Store Pods compensation
Investors in Store Pods: take particular note of the urgent update at the end of this ‘review’
What are Store Pods?
Store Pods are self-storage units in a large building constructed specifically by Store First to house large numbers of these units, of differing sizes. They are similar in nature to ‘Big Yellow’ but tend to occupy ‘low visibility’ out-of-town locations in contrast to Big Yellow’s inner-city high profile buildings. Store Pods are predominantly situated in the north of England.
Who occupies the Store Pod units?
Anyone who needs self-storage space, whether for short or longer duration. The different sizes of pods in each location are designed to cater for differing needs of ‘tenants’.
So, what proposition has been on offer to Store Pod investors?
Investors purchase a long term lease of one or more Pods, paying an annual fee to the owner of the building regardless of whether or not the Pods are let to tenants. In return, investors are entitled to receive rental income from tenants of their Pod(s) assuming, of course, that their Pod(s) are occupied. When occupied a proportion of the rental income is retained by Store First in addition to annual lease payments from the investor.
What type of investor has been attracted to Store Pods?
All of the investors who are clients of United Claims Management have used money transferred from a pension scheme to invest in Store Pods. The pension schemes in question are typically Personal Pensions or benefits in the pension scheme of a previous employer. To enable the value of these pensions to be used to buy Store Pods it must first of all be transferred to a Self-Invested Personal Pension (SIPP) administered by a bespoke SIPP provider. These providers charge fees for various transactions but all charge annual management fees regardless of the possible absence of any investment income. These range upwards of £500 per annum.
‘ALERT’ by the Financial Conduct Authority (then known as the Financial Services Authority) in January 2013.
“In particular, we have seen financial advisers moving customers’ retirement savings to Self-Invested Personal Pensions (SIPPs) that invest wholly or primarily in high risk, often highly illiquid investments. Examples of these unregulated investments are diamonds, overseas property developments (such as Freedom Bay), store pods [our italics]….among other non-mainstream propositions.”
In other words, investments such as those in Freedom Bay may not be appropriate for low to medium risk investors.
Is the Store Pod proposition a profitable investment?
It would be, if an investor’s Pods enjoy a regular flow of tenants, but almost all of our ‘Store Pod clients’ report very little rental income, if any! Where this regrettable situation continues the (so-called) investment is providing little or no income yet the investor remains liable to pay annual lease fees to Store First and, where applicable, annual management fees to the SIPP provider.
But might the Store Pod investment come good in future?
It’s a possibility, of course, especially if more potential occupants become aware of the location of a Store First building and prefer it to competitors such as Big Yellow. How long it might take for this extra potential demand to materialise is anyone’s guess. So the question for Store Pod investors is, “Do I cut and run or stay and pray?”
Selling Store Pods: the options
It may be possible to sell Pods back to Store First after they have been held for 5 years but we have not been made aware of any successful sales of this nature.
If a Store Pod investor can’t find a willing buyer through other means the only plausible options are to sell the Pods through a specialist commercial property estate agent, either by offering them at an agreed fixed price, or through auction.
Store Pod values throughout 2016
Sales at an agreed fixed price
There have always been far too many difficulties for an estate agent to establish a fair market price. As there have been no direct comparisons on which to start a valuation an estate agent can only guess on a fair valuation. Accordingly, we know of no estate agent in the whole of the UK offering this service.
Specialist commercial property auction
A fundamental aspect of auctions is that where a type of property has a high number of willing sellers and a low number of willing buyers the prices achieved at auction will tend to be low. This is what happened to Store Pods sold through Pugh and Co, an auction firm.
In late 2015 and early 2016, prices of Store Pods were fetching only around 1/3 of their original purchase price. As disappointing as these results were for sellers, 2016 saw even lower prices as the months passed: the trickle of selling investors turned into a flood and willing buyers seem to have slowed to a trickle, at best.
Store Pod sales in 2017
The last few weeks in 2016 and the first weeks in 2017 have brought an extremely worrying development: at least one major SIPP provider has refused to accept investors’ instructions to enter their Pods into auction. We understand this stance stems from the Store Pods’ auction house anticipating demand from potential buyers to be so low (or even non-existent?) as to not merit entry of an unlimited number of Pods into their sales.
Where does all this leave Store Pod investors wanting to “cut and run?” (that is, sell their Pods)
The situation is changing rapidly and investors’ options currently appear to be heavily reduced or even completely removed. However, we will continue to explore certain potential opportunities that we hope will help our clients, new and old.
It is vital that Store Pod investors register their interest with United Claims Management for regular and reliable advice and guidance.
Depending on each investor’s circumstances – primarily the identity of the financial adviser ‘selling’ the Pods – we may consider a range of options for a compensation claim, although note that some avenues may be blocked – at least temporarily.