Global Self Storage Reports Full Year 2023 Results
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Insights
Observing the reported financials, the decrease in total revenues and same-store revenues for Q4 2023 indicates a challenging market environment for Global Self Storage. The competitive move-in rate environment, coupled with general economic headwinds such as inflation and rising interest rates, appears to have exerted downward pressure on the company's ability to increase rental income. However, the increase in net income due to unrealized gains in marketable securities and higher interest income suggests a diversified income strategy that may buffer operational revenue fluctuations.
The occupancy rates and tenant duration data present a mixed picture. While there is a slight decrease in same-store occupancy year-over-year, the increase in occupancy to 92.1% as of March 15, 2024 and the increase in average tenant duration indicate a stable customer base. This stability could be a positive signal for investors, as it suggests tenant loyalty and a potentially steady revenue stream. The maintenance of the quarterly dividend also suggests confidence by the management in the company's cash flow stability.
From a financial perspective, the decline in FFO and AFFO is notable. FFO and AFFO are critical measures for real estate investment trusts (REITs), as they provide a clearer picture of the company's operational performance by excluding gains or losses from property sales or changes in the value of marketable securities. The decrease in these metrics may raise concerns about the company's operational efficiency and its ability to sustain dividend payouts in the long term.
Additionally, the increase in operating expenses, particularly due to employment costs and property taxes, suggests margin compression. This could be a concern for profitability moving forward, especially if the company is unable to pass these costs onto tenants through higher rental rates. The company's strategic focus on acquisitions and partnerships, as well as its revenue rate management program and marketing initiatives, will be important to monitor as they could significantly influence future financial performance.
The real estate sector and specifically the self-storage segment, is sensitive to economic cycles. Global Self Storage's strategic business plan, which includes funding acquisitions and expansion projects, indicates a growth-oriented approach. The company's robust capital resources, with a healthy mix of cash, marketable securities and available credit, position it to take advantage of acquisition opportunities in a potentially oversupplied market. However, the success of this strategy hinges on the company's ability to identify and integrate acquisitions that enhance shareholder value without overextending its financial leverage.
Investors should also consider the company's use of digital and grass roots marketing strategies to improve occupancy rates. While these methods appear to have been successful thus far, the effectiveness of these strategies in a sustained competitive pricing environment remains to be seen. The reliance on proprietary revenue rate management programs to offset decreased move-in rates is innovative, but it is not clear how much flexibility remains to raise rates without affecting occupancy levels.
Strong Occupancy Rates and Tenant Duration Drove Same-Store Revenue Growth Despite Competitive Move-in Rate Environment
MILLBROOK, NY / ACCESSWIRE / March 26, 2024 / Global Self Storage, Inc. (NASDAQ:SELF), a real estate investment trust that owns, operates, manages, acquires, and redevelops self-storage properties, reported results for the fourth quarter and full year ended December 31, 2023. All comparisons are to the same year-ago period unless otherwise noted.
Q4 2023 Highlights
- Total revenues decreased
2.7% to$3.0 million . - Net income increased to
$1.1 million or$0.10 per diluted share from$440,000 or$0.04 per basic and diluted share. - Funds from operations (FFO) decreased
13.0% to$0.9 million or$0.08 per diluted share (see definition of this and other non-GAAP measures and their reconciliation to GAAP, below). - Adjusted FFO (AFFO), a non-GAAP term, decreased
9.1% to$1.0 million or$0.09 per diluted share. - Same-store revenues decreased
2.5% to$3.0 million . - Same-store net operating income (NOI), a non-GAAP term, decreased
7.1% to$1.8 million . - Same-store occupancy at December 31, 2023 was
89.3% compared to89.6% at December 31, 2022 as the company optimized rental revenue. As of March 15, 2024, same-store occupancy increased to92.1% . - Same-store average tenant duration of stay at December 31, 2023 was approximately 3.4 years up from approximately 3.3 years at December 31, 2022.
- Maintained quarterly dividend of
$0.07 25 per common share. - Capital resources at December 31, 2023 totaled approximately
$24.3 million , comprised of$7.0 million in cash, cash equivalents and restricted cash;$2.8 million in marketable securities; and$14.5 million available under the company's revolving credit facility.
Full Year 2023 Highlights
- Total revenues increased
2.1% to$12.2 million . - Net income totaled
$2.9 million or$0.26 per diluted share from$2.1 million or$0.19 . - FFO decreased
7.2% to$4.2 million or$0.38 per diluted share. - AFFO decreased
6.9% to$4.4 million or$0.40 per diluted share. - Same-store revenues increased
2.1% to$12.1 million . - Total same-store revenue per leased square foot increased
2.4% to$16.34 . - Same-store NOI decreased
1.7% to$7.6 million .
Dividend
On March 1, 2024, the company declared a quarterly dividend of
Company Objective
The objective of the company is to increase value over time for the benefit of its stockholders. Toward this end, the company will continue to execute its strategic business plan, which includes funding acquisitions, either directly or through joint ventures, and expansion projects at its existing properties. The company's board of directors regularly reviews the strategic business plan, with topics and metrices that include capital formation, debt versus equity ratios, dividend policy, use of capital and debt, FFO and AFFO performance, and optimal cash levels.
The management of Global Self Storage believes that the company's continued operational performance and capital resources position it well to continue to pursue its strategic business plan.
Management Commentary
"In 2023, we generated record annual same-store revenue despite a competitive move-in rate environment and general economic headwinds related to inflation and interest rates," stated Global Self Storage president and CEO, Mark C. Winmill. "We saw lower move-in rental rates year-over-year across the self-storage industry, but we were able to partially offset decreases in our move-in rates with our proprietary revenue rate management program.
"Our strong occupancy rate for the year overall was a result of our balanced approach of both digital and grass roots marketing designed to attract high-quality tenants who are more price resilient and stay for a longer duration. This helped drive a record same-store average tenant duration of stay, which was a peer-leading 3.4 years at year end. Our West Henrietta occupancy in particular increased nine percentage points to
"We anticipate our overall average occupancy rates will continue to improve this year, with this strengthening our pricing power. Supporting this outlook is our belief that our local grass roots marketing, which includes distribution of flyers, LED reader boards and participation in community programs, is more effective and better utilized by us than our peers for attracting high-quality tenants.
"On the digital marketing front, we re-launched our website in Q4 with an enhanced user interface designed for better engagement and utilization of our now more than 2,700 tenant Google reviews, which has increased by over 160 reviews since December 31, 2023. Our reviews are a great asset as many of our properties have hundreds of Google reviews and our properties have a combined average rating of more than 4.8 out of 5 stars.
"We are planning for the heightened competitive pricing environment to persist, with continued pressure on move-in rates and increased marketing spend aimed at attracting high-quality tenants. We're also implementing measures to manage expenses amidst ongoing inflationary challenges.
"To be sure, these challenges are not unique to us but are industry wide. In that way, they also have a positive aspect in how we see them creating opportunities for favorable acquisitions and partnerships. Supported by our robust financial position, we're actively pursuing potential self-storage property acquisitions in select regions across the United States, and particularly where supply growth is limited and competition from other professionally managed operators is generally less.
"As we progress through the year, we expect to continue to benefit from our revenue rate management program, enhanced website, and various marketing initiatives. Our commitment to offering a seamless, secure, and customer-centric experience is unwavering, which we believe helps us attract high-quality tenants. Our comprehensive marketing strategies and the potential for growth through acquisitions makes us confident that our professional management will continue to build long-term shareholder value."
Q4 2023 Financial Summary
Total revenues decreased
Total operating expenses increased
Operating income decreased
Net income increased to
As of December 31, 2023, the company's capital resources totaled approximately
Q4 2023 Same-Store Results
As of December 31, 2023, the company owned 12 same-store properties and managed one third-party-owned property, and there were no non-same-store properties.
For the fourth quarter of 2023, same-store revenues decreased
Same-store cost of operations increased
Same-store NOI decreased
Same-store occupancy at December 31, 2023 increased to
Same-store average duration of tenant stay at December 31, 2023 was approximately 3.4 years compared to approximately 3.3 years at December 31, 2022.
For a reconciliation of net income to same-store NOI see, "Reconciliation of GAAP Net Income to Same-Store Net Operating Income," below.
Q4 2023 Operating Results
Net income in the fourth quarter of 2023 increased to
Property operations expense increased to
General and administrative expenses increased to
Business development costs increased to
Interest expense increased to
FFO decreased
AFFO decreased
Full Year 2023 Financial Summary
For the full year of 2023, total revenues increased
Total operating expenses increased
Operating income decreased
Net income increased to
Full Year 2023 Same-Store Results
For the full year of 2023, same-store revenues increased
Same-store cost of operations increased
Same-store NOI decreased
For a reconciliation of net income to same-store NOI see, "Reconciliation of GAAP Net Income to Same-Store Net Operating Income," below.
Full Year 2023 Operating Results
Net income in the full year of 2023 increased to
Property operations expense increased to
General and administrative expenses increased to
Business development costs decreased to
Interest expense increased to
FFO decreased
AFFO decreased
Q4 2023 and Full Year 2023 FFO and AFFO (Unaudited)
| Three Months | Three Months | Twelve Months | Twelve Months | |||||||||
| Ended | Ended | Ended | Ended | |||||||||
| December 31, 2023 | December 31, 2022 | December 31, 2023 | December 31, 2022 | |||||||||
Net income | $ | 1,097,400 | $ | 440,451 | $ | 2,938,769 | $ | 2,057,723 | ||||
Eliminate items excluded from FFO: | ||||||||||||
Unrealized (gain) loss on marketable equity securities | (574,142 | ) | 227,144 | (408,876 | ) | 1,117,029 | ||||||
Depreciation and amortization | 409,420 | 404,897 | 1,634,044 | 1,619,239 | ||||||||
Gain on Paycheck Protection Program (PPP) loan forgiveness | - | - | - | (307,210 | ) | |||||||
FFO attributable to common stockholders | 932,678 | 1,072,492 | 4,163,937 | 4,486,781 | ||||||||
Adjustments: | ||||||||||||
Compensation expense related to stock-based awards | 73,324 | 42,809 | 199,752 | 173,921 | ||||||||
Business development, capital raising, and property acquisition costs | 8,928 | 1,632 | 20,080 | 48,340 | ||||||||
AFFO attributable to common stockholders | $ | 1,014,930 | $ | 1,116,933 | $ | 4,383,769 | $ | 4,709,042 | ||||
Earnings per share attributable to common stockholders - basic | $ | 0.10 | $ | 0.04 | $ | 0.26 | $ | 0.19 | ||||
Earnings per share attributable to common stockholders - diluted | $ | 0.10 | $ | 0.04 | $ | 0.26 | $ | 0.19 | ||||
FFO per share - diluted | $ | 0.08 | $ | 0.10 | $ | 0.38 | $ | 0.41 | ||||
AFFO per share - diluted | $ | 0.09 | $ | 0.10 | $ | 0.40 | $ | 0.43 | ||||
Weighted average shares outstanding - basic | 11,057,928 | 11,025,477 | 11,045,699 | 10,845,884 | ||||||||
Weighted average shares outstanding - diluted | 11,096,619 | 11,071,042 | 11,087,217 | 10,900,041 | ||||||||
Additional Information
Additional information about the company's fourth quarter and full year of 2023 results, including financial statements and related notes, is available on Form 10-K as filed with the U.S. Securities and Exchange Commission and posted to the investor relations section of the company's website.
About Global Self Storage
Global Self Storage is a self-administered and self-managed REIT that owns, operates, manages, acquires, and redevelops self-storage properties. The company's self-storage properties are designed to offer affordable, easily accessible and secure storage space for residential and commercial customers. Through its wholly owned subsidiaries, the company owns and/or manages 13 self-storage properties in Connecticut, Illinois, Indiana, New York, Ohio, Pennsylvania, South Carolina, and Oklahoma.
For more information, go to ir.globalselfstorage.us or visit the company's customer site at www.globalselfstorage.us. You can also follow Global Self Storage on X, LinkedIn and Facebook.
Non-GAAP Financial Measures
Funds from Operations ("FFO") and FFO per share are non-GAAP measures defined by the National Association of Real Estate Investment Trusts ("NAREIT") and are considered helpful measures of REIT performance by REITs and many REIT analysts. NAREIT defines FFO as a REIT's net income, excluding gains or losses from sales of property, and adding back real estate depreciation and amortization. The Company also excludes unrealized gains on marketable equity securities and gains relating to PPP loan forgiveness. FFO and FFO per share are not a substitute for net income or earnings per share. FFO is not a substitute for GAAP net cash flow in evaluating our liquidity or ability to pay dividends, because it excludes financing activities presented on our statements of cash flows. In addition, other REITs may compute these measures differently, so comparisons among REITs may not be helpful. However, the Company believes that to further understand the performance of its stores, FFO should be considered along with the net income and cash flows reported in accordance with GAAP and as presented in the Company's financial statements.
Adjusted FFO ("AFFO") and AFFO per share are non-GAAP measures that represent FFO and FFO per share excluding the effects of stock-based compensation, business development, capital raising, and acquisition related costs and non-recurring items, which we believe are not indicative of the Company's operating results. AFFO and AFFO per share are not a substitute for net income or earnings per share. AFFO is not a substitute for GAAP net cash flow in evaluating our liquidity or ability to pay dividends, because it excludes financing activities presented on our statements of cash flows. We present AFFO because we believe it is a helpful measure in understanding our results of operations insofar as we believe that the items noted above that are included in FFO, but excluded from AFFO, are not indicative of our ongoing operating results. We also believe that the analyst community considers our AFFO (or similar measures using different terminology) when evaluating us. Because other REITs or real estate companies may not compute AFFO in the same manner as we do, and may use different terminology, our computation of AFFO may not be comparable to AFFO reported by other REITs or real estate companies. However, the Company believes that to further understand the performance of its stores, AFFO should be considered along with the net income and cash flows reported in accordance with GAAP and as presented in the Company's financial statements.
We believe net operating income or "NOI" is a meaningful measure of operating performance because we utilize NOI in making decisions with respect to, among other things, capital allocations, determining current store values, evaluating store performance, and in comparing period-to-period and market-to-market store operating results. In addition, we believe the investment community utilizes NOI in determining operating performance and real estate values and does not consider depreciation expense because it is based upon historical cost. NOI is defined as net store earnings before general and administrative expenses, interest, taxes, depreciation, and amortization.
NOI is not a substitute for net income, net operating cash flow, or other related GAAP financial measures, in evaluating our operating results.
Same-Store Self Storage Operations Definition
We consider our same-store portfolio to consist of only those stores owned and operated on a stabilized basis at the beginning and at the end of the applicable periods presented. We consider a store to be stabilized once it has achieved an occupancy rate that we believe, based on our assessment of market-specific data, is representative of similar self storage assets in the applicable market for a full year measured as of the most recent January 1 and has not been significantly damaged by natural disaster or undergone significant renovation or expansion. We believe that same-store results are useful to investors in evaluating our performance because they provide information relating to changes in store-level operating performance without taking into account the effects of acquisitions, dispositions, or new ground-up developments. At December 31, 2023, we owned twelve same-store properties and zero non same-store properties. The Company believes that by providing same-store results from a stabilized pool of stores, with accompanying operating metrics including, but not limited to, variances in occupancy, rental revenue, operating expenses, NOI, etc., stockholders and potential investors are able to evaluate operating performance without the effects of non-stabilized occupancy levels, rent levels, expense levels, acquisitions, or completed developments. Same-store results should not be used as a basis for future same-store performance or for the performance of the Company's stores as a whole.
Cautionary Note Regarding Forward Looking Statements
Certain information presented in this press release may contain "forward-looking statements" within the meaning of the federal securities laws including, but not limited to, the Private Securities Litigation Reform Act of 1995. Forward looking statements include statements concerning the company's plans, objectives, goals, strategies, future events, future revenues or performance, capital expenditures, financing needs, plans or intentions, and other information that is not historical information. In some cases, forward looking statements can be identified by terminology such as "believes," "plans," "intends," "expects," "estimates," "may," "will," "should," "anticipates," or the negative of such terms or other comparable terminology, or by discussions of strategy. All forward-looking statements by the company involve known and unknown risks, uncertainties and other factors, many of which are beyond the control of the company, which may cause the company's actual results to be materially different from those expressed or implied by such statements. The company may also make additional forward looking statements from time to time. All such subsequent forward-looking statements, whether written or oral, by the company or on its behalf, are also expressly qualified by these cautionary statements. Investors should carefully consider the risks, uncertainties, and other factors, together with all of the other information included in the company's filings with the Securities and Exchange Commission, and similar information. All forward-looking statements, including without limitation, the company's examination of historical operating trends and estimates of future earnings, are based upon the company's current expectations and various assumptions. The company's expectations, beliefs and projections are expressed in good faith, but there can be no assurance that the company's expectations, beliefs and projections will result or be achieved. All forward looking statements apply only as of the date made. The company undertakes no obligation to publicly update or revise forward looking statements which may be made to reflect events or circumstances after the date made or to reflect the occurrence of unanticipated events. The amount, nature, and/or frequency of dividends paid by the company may be changed at any time without notice.
Company Contact:
Thomas O'Malley
Chief Financial Officer
Global Self Storage
1 (212) 785-0900, ext. 267
Email Contact
Investor Relations Contact:
Ron Both
CMA Investor Relations
Tel (949) 432-7566
Email Contact
Media Contact:
Tim Randall
CMA Media Relations
Tel (949) 432-7572
Email Contact
GLOBAL SELF STORAGE, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
| December 31, 2023 | December 31, 2022 | |||||||
Assets | ||||||||
Real estate assets, net | $ | 55,481,220 | $ | 56,884,160 | ||||
Cash and cash equivalents | 6,921,779 | 6,363,610 | ||||||
Restricted cash | 106,767 | 151,397 | ||||||
Investments in securities | 2,775,029 | 2,366,153 | ||||||
Accounts receivable | 169,410 | 168,299 | ||||||
Prepaid expenses and other assets | 629,196 | 479,458 | ||||||
Interest rate cap | 50,881 | 123,152 | ||||||
Line of credit issuance costs, net | 50,801 | 152,402 | ||||||
Goodwill | 694,121 | 694,121 | ||||||
Total assets | $ | 66,879,204 | $ | 67,382,752 | ||||
Liabilities and stockholders' equity | ||||||||
Note payable, net | $ | 16,901,219 | $ | 17,420,854 | ||||
Accounts payable and accrued expenses | 1,731,958 | 1,622,784 | ||||||
Total liabilities | 18,633,177 | 19,043,638 | ||||||
Commitments and contingencies | ||||||||
Stockholders' equity | ||||||||
Preferred stock, | - | - | ||||||
Common stock, | 111,535 | 111,091 | ||||||
Additional paid in capital | 49,229,020 | 49,029,712 | ||||||
Accumulated deficit | (1,094,528 | ) | (801,689 | ) | ||||
Total stockholders' equity | 48,246,027 | 48,339,114 | ||||||
Total liabilities and stockholders' equity | $ | 66,879,204 | $ | 67,382,752 | ||||
GLOBAL SELF STORAGE, INC.
CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME
(Unaudited)
| Three Months Ended | Three Months Ended | Year Ended | Year Ended | |||||||||||||
| December 31, 2023 | December 31, 2022 | December 31, 2023 | December 31, 2022 | |||||||||||||
Revenues | ||||||||||||||||
Rental income | $ | 2,861,319 | $ | 2,943,291 | $ | 11,719,165 | $ | 11,485,511 | ||||||||
Other property related income | 98,789 | 93,869 | 392,577 | 375,571 | ||||||||||||
Management fees and other income | 16,262 | 21,550 | 78,973 | 83,768 | ||||||||||||
Total revenues | 2,976,370 | 3,058,710 | 12,190,715 | 11,944,850 | ||||||||||||
Expenses | ||||||||||||||||
Property operations | 1,174,658 | 1,115,702 | 4,549,038 | 4,169,182 | ||||||||||||
General and administrative | 703,335 | 688,516 | 2,876,300 | 2,580,899 | ||||||||||||
Depreciation and amortization | 409,420 | 404,897 | 1,634,044 | 1,619,239 | ||||||||||||
Business development | 8,928 | 1,632 | 20,080 | 48,340 | ||||||||||||
Total expenses | 2,296,341 | 2,210,747 | 9,079,462 | 8,417,660 | ||||||||||||
Operating income | 680,029 | 847,963 | 3,111,253 | 3,527,190 | ||||||||||||
Other income (expense) | ||||||||||||||||
Dividend and interest income | 70,085 | 27,681 | 265,046 | 120,575 | ||||||||||||
Unrealized gain/(loss) on marketable equity securities | 574,142 | (227,144 | ) | 408,876 | (1,117,029 | ) | ||||||||||
Interest expense | (226,856 | ) | (208,049 | ) | (846,406 | ) | (780,223 | ) | ||||||||
Gain on Paycheck Protection Program (PPP) loan forgiveness | - | - | - | 307,210 | ||||||||||||
Total other income (expense), net | 417,371 | (407,512 | ) | (172,484 | ) | (1,469,467 | ) | |||||||||
Net income and comprehensive income | $ | 1,097,400 | $ | 440,451 | $ | 2,938,769 | $ | 2,057,723 | ||||||||
Earnings per share | ||||||||||||||||
Basic | $ | 0.10 | $ | 0.04 | $ | 0.26 | $ | 0.19 | ||||||||
Diluted | $ | 0.10 | $ | 0.04 | $ | 0.26 | $ | 0.19 | ||||||||
Weighted average shares outstanding | ||||||||||||||||
Basic | 11,057,928 | 11,025,477 | 11,045,699 | 10,845,884 | ||||||||||||
Diluted | 11,096,619 | 11,071,042 | 11,087,217 | 10,900,041 | ||||||||||||
Reconciliation of GAAP Net Income to Same-Store Net Operating Income
The following table presents a reconciliation of same-store net operating income to net income as presented on the company's consolidated statements of operations for the periods indicated (unaudited):
| For the Three Months Ended December 31, | For the Twelve Months Ended December 31, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
Net income | $ | 1,097,400 | $ | 440,451 | $ | 2,938,769 | $ | 2,057,723 | ||||||||
Adjustments: | ||||||||||||||||
Management fees and other income | (16,262 | ) | (21,550 | ) | (78,973 | ) | (83,768 | |||||||||
General and administrative | 703,335 | 688,516 | 2,876,300 | 2,580,899 | ||||||||||||
Depreciation and amortization | 409,420 | 404,897 | 1,634,044 | 1,619,239 | ||||||||||||
Business development | 8,928 | 1,632 | 20,080 | 48,340 | ||||||||||||
Dividend and interest income | (70,085 | ) | (27,681 | ) | (265,046 | ) | (120,575 | |||||||||
Unrealized (gain) loss on marketable equity securities | (574,142 | ) | 227,144 | (408,876 | ) | 1,117,029 | ||||||||||
Interest expense | 226,856 | 208,049 | 846,406 | 780,223 | ||||||||||||
Gain on Paycheck Protection Program (PPP) loan forgiveness | - | - | - | (307,210 | ||||||||||||
Total same-store net operating income | $ | 1,785,450 | $ | 1,921,458 | $ | 7,562,704 | $ | 7,691,900 | ||||||||
| For the Three Months Ended December 31, | For the Twelve Months Ended December 31, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
Same-store revenues | $ | 2,960,108 | $ | 3,037,160 | $ | 12,111,742 | $ | 11,861,082 | ||||||||
Same-store cost of operations | $ | 1,174,658 | $ | 1,115,702 | $ | 4,549,038 | $ | 4,169,182 | ||||||||
Total same-store net operating income | $ | 1,785,450 | $ | 1,921,458 | $ | 7,562,704 | $ | 7,691,900 | ||||||||
SOURCE: Global Self Storage
View the original press release on accesswire.com
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