Global Self Storage, Inc. recently entered into an At Market Offering Sales Agreement, allowing the company to sell up to $15 million of common stock. This agreement was made in partnership with Alliance Global Partners and provides an additional avenue for capital formation for the real estate investment trust.
The decision to pursue an at-market offering comes as the company's dividend payout ratio was noted to be more than 161%. This high payout ratio suggests that Global Self Storage may be distributing a significant portion of its earnings as dividends, potentially limiting retained earnings for growth initiatives.
The new capital raising mechanism offers Global Self Storage flexibility to fund strategic growth initiatives, including potential acquisitions and expansions. However, the issuance of new common stock could lead to dilution for current shareholders, impacting per-share metrics.
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