trustees est depuis le début de l’année 2004, officiellement le distributeur et installateur exclusif pour la France du système de contrôle d’accès PTI.
En effet, un accord de partenariat a été trouvé avec le groupe Steel Storage importateur exclusif de PTI pour l’Europe.

De part son passé dans le monde informatique et télécoms, et son activité actuelle d’importateur de produit de vidéosurveillance, de contrôle d’accès et d’intrusion, Gilles Plançon, le gérant de Trustees est train de mettre en place une solution globale unique de sécurité pour les centres de self stockage.

Sa parfaite connaissance des sites (Access, Une pièce en plus, Homebox, Devon, et Annexx) lui permet de mettre en place des systèmes complets de sécurité, tout en s’assurant de sa capacité à s’intégrer dans tous les sites grâce à sa modularité et simplicité.

Cette offre incomparable et sa compétence, vont très certainement faire de Gilles Plançon un interlocuteur incontournable de la sécurité en générale et plus principalement du contrôle d’accès pour le self stockage.

Trustees 14 Allée des Mourettes, 91210 Draveil , Tel: 01 69 52 93 80

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Shurgard Europe vient d’émettre pour 325 million d’Euros d’obligation.

Cette somme permettra de restructurer sa dette à hauteur de 310 million Euros.

Shurgard Europe completes the first securitisation of European self-storage properties.

Shurgard Europe is pleased to announce the successful closing of an investment grade securitisation totalling EUR 325 million. The debt issuance benefits from the strong performance of Shurgard’s core European portfolio and capitalises on the Company’s leading market position. Today, October 15, 2004, Shurgard Self Storage SCA (Shurgard Europe) closed the debt offering, raising a total of EUR 325 million. The transaction, arranged by Citigroup, was structured based on the current and future cash-flows and collateralisation of 101 self-storage assets located across six European countries.

The securitisation was structured within the existing corporate structure, without isolating the assets into newly created companies, thereby allowing Shurgard to maintain maximum operational flexibility. The debt has been structured into three tranches of seven year non-amortising floating-rate bonds and have been assigned the following ratings by Standard & Poor’s and Fitch Ratings: EUR 235 million rated AAA/AA and priced at 3-month Euribor + 0.35%; EUR 40 million rated A/A and priced at 3-month Euribor plus 0.75% and EUR 50 million rated BBB/BBB and priced at 3-month Euribor plus 1.10%. Proceeds will be used for repayment of Shurgard Europe’s outstanding indebtedness of EUR 310 million and for general corporate purposes. The bonds will mature in October 2011 with interest being paid on a quarterly basis starting in January 2005. The structure has been set up to allow for subsequent debt issuance.

The bonds are listed on the Irish Stock Exchange and were heavily oversubscribed, with over thirty banks, investment funds, and insurance companies across Europe purchasing bonds. Steven De Tollenaere, Chief Financial Officer of Shurgard Europe, explains: « This transaction has been very well received by the fixed income markets, with investors attracted to the relatively stable nature of the self-storage business. The transaction enables the Company to secure an attractive long term cost of capital going forward and enhances our ability to access the capital markets as we look to continue Shurgard’s growth in Europe.”

Bruno Roqueplo, President of Shurgard Europe, adds: « The successful re-financing of our core portfolio of assets represents a key milestone towards the implementation of our business plan. Going forward we will focus on enhancing the performance of the securitisation portfolio whilst at the same time looking to grow the business by adding carefully selected sites to the existing portfolio.The successful execution of this strategy will enable Shurgard to further strengthen its leading market position in Europe

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