Sovran Retires Uncle Bob’s To Revitalize Image
When Robert Attea, Sovran Self Storage Chairman of the Board, and other members of the board and management rang the closing bell on the New York Stock Exchange on Aug. 16, it literally signaled the end of an era for the Buffalo real estate investment trust (REIT). It also marked the departure of a trusted but sometimes hamstrung brand name. As the closing bell pealed, Sovran celebrated the move-out of the old and in with the new. Looking to breathe new life into its brand, Sovran ushered out Uncle Bob’s Self Storage and welcomed in Life Storage®.
Venerable Uncle Bob lost a step in the Internet era and was retired at an age when most of us were still trying to figure out what we were going to do when we grow up. But in the current speed of business and technology, 30 is the new 60.
Reminiscent of the 1976 movie “Logan’s Run,” where youthful citizens are terminated at the age of 30, Uncle Bob couldn’t outrun a stodgy image for an Eastern-based company with its eyes fixed solidly on a western expansion.
Sovran was founded three decades ago when storage companies advertised almost exclusively in the Yellow Pages. As the 1980s closed, the company started looking for a name that would grab consumers’ attention and Uncle Bob’s was chosen because it seemed like a good idea at the time.
“The idea was to give managers a hook to talk to potential customers who called in,” says CEO David Rogers.
Some of them were borderline crank calls with managers fielding questions like “Are you Uncle Bob?” or “Is Aunt Jane there?”
“As hokey as it was, it got the conversation started and made managers feel a little more into the conversation in a quicker way,” Rogers says.
Not A Good Fit Today
As Sovran entered larger markets and transitioned to a central call center and sophisticated revenue management technology, the old, reliable name eventually became old and tired. “The Uncle Bob’s name belied our progress and our technology,” Rogers observes. “We didn’t need Uncle Bob’s anymore. It wasn’t the image we wanted to project.”
Uncle Bob’s was a reassuring name, yet had a small-town feel that was perhaps better suited for bygone days. “Uncle Bob was probably a hip dude in the ‘70s and ‘80s when self-storage had a different image, and that probably worked then,” says Shawn Hill, a principal with The BSC Group, a real estate financing advisor for self-storage clients. “Uncle Bob’s made you feel like that was a safe place to put your stuff and Uncle Bob was going to look after it.”
Sovran spent nearly three years researching brand names and testing some of them in surveys. What they found confirmed some of their suspicions.
“As much as we liked Uncle Bob’s name, there was a certain amount of negativity when we did our studies,” Rogers reports, revealing that 16 percent of potential customers had either an unfavorable or negative impression of the name. That was a significant number and an attention-getter for Sovran’s executives.
The name wasn’t very hip with some investors. “We’ve suffered for 21 years that we’ve been public as having two names: Sovran Self Storage was the corporate name and Uncle Bob’s was the trade name. That was one of the prime drivers for us to change the name,” Rogers says.
Then, in July, Sovran acquired LifeStorage LP, a privately-owned operator based in Chicago, for $1.3 billion. Along with the 84 stores spread across the country, Sovran also retained the name, although as two words instead of one.
“We liked the name before we knew the company was for sale,” Rogers reveals. “It just fits. It gives one a sense of comfort. Most people are giving you their lives, their memories. The connotation is so strong that we thought this is a very compelling name.”
Others in he industry are onboard with the new name as well.
“I love the name,” says Hill. “Everybody I’ve talked to feels the same way. It’s self explanatory—Life Storage is a place to store stuff that’s important in life. As the industry has changed and gotten much more progressive, the name change seems more suitable for the current climate and the way investors think about this industry with a more institutional focus.”
Sovran even had a few offers to buy the name when the acquisition was announced. “Nobody expected us to convert Uncle Bob’s brand,” Rogers says. “The name was well thought of in the industry.”
Of the 84 LifeStorage properties added to the REIT’s portfolio, 55 stores are in the operator’s established markets. The company also gained a presence in two new markets: Las Vegas and Sacramento, Calif.
Sovran had an eye on California for several years; this acquisition and other previous transactions give Life Storage a foothold in a potentially lucrative market.
“We’ve built a quick presence in LA,” Rogers says. “We had no stores Jan. 1, and then we went from zero to 12 in LA.”
Early this year, Sovran acquired several portfolios that netted the company nine stores in the Los Angeles area. The LifeStorage acquisition gives the REIT three facilities in Los Angeles and 10 stores in the Sacramento area.
The REIT, which is the fifth largest operator in the country, now operates approximately 650 self-storage facilities in 29 states.
“We like to get scale when we get into a market,” Rogers says. “Eight or 10 stores in each of those markets is probably sufficient scale—nowhere near what we want to top out at—but at least we’ve got footholds in LA and Sacramento. We’ll look to buy one-off and two-off properties in each of those markets now that we have sufficient scale.”
The name change appears to come at an ideal time as the company enters new Western markets where the Uncle Bob’s brand had virtually no presence, but changing the name of a well-established business has its share of risks. For openers, Life Storage estimates it will cost $22 million to make the conversion from Uncle Bob’s to the new brand name. There is signage to be changed, customers to be notified of the new name, and the company’s fleet of rental trucks must be rewrapped.
Timing is critical as well. “We wanted to launch in a non-busy time, when the phones are ringing less and Internet searches are less. We’re launching at the tail end of the high-volume season,” Rogers says.
The rebranding is being rolled out in 22 markets over a nine-month period. Buffalo’s 13 stores serve as the beta market, where signage and lighting are tested and other factors weighed.
With Sovran’s aggressive transition from Yellow Pages advertising to the Internet over the past seven years, moving away from a brand with name recognition might be dicey.
“The Uncle Bob’s brand that we’re sunsetting has a lot of history and traffic and name recognition, so it’s risky to sunset that,” Rogers acknowledges. “Fortunately, Life Storage has traction in a lot of markets where we already have a presence. It’s a lot easier to do this with the Web than it would have been in the old days with Yellow Pages.”
Rogers explains that companies used to wait a year to roll out a new brand because of the annual turnover of the publications. It wouldn’t make sense to put up signage for the new brand when current advertising is geared for the old name.
“The major risk we’ll have is a little bit of breakage from the Uncle Bob’s name brand on organic searches,” Rogers says. “You can certainly spend your way into paid advertising, and we plan to accelerate that. We do it all the time when we buy new stores and we change their name over.”
Wall Street Worries
Another major risk in a name change is the reaction of investors. Numerous factors affect a REIT’s stock price, many of which are outside the control of the company. Nevertheless, jittery investors may overreact to a single event such as a name change.
From the time of the LifeStorage acquisition and the announcement of the name change on July 18 until late August, Life Storage’s stock price declined approximately 16 percent.
It would be a difficult case to make that the new name contributed to the stock’s performance since all the other self-storage REITs suffered declines during that period. The stocks of CubeSmart and Extra Space Storage fell approximately 13 percent during that period while Public Storage sank more than 10 percent and National Storage Affiliates dropped nine percent.
“If you look across the stock market, maybe people feel like things are getting a little overheated and some investors are pulling back or trying to be a little defensive, which is impacting a lot of companies across many different industries,” Hill says. “If you look back at the runs these storage REITs have had over the extended horizon and not just this summer, they’ve generally been on a tear. So maybe there’s room for a little pullback.”
Indeed, over a 20-year period, the self-storage REITs consistently have ranked among the top 20 of more than 180 REITs. During that span, Sovran ranked at number 12.
But it appears the self-storage sector might have lost some of its lofty status in 2016. While the FTSE NAREIT All Equity REITs Index gained 13.68 percent in the first six months of the year, the self-storage sector recorded a modest 4.46 percent growth.
Numerous real estate professionals, however, like the sector’s long-range prospects because of its fundamentals and attractive cash flow. It’s possible Life Storage shareholders and some large investors may not fully appreciate the upside of the acquired portfolio.
“Certainly, it was an aggressive transaction; but if you look at the value of different components, it makes sense,” Hill says. “The rebranding will create value; there is value in entering new markets; there is value in gaining immediate scale on the West Coast; the overall collateral quality of the assets in their existing markets is improved; and now they can potentially prune the portfolio and replace older assets with newer, better locations. The Sovran executives may see some value in areas where it’s not immediately obvious to everyone, and I don’t think it’s a huge surprise that Wall Street isn’t rewarding them for it immediately.”
Marketing The Name
While there are some obstacles to hurdle, the name change paid immediate dividends as far as Rogers is concerned. “It helped retain virtually all of the managers at LifeStorage when we took over. They had a proud company heritage and it was a well run company,” he says. “It’s unsettling enough when you have a new owner. We put salve on a lot of wounds when we said we were keeping the name.”
Appeasing employees and investors is one side of the rebranding equation. Customers represent the other side. If potential customers are confused about the company name, they are liable to quickly move on to the next storage listing.
Rogers reports that more than 60 percent of existing customers have been with the company for longer than a year. These tenants will be notified of the name change, primarily by email. On-site signage will announce the change and managers are on hand to answer questions and concerns.
“It’s the new folks—the 40 percent of our space that we need to refill as folks move out—and that’s where our risk is,” Rogers says.
A marketing campaign is being put into play to announce the rebranding. Marketing will include promotions with local sports teams, charities, and community events. As Life Storage makes the change over in each market, decals on the company’s fleet trucks will be changed to reflect the new brand. These will serve as moving billboards to introduce the new name to consumers.
A rebranded Life Storage website (www.lifestorage.com) launched in August depicting the new logo and listing the newly acquired properties.
Rogers believes the new name will attract some of the potential customers who may have had a negative impression of Uncle Bob’s. “We thought even if we convert a small percentage of those, we’re hoping to see in the range of three-quarters percent to one and a quarter percent increase in occupancy over the next two or three years,” he says. “I think it will help and not turn those people off. That should be enough to move the needle.”
The new name will take some getting used to. In fact, Rogers admits stumbling over the name of his company, as when he introduced himself a few days after making the official change. “This is Dave Rogers from Sov…er, Life Storage. I’m having a hard time the last couple of days getting that change right,” he says.
As the company expands into new territories and eventually phases out Uncle Bob for good, the REIT is hoping “Life Storage” rolls easily off the tongues of investors as well as new customers.
Why Some Famous Brands Changed Their Names
Many companies large and small have changed their brand names for a variety of reasons. Some had no choice because their brand names couldn’t survive the times. Ayds diet candy and Isis Chocolates had to change for obvious reasons.
Others changed their names because of mergers or they were outdated or they didn’t fit the current business climate.
When self-storage REIT U-Store-It entered new markets, the company inevitably encountered competing facilities with similar names, so eventually it made sense to change the corporate name. Thus, CubeSmart was born.
Some of the most recognizable brands in the world were conceived with names like BackRub, AuctionWeb, and Blue Ribbon Sports. Here are a few well-known brands along with their long-forgotten monikers, as reported by AdWeek and CNBC.
Launched in 1995, AuctionWeb was one of four sites housed under an umbrella company called eBay Internet. Spurred by the media referring to AuctionWeb as eBay, the company made the name change official in 1997.
In addition to being a popular movie and soundtrack, Sound of Music also was the name of an electronics store specializing in high fidelity stereos. When Sound of Music’s largest and most profitable store was hit by a tornado, the store held a “Tornado Sale” in its parking lot with a selection of “best buys” on damaged and excess stock. The company made more money during this sale in four days than it did in a typical month. The store was renamed Best Buy in 1983.
Blue Ribbon Sports originally operated as a distributor for a Japanese shoemaker. The company later took on the name of the Greek goddess of victory: Nike.
Jerry Yang and David Filo were PhD students at Stanford University when they created an Internet search engine they called Jerry’s Guide to the World Wide Web. It eventually became one of the world’s largest search engines and was soon renamed Yahoo, which stands for “Yet Another Hierarchical Officious Oracle”.
Another famous search engine started life on the Stanford campus as BackRub in 1996. A year later, BackRub became too large to operate on the Stanford servers that hosted the website, so the founders found larger quarters and registered a new domain name. Today we simply refer to it as Google.
David Lucas is a freelance writer based in Phoenix, Arizona. He is a frequent contributor to all of MiniCo’s publications.