Tuesday, March 11, 2014
By J. Hemmerdinger email@example.com
PORTLAND - Banks aren't the only companies selling foreclosed property.
Deeply discounted goods are also being sold by self-storage companies.
Last week, Uncle Bob's Self Storage in Westbrook, Portland Self Storage and Morrills Corner Self Storage publicly auctioned the contents of units because renters had repeatedly failed to pay monthly fees.
The auctions are a common yet relatively unseen side of the self-storage business, an industry that's closely aligned with the housing sector. And though data is hard to obtain, some insiders say auctions have increased since the economy soured and home foreclosures soared.
"Our business has increased dramatically with the downturn in the economy," said Justin Manning, president and owner of Yarmouth, Mass.-based Storage Auctions USA, which conducts auctions for self-storage companies.
Manning said some companies are holding twice as many auctions now as they did before the recession.
He said evicted homeowners often store items, then find they can't afford those bills either. It's common for customers to owe thousands of dollars on items that are worth far less.
According to Maine law, a storage company may sell off the contents of a unit if the "occupant" is in default for more than 45 days. Companies must notify occupants of the sale and post public notices.
Manning said the auction rate is about 3 percent to 5 percent of available units.
Every month, his firm holds auctions at roughly six storage companies in Maine, selling off six to eight units at each site. In all of New England, the company auctions roughly10,000 units a year.
Buyers typically include eBay resellers and flea market operators.
Storage companies in southern Maine declined to allow The Portland Press Herald to observe auctions, citing privacy concerns and the sensitive nature of selling others' belongings.
But insiders described the process.
On auction day, buyers, sometimes about a dozen, are given a moment's glance at the contents of each unit, said Bruce Pike, owner of Portland Self Storage and Morrills Corner Self Storage.
Then the bidding begins.
The units are sold in just moments, usually for $100 to $200, plus a 10 percent auctioneer's fee, said Steve Howe, manager of Cumberland Self Storage, which has locations in Brunswick and Portland. Occasionally, prices go as high as $650.
Manning said many buyers are expert judges of value.
"The savvy veterans know how it is packed, how deep it is and if it is packed with moving boxes," he said. "If it looks like a pile at the dump, it is a pile at the dump."
Sometimes, buyers hit the jackpot. Manning has seen motorcycles and $5,000 worth of tools sell for next to nothing.
A buyer must pay the storage company 50 percent of the purchase price on the spot, then empty the unit within a week.
The industry says auctions are an unfortunate but necessary part of the business. They help recoup losses and clear space for new customers.
"This is not a money maker. This is a finger in the dike," Manning said.
And auctions are a delicate subject.
"It's not something I enjoy. It's like a house foreclosure, but on a smaller sale. For some people, it's all their possessions," Pike said.
"Self-storage facilities want to promote families and moving; they don't want to advertise that if you don't pay your rent, you will be foreclosed on," said Manning.
The self-storage industry has suffered during the recession. Revenue flattened and stock prices of some publicly traded storage companies plummeted.
The stock of Sovran Self Storage, for instance, which operates under the Uncle Bob's name, fell from $62 per share in 2007 to $17 in 2009. The stock now trades at around $40.
Sovran had $195 million in revenue in 2009, down from $203 million in 2008.
According to the Alexandria, Va.-based Self Storage Association, there are 46,000 self-storage facilities in the United States and 58,000 worldwide.
Jonathan Hemmerdinger can be reached at 791-6316 or: