Global Self Storage, Inc. (NASDAQ:SELF) is a self-administered and self-managed real estate investment trust (REIT) that owns, operates, manages, acquires, and redevelops self-storage properties across the United States. The company has demonstrated impressive financial performance, with annual net income of $2,938,769, annual revenue of $12,190,715, annual operating cash flow of $4,524,098, and annual free cash flow of $4,292,994 in its most recent fiscal year.
Business Overview
Global Self Storage's business model is focused on providing affordable, easily accessible, and secure storage space for both residential and commercial customers. The company currently owns and/or manages 13 self-storage properties located in Connecticut, Illinois, Indiana, New York, Ohio, Pennsylvania, South Carolina, and Oklahoma, totaling approximately 968,000 net leasable square feet.
Financials
In the first quarter of 2024, the company reported total revenues of $3,034,040, a slight decrease of 0.1% compared to the same period in the prior year. Rental income, which accounts for the majority of the company's revenue, decreased by 0.4% to $2,913,461, while other property-related income increased by 13.2% to $103,850. Management fees and other income decreased by 23.3% to $16,729 during the quarter.
The company's same-store portfolio, which consists of 12 stabilized properties, reported flat revenues for the first quarter of 2024 compared to the same period in 2023. Same-store occupancy increased by 3.4 percentage points to 91.3% as of March 31, 2024, up from 87.9% a year earlier. As of May 1, 2024, occupancy at the company's same-store properties had further improved to 92.8%.
Global Self Storage's same-store net operating income (NOI) decreased by 5.7% in the first quarter of 2024 compared to the same period in the prior year, primarily due to a 9.8% increase in same-store operating expenses. The increase in expenses was driven by higher employment costs, real estate taxes, insurance, and marketing expenses.
Funds from Operations (FFO) and Adjusted Funds from Operations (AFFO) for the first quarter of 2024 were $0.08 per diluted share, down from $0.09 and $0.10 per diluted share, respectively, in the same period of 2023. The decreases were primarily attributable to the higher operating expenses and lower rental income.
Liquidity
The company's balance sheet remains strong, with $6.9 million in cash, cash equivalents, and restricted cash, and $2.6 million in marketable securities as of March 31, 2024. Additionally, the company has $14.5 million available for withdrawal under its $15 million revolving credit facility, which was recently extended for another three years with a one-year extension option.
Recent Developments
Global Self Storage's management team is focused on executing the company's strategic business plan, which includes funding acquisitions, either directly or through joint ventures, as well as expanding and redeveloping its existing properties. The company's board of directors regularly reviews the strategic plan, with an emphasis on capital formation, debt-to-equity ratios, dividend policy, use of capital and debt, and FFO and AFFO performance.
Outlook
In terms of guidance, the company has not provided specific financial targets for the remainder of 2024. However, management has expressed confidence in the company's ability to continue executing its strategic plan and building value for shareholders over the long term. The company's strong operational performance, robust balance sheet, and experienced management team position it well to navigate the current market environment and capitalize on growth opportunities.
Risks and Challenges
Risks to the company's business include general market conditions, competition from other self-storage providers, the ability to successfully integrate and operate acquired properties, and potential changes in regulations or tax laws affecting REITs. Additionally, the company's reliance on a limited number of large customers and the potential for increased bad debt losses due to economic pressures on its customers could pose risks.
Conclusion
Overall, Global Self Storage's solid financial performance, strategic focus, and strong balance sheet make it an attractive investment opportunity in the self-storage REIT sector. The company's commitment to executing its growth plan and optimizing its existing portfolio positions it well to continue delivering value to shareholders in the years ahead.