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What changed in Global Self Storage, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Global Self Storage, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+147 added−159 removedSource: 10-K (2024-03-26) vs 10-K (2023-03-28)

Top changes in Global Self Storage, Inc.'s 2023 10-K

147 paragraphs added · 159 removed · 139 edited across 5 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeOur Financing Strategy Our financing strategy is to minimize the cost of our capital in order to maximize the returns generated for our stockholders.
Biggest changeOur Financing Strategy Our financing strategy is to minimize the cost of our capital in order to maximize the returns generated for our stockholders. For future acquisitions, the Company may employ various financing and capital raising alternatives including, but not limited to, debt and/or equity offerings, credit facilities, mortgage financing, and joint ventures with third parties.
We also believe our store managers’ attention to detail – maintaining security, cleanliness, and attentive customer service – is essential to attracting high quality tenants. Tenant leases at all of our stores are “month-to-month” leases. We seek to deliver at least 30 days’ written notice of any rental rate change.
We also believe our store managers’ attention to detail – maintaining security, cleanliness, and attentive customer service – is essential to attracting high quality tenants. Tenant leases at all of our stores are generally “month-to-month” leases. We seek to deliver at least 30 days’ written notice of any rental rate change.
During the twelve months ended December 31, 2022, under the Sales Agreement, the Company has sold and issued an aggregate of 373,833 shares of common stock and raised aggregate gross proceeds of approximately $2,272,628, less sales commissions of approximately $45,491 and other offering costs resulting in net proceeds of $2,008,436.
During the twelve months ended December 31, 2022, under the Sales Agreement, the Company sold and issued an aggregate of 373,833 shares of common stock and raised aggregate gross proceeds of approximately $2,272,628, less sales commissions of approximately $45,491 and other offering costs resulting in net proceeds of $2,008,436.
These entities also seek financing through similar channels to the Company. Therefore, we will continue to compete for institutional investors in a market where funds for real estate investment may decrease. Human Capital We seek to create a diverse and inclusive work environment that values each employee’s talents and contributions.
These entities also seek financing through similar channels to the Company. Therefore, we will continue to compete for investors in a market where funds for real estate investment may decrease. Human Capital We seek to create a diverse and inclusive work environment that values each employee’s talents and contributions.
To that end, we have established a cross-functional Environmental, Social, and Governance (“ESG”) committee responsible for establishing our sustainability priorities and objectives. Management regularly evaluates sustainability risks faced by our portfolio and believe the low obsolescence, geographic diversification, and low emissions of our portfolio help to mitigate those risks.
To that end, we have established a cross-functional Environmental, Social, and Governance (“ESG”) committee, comprised of management, responsible for establishing our sustainability priorities and objectives. Management regularly evaluates sustainability risks faced by our portfolio and believe the low obsolescence, geographic diversification, and low emissions of our portfolio help to mitigate those risks.
Our strategies in seeking to maximize our stores’ financial performance and stockholder value include, among others, the following: • continue to implement and refine our move-in rate management systems in seeking to maximize occupancies and thus revenue derived from our store portfolio; • continue to implement and refine our existing tenant revenue rate management systems in seeking to maximize revenue per leased square foot from our store portfolio; • continue to implement and refine our digital, drive-by, and referral marketing programs in seeking to attract more and higher quality (e.g., credit card paying) customers to our stores at a lower net cost; and • continue to pursue the acquisition of single stores and small portfolios that we believe can add stockholder value.
Our strategies in seeking to maximize our stores’ financial performance and stockholder value include, among others, the following: • continue to implement and refine our move-in rate management systems in seeking to maximize occupancies and thus revenue derived from our store portfolio; • continue to implement and refine our proprietary existing tenant revenue rate management program in seeking to maximize revenue per leased square foot from our store portfolio; • continue to implement and refine our digital, drive-by, and referral marketing programs in seeking to attract more and higher quality (e.g., credit card paying) customers to our stores at a lower net cost; and • continue to pursue the acquisition of single stores and small portfolios that we believe can add stockholder value.
As of December 31, 2022, the property, which was previously rebranded as “Global Self Storage,” had 137,318-leasable square feet and was comprised of 619 climate-controlled and non-climate-controlled units located in Edmond, Oklahoma. 10 We may pursue third-party management opportunities of properties owned by certain affiliates or joint venture partners for a fee, and utilize such relationships with third-party owners as a source for future acquisitions and investment opportunities.
As of December 31, 2023, the property, which was previously rebranded as “Global Self Storage,” had 137,318-leasable square feet and was comprised of 619 climate-controlled and non-climate-controlled units located in Edmond, Oklahoma. 10 We may pursue third-party management opportunities of properties owned by certain affiliates or joint venture partners for a fee, and utilize such relationships with third-party owners as a source for future acquisitions and investment opportunities.
As of December 31, 2022, the Company owned and operated, or managed, through its wholly owned subsidiaries, thirteen stores located in Connecticut, Illinois, Indiana, New York, Ohio, Pennsylvania, South Carolina, and Oklahoma. The Company was formerly registered under the Investment Company Act of 1940, as amended (the “1940 Act”) as a non-diversified, closed end management investment company.
As of December 31, 2023, the Company owned and operated, or managed, through its wholly owned subsidiaries, thirteen stores located in Connecticut, Illinois, Indiana, New York, Ohio, Pennsylvania, South Carolina, and Oklahoma. The Company was formerly registered under the Investment Company Act of 1940, as amended (the “1940 Act”) as a non-diversified, closed end management investment company.
Our Acquisition Strategy General In our store acquisition strategy, we will seek to continue to focus on secondary and tertiary cities in the Mid-West, Northeast and Mid-Atlantic parts of the country where we believe there is relatively less self storage space per capita available, generally resulting in greater demand for available self storage square feet; where new self storage development and permitting through the local planning and zoning boards is typically more difficult to secure thus creating barriers to entry for new self storage competition; and where local new supply through new development is generally less prevalent. 8 We continue to review available acquisition opportunities with the awareness that, should interest rates rise, it may impact our ability to obtain favorable rates for financing acquisitions.
Our Acquisition Strategy General In our store acquisition strategy, we will seek to continue to focus on secondary and tertiary cities in the Mid-West, Northeast and Mid-Atlantic parts of the country where we believe there is relatively less self storage space per capita available, generally resulting in greater demand for available self storage square feet; where new self storage development and permitting through the local planning and zoning boards is typically more difficult to secure thus creating barriers to entry for new self storage competition; and where local new supply through new development is generally less prevalent. 8 We continue to review available acquisition opportunities with the awareness that changes in interest rates may impact our ability to obtain favorable rates for financing acquisitions.
We value the safety of our employees and provide regular training for our employees to increase safety at our properties. During 2022, we continued to make masks and other personal protective equipment available to our employees. Environmental, Social, and Governance We are focused on building our company for the long-term to generate sustainable growth.
We value the safety of our employees and provide regular training for our employees to increase safety at our properties. During 2023, we continued to make masks and other personal protective equipment available to our employees. Environmental, Social, and Governance We are focused on building our company for the long-term to generate sustainable growth.
Also, in 2022, we continued to explore the installation of solar panels at our properties which we expect would reduce energy consumption and costs at such locations. 12 Climate Change and Environmental Stewardship We are committed to managing climate-related risks and opportunities in relation to our business.
Also, in 2023, we continued to explore the installation of solar panels at our properties which we expect would reduce energy consumption and costs at such locations. 12 Climate Change and Environmental Stewardship We are committed to managing climate-related risks and opportunities in relation to our business.
In seeking to maximize the performance of our stores, we employ our proprietary revenue rate management systems which help us to analyze, adjust, and set our move-in and existing tenant rental rates on a real-time basis across our portfolio.
In seeking to maximize the performance of our stores, we employ our proprietary revenue rate management program which help us to analyze, adjust, and set our move-in and existing tenant rental rates on a real-time basis across our portfolio.
On June 24, 2016, certain of our wholly owned subsidiaries (“Term Loan Secured Subsidiaries”) entered into a loan agreement and certain other related agreements (collectively, the “Term Loan Agreement”) between the Term Loan Secured Subsidiaries and Insurance Strategy Funding IV, LLC (the “Term Loan Lender”).
On June 24, 2016, certain wholly owned subsidiaries of the Company (“Term Loan Secured Subsidiaries”) entered into a loan agreement and certain other related agreements (collectively, the “Term Loan Agreement”) between the Term Loan Secured Subsidiaries and Insurance Strategy Funding IV, LLC (the “Term Loan Lender”).
We have used some of the proceeds from the Term Loan Agreement to acquire four additional self storage properties. On December 20, 2018, certain of our wholly owned subsidiaries (“Credit Facility Secured Subsidiaries”) entered into a revolving credit loan agreement (collectively, the “Credit Facility Loan Agreement”) between the Credit Facility Secured Subsidiaries and TCF National Bank (“Credit Facility Lender”).
We have used some of the proceeds from the Term Loan Agreement to acquire four self storage properties in 2016. On December 20, 2018, certain of our wholly owned subsidiaries (“Credit Facility Secured Subsidiaries”) entered into a revolving credit loan agreement (collectively, the “Credit Facility Loan Agreement”) between the Credit Facility Secured Subsidiaries and TCF National Bank (“Credit Facility Lender”).
We also offer individualized counseling to our employees to assist them with their journey towards better health. We also seek to promote diversity among our employees and management team. As of December 31, 2022, approximately 44% of our non-store (including finance, human resources, accounting, tax, legal, and marketing, but excluding store-level operations) employees and independent contractors were women.
We also offer individualized counseling to our employees to assist them with their journey towards better health. We also seek to promote diversity among our employees and management team. As of December 31, 2023, approximately 40% of our non-store (including finance, human resources, accounting, tax, legal, and marketing, but excluding store-level operations) employees and independent contractors were women.
The Company and the Amended Credit Facility Secured Subsidiaries paid customary fees and expenses in connection with their entry into the Amended Credit Facility Loan Documents. The Company also maintains a bank account at the Amended Credit Facility Lender. As of December 31, 2022, we have no withdrawn proceeds under the Amended Credit Facility Loan Agreement.
The Company and the Amended Credit Facility Secured Subsidiaries paid customary fees and expenses in connection with their entry into the Amended Credit Facility Loan Documents. The Company also maintains a bank account at the Amended Credit Facility Lender. As of December 31, 2023, we have not withdrawn proceeds under the Amended Credit Facility Loan Agreement.
For future acquisitions, the Company may continue to use various financing and capital raising alternatives including, but not limited to, debt and/or equity offerings, credit facilities, mortgage financing, and joint ventures with third parties. We conduct or obtain environmental assessments in connection with the acquisition or development of additional stores.
For future acquisitions, the Company may employ various financing and capital raising alternatives including, but not limited to, debt and/or equity offerings, credit facilities, mortgage financing, and joint ventures with third parties. We conduct or obtain environmental assessments in connection with the acquisition or redevelopment of additional stores.
We continue to actively review a number of store and store portfolio acquisition opportunities and have been working to further develop and expand our current stores. We did not complete any self storage property acquisitions in 2022.
We continue to actively review a number of store and store portfolio acquisition opportunities and have been working to further redevelop and expand our current stores. We did not complete any self storage property acquisitions in 2023.
Our ESG committee will report annually to our board of directors on the status of our ESG program, our progress against the goals we have set, and provide updates on the various initiatives we have undertaken to improve our sustainability. A key area of focus from a sustainability perspective is minimizing the impact we make on the environment.
Our ESG committee reports annually to our board of directors on the status of our ESG program, our progress against the goals we have set, and provides updates on the various initiatives we have undertaken to improve our sustainability. A key area of focus from a sustainability perspective is minimizing the impact we make on the environment.
As of December 31, 2022, we had 31 employees, which includes employees of our property management platform. In order to attract and retain diverse top talent, we offer training and development opportunities for our employees. In 2022, we offered training and development for our employees, which included anti-harassment training, cyber security training, and site manager training.
As of December 31, 2023, we had 35 employees, which includes employees of our property management platform. In order to attract and retain diverse top talent, we offer training and development opportunities for our employees. In 2023, we offered training and development for our employees, which included anti-harassment training, cybersecurity training, and site manager training.
Our ESG committee will guide our commitment to sustainability and will have primary responsibility for climate-related activities. Our ESG committee will report annually to our board of directors, which oversees all of our sustainability initiatives. We consider potential environmental impacts—both positive and negative—into our decision making across the business.
Our ESG committee guides our commitment to sustainability and has primary responsibility for climate-related activities. Our ESG committee reports annually to our board of directors, which oversees all of our sustainability initiatives. We consider potential environmental impacts—both positive and negative—into our decision making across the business.
We entered into a non-recourse guaranty (the “Term Loan Guaranty” and together with the Term Loan Agreement, the Term Loan Promissory Note and the Term Loan Security Agreement, the “Term Loan Documents”) on June 24, 2016 to guarantee the payment to the Term Loan Lender of certain obligations of the Term Loan Secured Subsidiaries under the Term Loan Agreement.
The Company entered into a non-recourse guaranty (the “Term Loan Guaranty” and together with the Term Loan Agreement, the Term Loan Promissory Note and the Term Loan Security Agreement, the “Term Loan Documents”) to guarantee the payment to the Term Loan Lender of certain obligations of the Term Loan Secured Subsidiaries under the Term Loan Agreement.
Business Activities As of December 31, 2022, the Company had 31 total employees and owned and operated, or managed, through its wholly owned subsidiaries, thirteen stores. As of December 31, 2022, these properties totaled 966,766 net leasable square feet and offered ‭7,023‬ storage units.
Business Activities As of December 31, 2023, the Company had 35 total employees and owned and operated, or managed, through its wholly owned subsidiaries, thirteen stores. As of December 31, 2023, these properties totaled 967,336 net leasable square feet and offered 7,039‬ storage units.
Under the Amended Credit Facility Loan Agreement, the Amended Credit Facility Secured Subsidiaries may borrow from the Amended Credit Facility Lender in the principal amount of up to $15 million pursuant to a promissory note (the “Amended Credit Facility Promissory Note”).
Under the Amended Credit Facility Loan Agreement, the Amended Credit Facility Secured Subsidiaries may borrow from the Amended Credit Facility Lender in the principal amount of up to $15 million, reduced to $14.75 million and $14.5 million in years 2 and 3, respectively, pursuant to a promissory note (the “Amended Credit Facility Promissory Note”).
The Amended Credit Facility Promissory Note bears an interest rate equal to 3% plus the greater of the One Month U.S. Dollar London Inter-Bank Offered Rate or 0.25% and is due to mature on July 6, 2024. As of December 31, 2022, the effective interest rate was 4.12%. The publication of LIBOR will cease immediately after June 30, 2023.
The Amended Credit Facility Promissory Note bears an interest rate equal to 3% plus the greater of the One Month U.S. Dollar London Inter-Bank Offered Rate or 0.25% and is due to mature on July 6, 2024.
The Company invests in stores by acquiring stores through its wholly owned subsidiaries and operates primarily in one segment: rental operations.‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬ We continue to evaluate and enact a range of new initiatives and opportunities in order to help enable us to maximize our stores’ financial performance and stockholder value.
We continue to evaluate and enact a range of new initiatives and opportunities in order to help enable us to maximize our stores’ financial performance and stockholder value.
The Amended Credit Facility Loan Agreement provides for a replacement index based on the Secured Overnight Financing Rate (“SOFR”). The interest rate on the Amended Credit Facility Promissory Note subsequent to June 30, 2023, is equal to 3% plus the greater of SOFR plus 0.11448% or 0.25%.
The interest rate on the Amended Credit Facility Promissory Note subsequent to June 30, 2023, is equal to 3% plus the greater of SOFR plus 0.11448% or 0.25%. As of December 31, 2023, the effective interest rate was 8.46%.
In addition to traditional and climate-controlled units, many of the properties feature both covered and outside auto/RV/boat storage.
In addition to traditional and climate-controlled units, many of the properties feature both covered and outside auto/RV/boat storage. The Company invests in stores by acquiring stores through its wholly owned subsidiaries and operates primarily in one segment: rental operations.
Our Third-Party Management Platform On October 23, 2019, we signed our first self storage client under our third-party management platform.
There were no shares of common stock sold during the three and twelve months ended December 31, 2023 under the Sales Agreement. Our Third-Party Management Platform On October 23, 2019, we signed our first self storage client under our third-party management platform.
Added
The Company is considering, among other things, refinancing or finding a suitable replacement for the revolving line of credit in light of its upcoming maturity. The publication of LIBOR ceased after June 30, 2023. The Amended Credit Facility Loan Agreement provides for a replacement index based on the Secured Overnight Financing Rate (“SOFR”).

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeOur business could be harmed if key personnel with business experience in the self storage industry terminate their employment with us. Our officers have experience in the self storage industry and our success will depend, to a significant extent, on their services. There is no guarantee that any of them will remain employed with us.
Biggest changeOur officers have experience in the self storage industry and our success will depend, to a significant extent, on their services. There is no guarantee that any of them will remain employed with us. We do not generally maintain key person life insurance. The loss of services of one or more members of our senior management could harm our business.
Some of the factors that could negatively affect the market price of our common stock include: • our actual or projected operating results, financial condition, cash flows and liquidity or changes in business strategy or prospects; • actual or perceived conflicts of interest with our directors, officers and employees; • equity issuances by us, or share resales by our stockholders, or the perception that such issuances or resales may occur; • the impact of accounting principles and policies on our financial positions and results; • publication of research reports about us or the real estate industry; • changes in market valuations of similar companies; • adverse market reaction to any increased indebtedness we may incur in the future; • additions to or departures of our key personnel; • speculation in the press or investment community; • our failure to meet, or the lowering of, our earnings estimates or those of any securities analysts; • increases in market interest rates, which may lead investors to demand a higher distribution yield for our common stock and would result in increased interest expenses on our debt; • failure to maintain our REIT qualification or exclusion from registration under the 1940 Act, as amended; • price and volume fluctuations in the stock market generally; and • general market and economic conditions, including the current state of the credit and capital markets.
Some of the factors that could negatively affect the market price of our common stock include: • our actual or projected operating results, financial condition, cash flows and liquidity or changes in business strategy or prospects; • actual or perceived conflicts of interest with our directors, officers and employees; • equity issuances by us, or share resales by our stockholders, or the perception that such issuances or resales may occur; • the impact of accounting principles and policies on our financial positions and results; • publication of research reports about us or the real estate industry; 28 • changes in market valuations of similar companies; • adverse market reaction to any increased indebtedness we may incur in the future; • additions to or departures of our key personnel; • speculation in the press or investment community; • our failure to meet, or the lowering of, our earnings estimates or those of any securities analysts; • increases in market interest rates, which may lead investors to demand a higher distribution yield for our common stock and would result in increased interest expenses on our debt; • failure to maintain our REIT qualification or exclusion from registration under the 1940 Act, as amended; • price and volume fluctuations in the stock market generally; and • general market and economic conditions, including the current state of the credit and capital markets.
These assumptions are inherently uncertain, and, if they prove to be wrong, then we may be subject to certain risks including the following: • we may not complete development projects on schedule or within projected budgeted amounts; • we may underestimate the costs necessary to bring a property up to the standards established for its intended market position; • we may encounter delays or refusals in obtaining all necessary zoning, land use, building, occupancy and other required governmental permits and authorizations; • we may be unable to increase occupancy at a newly acquired property as quickly as expected or at all; and • we may be unable to obtain financing for these projects on favorable terms or at all. 16 The occurrence of such events could adversely affect the investment returns from these development or redevelopment projects and may adversely impact our economic performance.
These assumptions are inherently uncertain, and, if they prove to be wrong, then we may be subject to certain risks including the following: • we may not complete redevelopment projects on schedule or within projected budgeted amounts; • we may underestimate the costs necessary to bring a property up to the standards established for its intended market position; • we may encounter delays or refusals in obtaining all necessary zoning, land use, building, occupancy and other required governmental permits and authorizations; • we may be unable to increase occupancy at a newly acquired property as quickly as expected or at all; and • we may be unable to obtain financing for these projects on favorable terms or at all. 16 The occurrence of such events could adversely affect the investment returns from these redevelopment projects and may adversely impact our economic performance.
Our ability to acquire or integrate properties may also be constrained by the following additional risks: • the inability to achieve satisfactory completion of due diligence investigations and other customary closing conditions; • spending more than the time and amounts budgeted to make necessary improvements or renovations to acquired properties; • the inability to build a captive pipeline of target properties that meet our rigorous underwriting standards; • the inability to accurately estimate occupancy levels, rental rates, operating costs or costs of improvements to bring an acquired property up to the standards established for our intended market position; and • encountering delays in the selection, acquisition, development or redevelopment of self storage properties which could adversely affect returns to stockholders and stockholders could suffer delays in the distribution of cash dividends attributable to any such properties.
Our ability to acquire or integrate properties may also be constrained by the following additional risks: • the inability to achieve satisfactory completion of due diligence investigations and other customary closing conditions; • spending more than the time and amounts budgeted to make necessary improvements or renovations to acquired properties; • the inability to build a captive pipeline of target properties that meet our rigorous underwriting standards; • the inability to accurately estimate occupancy levels, rental rates, operating costs or costs of improvements to bring an acquired property up to the standards established for our intended market position; and • encountering delays in the selection, acquisition, or redevelopment of self storage properties which could adversely affect returns to stockholders and stockholders could suffer delays in the distribution of cash dividends attributable to any such properties.
If we fail to qualify for treatment as a REIT at any time and do not qualify for certain statutory relief provisions, we would be required to pay U.S. federal income tax on our taxable income, and possibly could be required 24 to borrow money or sell assets to pay that tax, thus substantially reducing the funds available for distribution for each year involved.
If we fail to qualify for treatment as a REIT at any time and do not qualify for certain statutory relief provisions, we would be required to pay U.S. federal income tax on our taxable income, and possibly could be required to borrow money or sell assets to pay that tax, thus substantially reducing the funds available for distribution for each year involved.
Our ability to satisfy these asset tests depends upon an analysis of the characterization and fair market values of our assets, some of which are not susceptible to a precise determination, and for which we will not obtain independent appraisals. In addition, we have held and may continue to hold investments in other publicly traded REITs.
Our ability to satisfy these asset tests depends upon an analysis of the characterization and fair market values of our assets, some of which are not susceptible to a precise determination, and for which we will not obtain independent 23 appraisals. In addition, we have held and may continue to hold investments in other publicly traded REITs.
Payment of these taxes generally could materially and adversely affect our income, cash flow, results of operations, financial condition, liquidity and prospects, and could adversely affect the value of our common stock and the ability to make distributions to stockholders. To maintain our REIT qualification, we may be forced to borrow funds during unfavorable market conditions.
Payment of these taxes generally could materially and adversely affect our income, cash flow, results of operations, financial condition, liquidity and prospects, and could adversely affect the value of our common stock and the ability to make distributions to stockholders. 24 To maintain our REIT qualification, we may be forced to borrow funds during unfavorable market conditions.
Holders of our common stock are 28 not entitled to preemptive rights or other protections against dilution. Because our decision to issue securities in any future offering will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or nature of our future offerings.
Holders of our common stock are not entitled to preemptive rights or other protections against dilution. Because our decision to issue securities in any future offering will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or nature of our future offerings.
Thus, compliance with the REIT requirements may hinder our investment performance. We may be subject to a 100% tax on income from “prohibited transactions,” and this tax may limit our ability to sell assets or require us to restructure certain of our activities in order to avoid being subject to the tax.
Thus, compliance with the REIT requirements may hinder our investment performance. 25 We may be subject to a 100% tax on income from “prohibited transactions,” and this tax may limit our ability to sell assets or require us to restructure certain of our activities in order to avoid being subject to the tax.
We intend to structure transactions with any TRS on 26 terms that we believe are arm’s length to avoid incurring the 100% excise tax described above. There can be no assurances, however, that we will be able to avoid application of the 100% tax. We may not have cash available to make distributions.
We intend to structure transactions with any TRS on terms that we believe are arm’s length to avoid incurring the 100% excise tax described above. There can be no assurances, however, that we will be able to avoid application of the 100% tax. We may not have cash available to make distributions.
In addition, losses in our TRS will generally not provide any tax benefit, except for being carried back or forward against past or future taxable income in the TRS. Legislative or regulatory tax changes related to REITs could materially and adversely affect our business.
In addition, losses in our TRS 27 will generally not provide any tax benefit, except for being carried back or forward against past or future taxable income in the TRS. Legislative or regulatory tax changes related to REITs could materially and adversely affect our business.
If market interest rates increase, prospective investors may demand a higher distribution rate or seek alternative investments paying higher dividends or interest. As a result, interest rate fluctuations and conditions in capital markets can affect the market value of our 29 common stock.
If market interest rates increase, prospective investors may demand a higher distribution rate or seek alternative investments paying higher dividends or interest. As a result, interest rate fluctuations and conditions in capital markets can affect the market value of our common stock.
For instance, if interest rates rise, it is likely that the market price of our common stock will decrease as market rates on interest-bearing securities increase. Item 1B. Unresolved Sta ff Comments. None. 30
For instance, if interest rates rise, it is likely that the market price of our common stock will decrease as market rates on interest-bearing securities increase. Item 1B. Unresolved Sta ff Comments. None.
Any of the following events could result in substantial impact to our business, financial condition, results of operations and cash flows: • changes in global, national, regional or local economic, demographic or capital market conditions; • a recession, slowdown or sustained downturn in the U.S. market, and to a lesser extent, the global economy (or any particular segment thereof); • overall weakening of, or disruptions in, the financial markets; • perceived or actual economic distress or failures of financial institutions; • increases in interest rates, inflationary pressures; • supply chain related disruptions, such as those caused by the ongoing COVID-19 pandemic; • geopolitical challenges and uncertainties (including wars and other forms of conflict, terrorist acts and security operations), such as the escalating conflict between Russia and Ukraine and the severe economic sanctions and export controls imposed by the U.S. and other governments against Russia and Russian interests; and • changes in government rules, regulations and fiscal policies, including increases in taxes, changes in zoning laws and increasing costs to comply with environmental laws.
Any of the following events could result in substantial impact to our business, financial condition, results of operations and cash flows: • changes in global, national, regional or local economic, demographic or capital market conditions; • a recession, slowdown or sustained downturn in the U.S. market, and to a lesser extent, the global economy (or any particular segment thereof); • overall weakening of, or disruptions in, the financial markets; • perceived or actual economic distress or failures of financial institutions; • increases in interest rates, inflationary pressures; • supply chain related disruptions, such as those caused by the recent COVID-19 pandemic; • geopolitical challenges and uncertainties (including wars and other forms of conflict, terrorist acts and security operations), such as the ongoing conflict between Russia and Ukraine and the severe economic sanctions and export controls imposed by the U.S. and other governments against Russia and Russian interests, and the ongoing conflict between Israel and Hamas; and • changes in government rules, regulations and fiscal policies, including increases in taxes, changes in zoning laws and increasing costs to comply with environmental laws.
Furthermore, we may continue to hold interests in publicly traded REITs, and as a result our REIT qualification may continue to depend on the REIT qualification of any publicly traded REITs in which we continue to hold an interest.
Furthermore, we may continue to hold interests in publicly traded REITs, and as a result our REIT qualification may continue to depend on the REIT qualification of any publicly traded REITs in which we continue to 26 hold an interest.
Prior to October 20, 2017, our charter did not contain customary 27 REIT ownership restrictions and therefore did not ensure that we satisfied the 5/50 Test.
Prior to October 20, 2017, our charter did not contain customary REIT ownership restrictions and therefore did not ensure that we satisfied the 5/50 Test.
The extent of the impact of the COVID-19 pandemic and any other pandemic or major health issue on us will depend on many factors, including the duration and scope of the public health emergency, the actions taken by governmental authorities to contain COVID-19 and other future pandemics and their financial and economic impact, the implementation of travel advisories and restrictions, the efficacy and availability of vaccines, the disparities in vaccination rates and vaccine hesitancy, the rise of new variants and the severity of such variants, the impact of the public health emergency on overall supply and demand, goods and services, consumer confidence and levels of economic activity and the extent of its disruption to global, regional, and local supply chains and economic markets, all of which are uncertain and difficult to assess.
The extent of the impact of a pandemic and any other pandemic or major health issue on us will depend on many factors, including the duration and scope of the public health emergency, the actions taken by governmental authorities to contain such pandemics or public health issues and their financial and economic impact, the implementation of travel advisories and restrictions, the efficacy and availability of vaccines, the disparities in vaccination rates and vaccine hesitancy, the rise of new variants and the severity of such variants, the impact of the public health emergency on overall supply and demand, goods and services, consumer confidence and levels of economic activity and the extent of its disruption to global, regional, and local supply chains and economic markets, all of which are uncertain and difficult to assess.
We depend on external sources of financing that are outside of our control, which could adversely affect our ability to acquire or develop properties, satisfy our debt obligations and/or make distributions to stockholders.
We depend on external sources of financing that are outside of our control, which could adversely affect our ability to acquire or redevelop properties, satisfy our debt obligations and/or make distributions to stockholders.
The costs associated with these liabilities may adversely impact our operating results. Our investments in development and redevelopment projects may not yield anticipated returns which could adversely impact our economic performance. In deciding whether to develop or redevelop a particular property, we make certain assumptions regarding the expected future performance of that property.
The costs associated with these liabilities may adversely impact our operating results. Our investments in redevelopment projects may not yield anticipated returns which could adversely impact our economic performance. In deciding whether to redevelop a particular property, we make certain assumptions regarding the expected future performance of that property.
Moreover, many risk factors set forth in this annual report on Form 10-K should be interpreted as heightened risks as a result of the impact of the COVID-19 pandemic or another major public health issue.
Moreover, many risk factors set forth in this annual report on Form 10-K should be interpreted as heightened risks as a result of the impact of a pandemic or other major public health issue.
We believe that our level of business activity and the profitability of our business, as well as the values of, and the cash flows from, the assets we may own may be impacted by the effects of COVID-19 and its future variants and could in the future be impacted by another pandemic or other major public health issues.
We believe that our level of business activity and the profitability of our business, as well as the values of, and the cash flows from, the assets we may own could in the future be impacted by a pandemic or other major public health issue.
To qualify as a REIT for U.S. federal tax purposes, we must continually satisfy various requirements concerning, among other things, the sources of our income, the nature and diversification of our assets, the amounts we distribute to our stockholders, and the ownership of shares.
Complying with the REIT requirements may cause us to forgo and/or liquidate otherwise attractive investments. To qualify as a REIT for U.S. federal tax purposes, we must continually satisfy various requirements concerning, among other things, the sources of our income, the nature and diversification of our assets, the amounts we distribute to our stockholders, and the ownership of shares.
The outside business interests of our officers may divert their time and attention away from us, and may result in a potential conflict with respect to the allocation of business opportunities, which could harm our business.
There may be conflicts of interest resulting from the relationships among us, our affiliates, and other related parties. The outside business interests of our officers may divert their time and attention away from us, and may result in a potential conflict with respect to the allocation of business opportunities, which could harm our business.
If we cease to qualify as a REIT, we would become subject to U.S. federal income tax on our taxable income and would no longer 20 be required to distribute most of our net taxable income to stockholders, which may have adverse consequences on the total return to our stockholders.
If we cease to qualify as a REIT, we would become subject to U.S. federal income tax on our taxable income and would no longer be required to distribute most of our net taxable income to stockholders, which may have adverse consequences on the total return to our stockholders. 20 Our business could be harmed if key personnel with business experience in the self storage industry terminate their employment with us.
Major public health issues, including the COVID-19 pandemic, and related disruptions in the U.S. and global economy and financial markets could adversely impact or disrupt our financial condition and results of operations.
Major public health issues and related disruptions in the U.S. and global economy and financial markets could adversely impact or disrupt our financial condition and results of operations. In recent years, the outbreaks of a number of diseases, including COVID-19, avian influenza, H1N1, and other viruses have increased the risk of a pandemic or major public health issues.
Accordingly, there can be no assurance that we will be able to distribute net taxable income to stockholders in a manner that satisfies the REIT distribution requirements and avoids the 4% non-deductible excise tax. 25 Complying with the REIT requirements may cause us to forgo and/or liquidate otherwise attractive investments.
There may be timing differences between our actual receipt of cash and the inclusion of items in our income for U.S. federal income tax purposes. Accordingly, there can be no assurance that we will be able to distribute net taxable income to stockholders in a manner that satisfies the REIT distribution requirements and avoids the 4% non-deductible excise tax.
Removed
In recent years, the outbreaks of a number of diseases, including avian influenza, H1N1, and other viruses have increased the risk of a pandemic or major public health issues. Since December 2019, COVID-19 and its variants have spread globally, including in the United States, and have continued to adversely impact global economic activity and contribute significant volatility in financial markets.
Removed
We do not generally maintain key person life insurance. The loss of services of one or more members of our senior management could harm our business. There may be conflicts of interest resulting from the relationships among us, our affiliates, and other related parties.
Removed
The discontinuation of U.S. dollar London Interbank Offered Rate (“LIBOR”) may adversely affect our borrowing costs and the costs of any related hedging transactions. The terms of the Amended Credit Facility Loan Agreement refer to U.S. dollar LIBOR. As announced on March 5, 2021 by the ICE Benchmark Administration Limited (“IBA”) and the U.K.
Removed
Financial Conduct Authority, the IBA will cease publishing the overnight, 1-month, 3-month, 6-month and 12-month settings of U.S. dollar LIBOR rates immediately after June 30, 2023.
Removed
The Alternative Reference Rates Committee (“ARRC”), which was convened by the Federal Reserve Board and the New York Federal Reserve Bank, has identified the Secured Overnight Financing Rate (“SOFR”) as the recommended risk-free alternative rate for U.S. dollar LIBOR.
Removed
The ARRC has also recommended the use of the CME Group’s computation of forward-looking SOFR term rates (“Term SOFR”), subject to certain recommended limitations on the scope of its use.
Removed
In March 2022, the Adjustable Interest Rate (LIBOR) Act was enacted at the federal level in the United States, pursuant to which the Board of Governors of the Federal Reserve System has designated benchmark replacement rates based on SOFR for U.S. law governed legacy contracts that have no or insufficient fallback provisions.
Removed
While the Amended Credit Facility Loan Agreement includes fallback language that would facilitate replacing U.S. dollar LIBOR, there can be no assurance that any alternative rates used to determine interest on our variable rate debt, including any version of SOFR or Term SOFR, plus any spread adjustment 23 will be economically equivalent to U.S. dollar LIBOR.
Removed
In addition, market practices related to calculation conventions for replacement benchmark rates continue to develop and may vary, and inconsistent conventions may develop among financial products. Inconsistent use of replacement rates or calculation conventions among financial products could expose us to additional financial risks and increased costs.
Removed
It is not possible to predict all consequences of the IBA’s plans to cease publishing U.S. dollar LIBOR, any related regulatory actions and the expected discontinuance of the use of U.S. dollar LIBOR as a reference rate for financial contracts.
Removed
Any transition from U.S. dollar LIBOR to alternative reference rates could result in financial market disruptions or significant increases in our borrowing costs or the costs of any related hedging, any of which could have an adverse effect on our business, results of operations, financial condition, and the market price of our common stock.
Removed
There may be timing differences between our actual receipt of cash and the inclusion of items in our income for U.S. federal income tax purposes.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeGLOBAL SELF STORAGE STORES (As of December 31, 2022) Year Store Number Net Leasable December 31, 2022 Square Foot December 31, 2021 Square Foot Property (1) Address Opened / Acquired-Managed of Units Square Feet Occupancy % Occupancy % OWNED STORES SSG BOLINGBROOK LLC 296 North Weber Road, Bolingbrook, IL 60440 1997 / 2013 807 113,700 91.2 % 96.9 % SSG CLINTON LLC 6 Heritage Park Road, Clinton, CT 06413 1996 / 2016 182 30,408 88.5 % 88.8 % SSG DOLTON LLC 14900 Woodlawn Avenue, Dolton, IL 60419 2007 / 2013 652 86,590 88.7 % 92.7 % SSG FISHERS LLC 13942 East 96th Street, McCordsville, IN 46055 2007 / 2016 543 76,360 89.4 % 89.3 % SSG LIMA LLC 1910 West Robb Avenue, Lima, OH 60419 1996 / 2016 755 94,883 91.8 % 95.7 % SSG MERRILLVILLE LLC 6590 Broadway, Merrillville, IN 46410 2005 / 2013 568 80,970 93.0 % 96.2 % SSG MILLBROOK LLC 3814 Route 44, Millbrook, NY 12545 2008 / 2016 260 24,482 94.1 % 96.3 % SSG ROCHESTER LLC 2255 Buffalo Road, Rochester, NY 14624 2010 / 2012 648 68,311 91.7 % 93.5 % SSG SADSBURY LLC 21 Aim Boulevard, Sadsburyville, PA 19369 2006 / 2012 694 78,875 89.3 % 91.5 % SSG SUMMERVILLE I LLC 1713 Old Trolley Road, Summerville, SC 29485 1990 / 2013 569 76,460 87.4 % 93.5 % SSG SUMMERVILLE II LLC 900 North Gum Street, Summerville, SC 29483 1997 / 2013 246 42,860 89.5 % 92.4 % SSG WEST HENRIETTA LLC 70 Erie Station Road, West Henrietta, NY 14586 2016 / 2019 480 55,550 79.6 % 84.4 % TOTAL/AVERAGE SAME-STORES 6,404 829,449 89.6 % 93.1 % MANAGED STORES TPM EDMOND LLC 14000 N I 35 Service Rd, Edmond, OK 73013 2015 / 2019 619 137,318 94.8 % 94.2 % TOTAL/AVERAGE MANAGED STORES 619 137,318 94.8 % 94.2 % TOTAL/AVERAGE ALL OWNED/MANAGED STORES 7,023 966,767 90.4 % 93.2 % (1) Each property is directly owned or managed by the Company’s wholly owned subsidiary listed in the table.
Biggest changeGLOBAL SELF STORAGE STORES (As of December 31, 2023) Year Store Number Net Leasable December 31, 2023 Square Foot December 31, 2022 Square Foot Property (1) Address Opened / Acquired-Managed of Units Square Feet Occupancy % Occupancy % OWNED STORES SSG BOLINGBROOK LLC 296 North Weber Road, Bolingbrook, IL 60440 1997 / 2013 809 113,700 89.9 % 91.2 % SSG CLINTON LLC 6 Heritage Park Road, Clinton, CT 06413 1996 / 2016 182 30,408 86.8 % 88.5 % SSG DOLTON LLC 14900 Woodlawn Avenue, Dolton, IL 60419 2007 / 2013 652 86,590 87.6 % 88.7 % SSG FISHERS LLC 13942 East 96th Street, McCordsville, IN 46055 2007 / 2016 545 76,335 91.7 % 89.4 % SSG LIMA LLC 1910 West Robb Avenue, Lima, OH 60419 1996 / 2016 767 94,928 87.5 % 91.8 % SSG MERRILLVILLE LLC 6590 Broadway, Merrillville, IN 46410 2005 / 2013 569 81,270 92.2 % 93.0 % SSG MILLBROOK LLC 3814 Route 44, Millbrook, NY 12545 2008 / 2016 260 24,482 92.4 % 94.1 % SSG ROCHESTER LLC 2255 Buffalo Road, Rochester, NY 14624 2010 / 2012 649 68,311 92.5 % 91.7 % SSG SADSBURY LLC 21 Aim Boulevard, Sadsburyville, PA 19369 2006 / 2012 693 78,875 89.5 % 89.3 % SSG SUMMERVILLE I LLC 1713 Old Trolley Road, Summerville, SC 29485 1990 / 2013 569 76,460 85.3 % 87.4 % SSG SUMMERVILLE II LLC 900 North Gum Street, Summerville, SC 29483 1997 / 2013 248 43,110 88.0 % 89.5 % SSG WEST HENRIETTA LLC 70 Erie Station Road, West Henrietta, NY 14586 2016 / 2019 477 55,550 88.6 % 79.6 % TOTAL/AVERAGE SAME-STORES 6,420 830,019 89.3 % 89.6 % MANAGED STORES TPM EDMOND LLC 14000 N I 35 Service Rd, Edmond, OK 73013 2015 / 2019 619 137,318 96.9 % 94.8 % TOTAL/AVERAGE MANAGED STORES 619 137,318 96.9 % 94.8 % TOTAL/AVERAGE ALL OWNED/MANAGED STORES 7,039 967,337 90.4 % 90.4 % (1) Each property is directly owned or managed by the Company’s wholly owned subsidiary listed in the table.
Certain stores’ leasable square feet in the chart above includes outside auto/RV/boat storage space: approximately 13,000 square feet at SSG Sadsbury LLC; 6,300 square feet at SSG Fishers LLC; 15,700 square feet at SSG Bolingbrook LLC; 9,000 square feet at SSG Dolton LLC; 1,800 square feet at SSG Merrillville LLC; 3,800 square feet at SSG Summerville I LLC; 7,200 square feet at SSG Summerville II LLC and 8,750 square feet at SSG Clinton LLC.
Certain stores’ leasable square feet in the chart above includes outside auto/RV/boat storage space: approximately 12,900 square feet at SSG Sadsbury LLC; 6,300 square feet at SSG Fishers LLC; 15,700 square feet at SSG Bolingbrook LLC; 9,000 square feet at SSG Dolton LLC; 2,100 square feet at SSG Merrillville LLC; 3,800 square feet at SSG Summerville I LLC; 7,400 square feet at SSG Summerville II LLC and 8,800 square feet at SSG Clinton LLC.
For SSG Lima LLC, included is approximately 5,700 square feet of non-storage commercial and student housing space. For SSG Millbrook LLC, included is approximately 1,300 square feet of wine storage and non-storage office space. Approximately 33% of our total available units are climate-controlled, 59% are traditional drive-up storage, and 8% are outdoor parking storage for boats, cars and recreational vehicles.
Approximately 33% of our total available units are climate-controlled, 59% are traditional drive-up storage, and 8% are outdoor parking storage for boats, cars and recreational vehicles.
Added
For SSG Lima LLC, included is approximately 3,800 square feet of non-storage commercial and student housing space. For SSG Millbrook LLC, included is approximately 1,300 square feet of wine storage and non-storage office space. For SSG Fishers LLC, included is approximately 300 square feet of storage locker space.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeFurthermore, the Company will seek to evaluate whether there exist losses which may be reasonably 31 possible and, if material, make the necessary disclosures. The Company currently does not have any material pending legal proceedings to which the Company or any of its subsidiaries is a party or of which any of their property is the subject. Item 4.
Biggest changeFurthermore, the Company will seek to evaluate whether there exist losses which may be reasonably possible and, if material, make the necessary disclosures. The Company currently does not have any material pending 31 legal proceedings to which the Company or any of its subsidiaries is a party or of which any of their property is the subject. Item 4.
Holders As of March 15, 2023, there were approximately 7,750 record and beneficial holders of the Company’s common stock. Item 6. [ Reserved]. 33
Holders As of March 15, 2024, there were approximately 7,830 record and beneficial holders of the Company’s common stock. Item 6. [ Reserved]. 33

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeAnother significant contributing factor to our results was our success in controlling store-level cost of operations and maximizing tenant occupancy. 39 These results are summarized as follows: SAME - STORE PROPERTIES Twelve Months Ended December 31, 2022 2021 Variance % Change Revenues $ 11,861,082 $ 10,432,905 $ 1,428,177 13.7 % Cost of operations $ 4,169,182 $ 3,776,770 $ 392,412 10.4 % Net operating income $ 7,691,900 $ 6,656,135 $ 1,035,765 15.6 % Depreciation and amortization $ 1,433,060 $ 1,443,906 $ (10,846 ) -0.8 % Net leasable square footage at period end* 829,448 831,190 (1,742 ) -0.2 % Net leased square footage at period end 743,476 773,593 (30,117 ) -3.9 % Overall square foot occupancy at period end 89.6 % 93.1 % -3.5 % -3.7 % Total annualized revenue per leased square foot $ 15.95 $ 13.49 $ 2.47 18.3 % Total available leasable storage units* 6,404 6,393 11 0.2 % Number of leased storage units 5,673 5,889 (216 ) -3.7 % SAME - STORE PROPERTIES Three Months Ended December 31, 2022 2021 Variance % Change Revenues $ 3,037,160 $ 2,742,085 $ 295,075 10.8 % Cost of operations $ 1,115,702 $ 945,079 $ 170,623 18.1 % Net operating income $ 1,921,458 $ 1,797,006 $ 124,452 6.9 % Depreciation and amortization $ 358,847 $ 362,743 $ (3,896 ) -1.1 % Net leasable square footage at period end* 829,448 831,190 (1,742 ) -0.2 % Net leased square footage at period end* 743,476 773,593 (30,117 ) -3.9 % Overall square foot occupancy at period end 89.6 % 93.1 % -3.5 % -3.8 % Total annualized revenue per leased square foot $ 16.34 $ 14.18 $ 2.16 15.2 % Total available leasable storage units* 6,404 6,393 11 0.2 % Number of leased storage units 5,673 5,889 (216 ) -3.7 % * From time to time, as guided by market conditions, net leasable square footage, net leased square footage and total available storage units at our properties may increase or decrease as a result of consolidation, division or reconfiguration of storage units.
Biggest changeAlso, contributing to our results were our customer service efforts which we believe were essential in building local brand loyalty resulting in powerful referral and word-of-mouth market demand for our storage units and services. 39 These results are summarized as follows: SAME - STORE PROPERTIES Twelve Months Ended December 31, 2023 2022 Variance % Change Revenues $ 12,111,742 $ 11,861,082 $ 250,660 2.1 % Cost of operations $ 4,549,038 $ 4,169,182 $ 379,856 9.1 % Net operating income $ 7,562,704 $ 7,691,900 $ (129,196 ) -1.7 % Depreciation and amortization $ 1,449,571 $ 1,433,060 $ 16,511 1.2 % Net leasable square footage at period end* 830,019 829,448 571 0.1 % Net leased square footage at period end* 741,248 743,476 (2,228 ) -0.3 % Overall square foot occupancy at period end 89.3 % 89.6 % -0.3 % -0.3 % Total annualized revenue per leased square foot $ 16.34 $ 15.95 $ 0.39 2.4 % Total available leasable storage units* 6,420 6,404 16 0.2 % Number of leased storage units 5,589 5,673 (84 ) -1.5 % SAME - STORE PROPERTIES Three Months Ended December 31, 2023 2022 Variance % Change Revenues $ 2,960,108 $ 3,037,160 $ (77,052 ) -2.5 % Cost of operations $ 1,174,658 $ 1,115,702 $ 58,956 5.3 % Net operating income $ 1,785,450 $ 1,921,458 $ (136,008 ) -7.1 % Depreciation and amortization $ 363,262 $ 358,847 $ 4,415 1.2 % Net leasable square footage at period end* 830,019 829,448 571 0.1 % Net leased square footage at period end* 741,248 743,476 (2,228 ) -0.3 % Overall square foot occupancy at period end 89.3 % 89.6 % -0.3 % -0.3 % Total annualized revenue per leased square foot $ 15.97 $ 16.34 $ (0.37 ) -2.3 % Total available leasable storage units* 6,420 6,404 16 0.2 % Number of leased storage units 5,589 5,673 (84 ) -1.5 % * From time to time, as guided by market conditions, net leasable square footage, net leased square footage and total available storage units at our properties may increase or decrease as a result of consolidation, division or reconfiguration of storage units.
During the twelve months ended December 31, 2022, under the Sales Agreement, the Company has sold and issued an aggregate of 373,833 shares of common stock and raised aggregate gross proceeds of approximately $2,272,628, less sales commissions of approximately $45,491 and other offering costs resulting in net proceeds of $2,008,436.
During the twelve months ended December 31, 2022, under the Sales Agreement, the Company sold and issued an aggregate of 373,833 shares of common stock and raised aggregate gross proceeds of approximately $2,272,628, less sales commissions of approximately $45,491 and other offering costs resulting in net proceeds of $2,008,436.
Our future rental income growth will likely also be dependent upon many factors for each market that we operate in, including, among other things, demand for self storage space, the level of competitor supply of self storage space, and the average length of stay of our tenants.
Our future rental income growth will likely also be dependent upon many factors for each 41 market that we operate in, including, among other things, demand for self storage space, the level of competitor supply of self storage space, and the average length of stay of our tenants.
Increasing existing tenant rental rates, generally 41 on an annual basis, is a key component of our revenue growth. We typically determine the level of rental increases based upon our expectations regarding the impact of existing tenant rate increases on incremental move-outs.
Increasing existing tenant rental rates, generally on an annual basis, is a key component of our revenue growth. We typically determine the level of rental increases based upon our expectations regarding the impact of existing tenant rate increases on incremental move-outs.
Capital resources derived from retained cash flow have been and are currently expected to continue to be negligible. Retained operating cash flow represents our expected cash flow provided by operating activities, less stockholder distributions and capital expenditures to maintain stores.
Capital resources derived from retained cash 36 flow have been and are currently expected to continue to be negligible. Retained operating cash flow represents our expected cash flow provided by operating activities, less stockholder distributions and capital expenditures to maintain stores.
As of December 31, 2022, we observed no material degradation in rent collections. However, we believe that our bad debt losses could increase from historical levels, due to (i) cumulative stress (such as inflation, COVID-19, recession fears, etc.) on our customers’ financial capacity and (ii) reduced rent recoveries from auctioned units.
As of December 31, 2023, we observed no material degradation in rent collections. However, we believe that our bad debt losses could increase from historical levels, due to (i) cumulative stress (such as inflation, COVID-19, recession fears, etc.) on our customers’ financial capacity and (ii) reduced rent recoveries from auctioned units.
There were no realized gains or losses for the twelve months ended December 31, 2022 and December 31, 2021. Item 7A. Quantitative and Qualitat ive Disclosures About Market Risk. Not applicable. Item 8. Financial Statement s and Supplementary Data. The financial statements are included in this annual report beginning on page F-3. Item 9.
There were no realized gains or losses for the twelve months ended December 31, 2023 and December 31, 2022. Item 7A. Quantitative and Qualitat ive Disclosures About Market Risk. Not applicable. Item 8. Financial Statement s and Supplementary Data. The financial statements are included in this annual report beginning on page F-3. Item 9.
As of December 31, 2022, the Company owned and operated, or managed, through its wholly owned subsidiaries, thirteen stores located in Connecticut, Illinois, Indiana, New York, Ohio, Pennsylvania, South Carolina, and Oklahoma. The Company was formerly registered under the Investment Company Act of 1940, as amended (the “1940 Act”) as a non-diversified, closed end management investment company.
As of December 31, 2023, the Company owned and operated, or managed, through its wholly owned subsidiaries, thirteen stores located in Connecticut, Illinois, Indiana, New York, Ohio, Pennsylvania, South Carolina, and Oklahoma. The Company was formerly registered under the Investment Company Act of 1940, as amended (the “1940 Act”) as a non-diversified, closed end management investment company.
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. As of December 31, 2022, we owned twelve same-store properties and zero non-same-store properties.
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. As of December 31, 2023, we owned twelve same-store properties and zero non-same-store properties.
Importantly, we continue to refine our ongoing revenue rate management program which includes regular internet data scraping of local competitors’ prices. We do this in seeking to maintain our competitive market price advantage for our various sized storage units at our stores. This program helps us in seeking to maximize each store’s occupancies and our self storage revenue and NOI.
Importantly, we continue to refine our proprietary revenue rate management program which includes regular internet data scraping of local competitors’ prices. We do this in seeking to maintain our competitive market price advantage for our various sized storage units at our stores. This program helps us in seeking to maximize each store’s occupancies and our self storage revenue and NOI.
As described in more detail below, the Credit Facility Loan Agreement has been replaced in its entirety by the Amended Credit Facility Loan Agreement on July 6, 2021.
As described in more detail below, the Credit Facility Loan Agreement has been replaced in its entirety by the Amended Credit Facility Loan Agreement (as defined below) on July 6, 2021.
We currently expect inflationary increases in landscaping expense in 2023, excluding snow removal expense, which is primarily weather dependent and unpredictable. Marketing. Marketing expense is comprised principally of internet advertising and the operating costs of our 24/7 kiosk and telephone call and reservation center. Marketing expense varies based upon demand, occupancy levels, and other factors.
We currently expect inflationary increases in landscaping expense in 2024, excluding snow removal expense, which is primarily weather dependent and unpredictable. Marketing. Marketing expense is comprised principally of internet advertising and the operating costs of our 24/7 kiosk and telephone call and reservation center. Marketing expense varies based upon demand, occupancy levels, and other factors.
It is difficult to estimate future utility costs because weather, temperature, and energy prices are volatile and unpredictable. However, based upon current trends and expectations regarding commercial electricity rates, we currently expect inflationary increases in rates combined with lower usage resulting in higher net utility costs in 2023.
It is difficult to estimate future utility costs because weather, temperature, and energy prices are volatile and unpredictable. However, based upon current trends and expectations regarding commercial electricity rates, we currently expect inflationary increases in rates combined with lower usage resulting in higher net utility costs in 2024.
The increase in property tax expense during the year ended December 31, 2022 is primarily due to increased property assessment valuations and the loss of our Class 8 tax incentive granted to SSG Dolton LLC. See the section titled “Property Tax Expenses at Dolton, IL” for additional detail.
The increase in property tax expense during the year ended December 31, 2023 is primarily due to increased property assessment valuations and the loss of our Class 8 tax incentive granted to SSG Dolton LLC. See the section titled “Property Tax Expenses at Dolton, IL” for additional detail.
As of December 31, 2022, we managed one third-party owned property, which was previously rebranded as “Global Self Storage,” had 137,318-leasable square feet and was comprised of 619 climate-controlled and non-climate-controlled units located in Edmond, Oklahoma.
As of December 31, 2023, we managed one third-party owned property, which was previously rebranded as “Global Self Storage,” had 137,318-leasable square feet and was comprised of 619 climate-controlled and non-climate-controlled units located in Edmond, Oklahoma.
These events were applied retroactively to take effect on January 1, 2017. Property tax expenses have increased to $399,000 during 2020, $417,000 during 2021, and $532,000 during 2022. The Class 8 tax incentive phased out over the years 2017, 2018, 2019, 2020, and 2021.
These events were applied retroactively to take effect on January 1, 2017. Property tax expenses have increased to $399,000 during 2020, $417,000 during 2021, $532,000 during 2022, and $559,000 during 2023. The Class 8 tax incentive phased out over the years 2017, 2018, 2019, 2020, and 2021.
On June 24, 2016, certain of our wholly owned subsidiaries (“Term Loan Secured Subsidiaries”) entered into a loan agreement and certain other related agreements (collectively, the “Term Loan Agreement”) between the Term Loan Secured Subsidiaries and Insurance Strategy Funding IV, LLC (the “Term Loan Lender”).
On June 24, 2016, certain wholly owned subsidiaries of the Company (“Term Loan Secured Subsidiaries”) entered into a loan agreement and certain other related agreements (collectively, the “Term Loan Agreement”) between the Term Loan Secured Subsidiaries and Insurance Strategy Funding IV, LLC (the “Term Loan Lender”).
We believe that our results were driven by, among other things, our internet and digital marketing initiatives which helped maintain our overall average same-store occupancy of approximately 90% as of December 31, 2022.
We believe that our results were driven by, among other things, our internet and digital marketing initiatives which helped maintain our overall average same-store occupancy of approximately 90% as of December 31, 2023.
We have used some of the proceeds from the Term Loan Agreement to acquire four additional self storage properties. On December 20, 2018, certain of our wholly owned subsidiaries (“Credit Facility Secured Subsidiaries”) entered into a revolving credit loan agreement (collectively, the “Credit Facility Loan Agreement”) between the Credit Facility Secured Subsidiaries and TCF National Bank (“Credit Facility Lender”).
We have used some of the proceeds from the Term Loan Agreement to acquire four self storage properties in 2016. On December 20, 2018, certain of our wholly owned subsidiaries (“Credit Facility Secured Subsidiaries”) entered into a revolving credit loan agreement (collectively, the “Credit Facility Loan Agreement”) between the Credit Facility Secured Subsidiaries and TCF National Bank (“Credit Facility Lender”).
These capital resources allow us to continue to execute our strategic business plan, which includes funding acquisitions, either directly or through joint ventures; expansion projects at our existing properties; and broadening our revenue base and pipeline of potential acquisitions through developing Global MaxManagement SM , our third-party management platform.
The Company's capital resources allow us to continue to execute our strategic business plan, which includes funding acquisitions, either directly or through joint ventures; expansion projects at our existing properties; and broadening our revenue base and pipeline of potential acquisitions through developing Global MaxManagement SM , our third-party management platform.
This increase in same-store cost of operations for the twelve months ended December 31, 2022 was due primarily to increased expenses for employment and real estate taxes. Employment.
This increase in same-store cost of operations for the twelve months ended December 31, 2023 was due primarily to increased expenses for employment and real estate taxes. Employment.
We believe that, through our various marketing initiatives, we can continue to attract high quality, long term tenants who we expect will be storing with us for years. As of December 31, 2022, our average tenant duration of stay was approximately 3.3 years, up from approximately 3.0 years as of December 31, 2021.
We believe that, through our various marketing initiatives, we can continue to attract high quality, long term tenants who we expect will be storing with us for years. As of December 31, 2023, our average tenant duration of stay was approximately 3.4 years, up from approximately 3.3 years as of December 31, 2022.
For future acquisitions, the Company may continue to use various financing and capital raising alternatives including, but not limited to, debt and/or equity offerings, credit facilities, mortgage financing, and joint ventures with third parties.
For future acquisitions, the Company may employ various financing and capital raising alternatives including, but not limited to, debt and/or equity offerings, credit facilities, mortgage financing, and joint ventures with third parties.
The Company and the Amended Credit Facility Secured Subsidiaries paid customary fees and expenses in connection with their entry into the Amended Credit Facility Loan Documents. The Company also maintains a bank account at the Amended Credit Facility Lender. As of December 31, 2022, we have no withdrawn proceeds under the Amended Credit Facility Loan Agreement.
The Company and the Amended Credit Facility Secured Subsidiaries paid customary fees and expenses in connection with their entry into the Amended Credit Facility Loan Documents. The Company also maintains a bank account at the Amended Credit Facility Lender. As of December 31, 2023, we have not withdrawn proceeds under the Amended Credit Facility Loan Agreement.
Such factors include, among others, the impact of the COVID-19 pandemic, initial move-in rates, seasonal factors, unit size and geographical mix of the specific tenants moving in or moving out, the length of stay of the tenants moving in or moving out, changes in our pricing strategies, and the degree and timing of rate increases previously passed to existing tenants.
Such factors include, among others, initial move-in rates, seasonal factors, unit size and geographical mix of the specific tenants moving in or moving out, the length of stay of the tenants moving in or moving out, changes in our pricing strategies, and the degree and timing of rate increases previously passed to existing tenants.
The increase in marketing expense in the twelve months ended December 31, 2022 versus the same period in 2021 is primarily due to increased marketing costs and internet advertising expenses during the year ended 2022. Based upon current trends in move-ins, move-outs, and occupancies, we currently expect marketing expense to increase in 2023. General.
The decrease in marketing expense in the twelve months ended December 31, 2023 versus the same period in 2022 is primarily due to decreased marketing costs and internet advertising expenses during the year ended 2023. Based upon current trends in move-ins, move-outs, and occupancies, we currently expect marketing expense to increase in 2024. General.
The Company and its properties could be materially and adversely affected by the risks, or the public perception of the risks, related to, among other things, public health crises, including the novel coronavirus (“COVID-19”) and its variants, natural disasters and geopolitical events, including the ongoing conflict between Russia, Belarus and Ukraine, financial and credit market volatility and disruptions, inflationary pressures, rising interest rates, supply chain issues, labor shortages and recessionary concerns.
The Company and its properties could be materially and adversely affected by the risks, or the public perception of the risks, related to, among other things, public health crises, natural disasters and geopolitical events, including the ongoing conflict between Russia, Belarus and Ukraine, the ongoing conflict between Israel and Hamas, financial and credit market volatility and disruptions, inflationary pressures, rising interest rates, supply chain issues, labor shortages and recessionary concerns.
Credit card fees increased for the year ended December 31, 2022 due to a higher proportion of rental payments being received through credit cards, which is one of the results of our initiatives in building a higher quality overall tenant base. We currently expect moderate increases in other direct store costs in 2023.
Credit card fees increased for the year ended December 31, 2023 due to an increase in rental payments received through credit cards, which is one of the results of our initiatives in building a higher quality overall tenant base. We currently expect moderate increases in other direct store costs in 2024.
The Company recognizes changes in the fair value of its investments in equity securities with readily determinable fair values in net income and, as such, recorded an unrealized loss of $1,117,029 for the year ended December 31, 2022 compared to an unrealized gain of $1,566,731 during the year ended December 31, 2021.
The Company recognizes changes in the fair value of its investments in equity securities with readily determinable fair values in net income and, as such, recorded an unrealized gain of $408,876 for the year ended December 31, 2023 compared to an unrealized loss of $1,117,029 during the year ended December 31, 2022.
The increase in landscaping expense in the twelve months ended December 31, 2022 versus the same period in 2021 is primarily due to inflationary increases in rates. Landscaping expense levels are dependent upon many factors such as weather conditions, which can impact landscaping needs including, among other things, snow removal, inflation in material and labor costs, and random events.
The decrease in landscaping expense in the twelve months ended December 31, 2023 versus the same period in 2022 is primarily due to lower snow removal costs. Landscaping expense levels are dependent upon many factors such as weather conditions, which can impact landscaping needs including, among other things, snow removal, inflation in material and labor costs, and random events.
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. Same-store occupancy as of the end of the three months and year ended December 31, 2022 decreased by 350 basis points to 89.6% from 93.1% for the same period in 2021.
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. Same-store occupancy as of the end of the three months and year ended December 31, 2023 decreased by 30 basis points to 89.3% from 89.6% for the same period in 2022.
We currently expect existing tenant rent increases for 2023, if any, to be lower than those for the year ended December 31, 2022. It is difficult to predict trends in move-in, move-out, in place contractual rents, and occupancy levels.
We currently expect existing tenant rent increases for 2024, if any, to be similar to, or slightly greater than, those for the year ended December 31, 2023. It is difficult to predict trends in move-in, move-out, in place contractual rents, and occupancy levels.
We entered into a non-recourse guaranty (the “Term Loan Guaranty” and together with the Term Loan Agreement, the Term Loan Promissory Note and the Term Loan Security Agreement, the “Term Loan Documents”) on June 24, 2016 to guarantee the payment to the Term Loan Lender of certain obligations of the Term Loan Secured Subsidiaries under the Term Loan Agreement.
The Company entered into a non-recourse guaranty (the “Term Loan Guaranty” and together with the Term Loan Agreement, the Term Loan Promissory Note and the Term Loan Security Agreement, the “Term Loan Documents”) to guarantee the payment to the Term Loan Lender of certain obligations of the Term Loan Secured Subsidiaries under the Term Loan Agreement.
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.
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.
During the year ended December 31, 2022, the Company had other income of $307,210, attributable to a gain on the forgiveness of a Paycheck Protection Program ("PPP") term note. Net income (loss) For the year ended December 31, 2022, net income was $2,057,723 or $0.19 per fully diluted share.
During the year ended December 31, 2022, the Company had other income of $307,210, attributable to a gain on the forgiveness of a Paycheck Protection Program ("PPP") term note. Net income For the year ended December 31, 2023, net income was $2,938,769 or $0.26 per fully diluted share.
For the year ended December 31, 2021, net income was $3,281,251 or $0.33 per fully diluted share. Non-GAAP 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.
For the year ended December 31, 2022, net income was $2,057,723 or $0.19 per fully diluted share. 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.
Adjusted FFO (“AFFO”) and AFFO per share are non-GAAP measures that represent FFO and FFO per share excluding the effects of 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.
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.
Upon completion in February 2020, the Millbrook, NY store's area occupancy dropped from approximately 88.6% to approximately 45.5%. As of December 31, 2022, the Millbrook, NY store’s total area occupancy stood at 94.1%. In the first quarter of 2020, the Company began reviewing plans to convert certain commercially-leased space to all-climate-controlled units at the McCordsville, IN property.
Upon completion in February 2020, the Millbrook, NY store's area occupancy dropped from approximately 88.6% to approximately 45.5%. As of June 30, 2021, the Millbrook, NY store’s total area occupancy was approximately 95.4%. In the first quarter of 2020, the Company began reviewing plans to convert certain commercially-leased space to all-climate-controlled units at the McCordsville, IN property.
As of December 31, 2022, the McCordsville, IN store’s total area occupancy stood at 89.4%. 44 Our West Henrietta, NY store expansion project, completed in August 2020, added approximately 7,300 leasable square feet of drive-up storage units. Upon completion of the expansion project, West Henrietta, NY’s total area occupancy dropped from approximately 89.6% to approximately 77.9%.
As of June 30, 2021, the McCordsville, IN store’s total area occupancy was approximately 94.7%. Our West Henrietta, NY store expansion project, completed in August 2020, added approximately 7,300 leasable square feet of drive-up storage units. Upon completion of the expansion project, West Henrietta, NY’s total area occupancy dropped from approximately 89.6% to approximately 77.9%.
In addition, we may pursue third-party management opportunities of properties owned by certain affiliates or joint venture partners for a fee, and utilize such relationships with third-party owners as a source for future acquisitions and investment opportunities.
We did not make any acquisitions in the year ended December 31, 2023. In addition, we may pursue third-party management opportunities of properties owned by certain affiliates or joint venture partners for a fee, and utilize such relationships with third-party owners as a source for future acquisitions and investment opportunities.
Under the Amended Credit Facility Loan Agreement, the Amended Credit Facility Secured Subsidiaries may borrow from the Amended Credit Facility Lender in the principal amount of up to $15 million pursuant to a promissory note (the “Amended Credit Facility Promissory Note”).
Under the Amended Credit Facility Loan Agreement, the Amended Credit Facility Secured Subsidiaries may borrow from the Amended Credit Facility Lender in the principal amount of up to $15 million, reduced to $14.75 million and $14.5 million in years 2 and 3, respectively, pursuant to a promissory note (the “Amended Credit Facility Promissory Note”).
As of December 31, 2022, the West Henrietta, NY store’s total area occupancy stood at 79.6%. In 2021, the Company began reviewing plans to convert certain commercially-leased spaces to approximately 3,000 leasable square feet of all-climate-controlled units at the Lima, OH property.
As of June 30, 2021, the West Henrietta, NY store’s total area occupancy was approximately 89.1%. 44 In 2021, the Company began reviewing plans to convert certain commercially-leased spaces to approximately 3,000 leasable square feet of all-climate-controlled units at the Lima, OH property.
As we continue to acquire and/or develop additional stores, as part of the funding for such activities, we plan to liquidate our investment in marketable equity securities and potentially realize gains or losses. As of December 31, 2022, our cumulative unrealized gain on marketable equity securities was $1,610,666.
As we continue to acquire and/or redevelop additional stores, as part of the funding for such activities, we may liquidate our investment in marketable equity securities and potentially realize gains or losses. As of December 31, 2023, our cumulative unrealized gain on marketable equity securities was $2,019,542.
Lien administration expenses increased 13.2% or $382 in the three months ended December 31, 2022 as compared to the same period in 2021, and increased 0.1% or $7 in the twelve months ended December 31, 2022 as compared to the same period in 2021. We currently expect moderate increases in other direct store costs in 2023.
We currently expect moderate increases in other direct store costs in 2024. Lien Administration. Lien administration expenses increased 64.9% or $2,126 in the three months ended December 31, 2023 as compared to the same period in 2022, and increased 51.1% or $6,751 in the twelve months ended December 31, 2023 as compared to the same period in 2022.
The change is primarily attributable to an increase in employment expenses and certain professional fees.‬‬‬‬‬‬‬‬‬ ‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬Business development, capital raising, and store acquisition expenses increased from $45,531 to $48,340 during the year ended December 31, 2022 as compared to the year ended December 31, 2021.
The change is primarily attributable to an increase in employment expenses. Business development, capital raising, and store acquisition expenses decreased from $48,340 to $20,080 during the year ended December 31, 2023 as compared to the year ended December 31, 2022.
Same-store cost of operations increased by 18.1% for the three months ended December 31, 2022 versus the three months ended December 31, 2021, and increased by 10.4% for the twelve months ended December 31, 2022 versus the twelve months ended December 31, 2021.
Same-store cost of operations increased by 5.3% for the three months ended December 31, 2023 versus the three months ended December 31, 2022, and increased by 9.1% for the twelve months ended December 31, 2023 versus the twelve months ended December 31, 2022.
These costs primarily consisted of consulting costs in connection with business development, capital raising, and future potential store acquisitions, and expenses related to our third party management platform marketing initiatives.
These costs primarily consisted of consulting costs in connection with business development, capital raising, and future potential store acquisitions, and expenses related to our third party management platform marketing initiatives. The majority of these expenses are non-recurring and fluctuate based on business development activity during the time period.
The Amended Credit Facility Promissory Note bears an interest rate equal to 3% plus the greater of the One Month U.S. Dollar London Inter-Bank Offered Rate or 0.25% and is due to mature on July 6, 2024. As of December 31, 2022, the effective interest rate was 4.12%. The publication of LIBOR will cease immediately after June 30, 2023.
The Amended Credit Facility Promissory Note bears an interest rate equal to 3% plus the greater of the One Month U.S. Dollar London Inter-Bank Offered Rate or 0.25% and is due to mature on July 6, 2024.
On-site store manager, regional manager and district payroll expense increased 21.7% or $58,387 for the three months ended December 31, 2022 versus the three months ended December 31, 2021, and increased 8.4% or $93,810 for the twelve months ended December 31, 2022 as compared to the same period in 2021.
On-site store manager, regional manager and district payroll expense increased 3.7% or $12,218 for the three months ended December 31, 2023 versus the three months ended December 31, 2022, and increased 9.3% or $113,353 for the twelve months ended December 31, 2023 as compared to the same period in 2022.
We classify administrative expenses as bank charges related to processing the stores’ cash receipts, credit card fees, repairs and maintenance, utilities, landscaping, alarm monitoring and trash removal.
We currently expect same-store property tax expenses to increase during 2024, primarily due to increased property assessment valuations. Administrative. We classify administrative expenses as bank charges related to processing the stores’ cash receipts, credit card fees, repairs and maintenance, utilities, landscaping, alarm monitoring and trash removal.
Same-store NOI increased by 6.9% for the three months ended December 31, 2022 versus the three months ended December 31, 2021, and increased 15.6% for the twelve months ended December 31, 2022 versus the twelve months ended December 31, 2021. The increase in same-store NOI was due primarily to an increase in revenues.
Same-store NOI decreased by 7.1% for the three months ended December 31, 2023 versus the three months ended December 31, 2022, and decreased by 1.7% for the twelve months ended December 31, 2023 versus the twelve months ended December 31, 2022. The decrease in same-store NOI was due primarily to an increase in expenses.
Analysis of Global Self Storage FFO and AFFO 43 The following tables present a reconciliation and computation of net income to funds from operations (“FFO”) and adjusted funds from operations (“AFFO”) and earnings per share to FFO and AFFO per share (unaudited): Three Months Three Months Twelve Months Twelve Months Ended Ended Ended Ended December 31, 2022 December 31, 2021 December 31, 2022 December 31, 2021 Net income $ 440,451 $ 1,379,643 $ 2,057,723 $ 3,281,251 Eliminate items excluded from FFO: Unrealized loss (gain) on marketable equity securities 227,144 (775,542 ) 1,117,029 (1,566,731 ) Depreciation and amortization 404,897 409,669 1,619,239 1,631,609 Gain on Paycheck Protection Program (PPP) loan forgiveness — — (307,210 ) — FFO attributable to common stockholders 1,072,492 1,013,770 4,486,781 3,346,129 Adjustments: Compensation expense related to stock-based awards 42,809 54,098 173,921 194,372 Business development, capital raising, and property acquisition costs 1,632 34,896 48,340 45,531 AFFO attributable to common stockholders $ 1,116,933 $ 1,102,764 $ 4,709,042 $ 3,586,032 Earnings per share attributable to common stockholders - basic $ 0.04 $ 0.13 $ 0.19 $ 0.33 Earnings per share attributable to common stockholders - diluted $ 0.04 $ 0.13 $ 0.19 $ 0.33 FFO per share - diluted $ 0.10 $ 0.10 $ 0.41 $ 0.33 AFFO per share - diluted $ 0.10 $ 0.10 $ 0.43 $ 0.36 Weighted average shares outstanding - basic 11,025,477 10,613,044 10,845,884 9,973,113 Weighted average shares outstanding - diluted 11,071,042 10,646,806 10,900,041 10,004,061 Analysis of Global Self Storage Store Expansions In addition to actively reviewing a number of store and portfolio acquisition candidates, we have been working to further develop and expand our current stores.
Analysis of Global Self Storage FFO and AFFO 43 The following tables present a reconciliation and computation of net income to funds from operations (“FFO”) and adjusted funds from operations (“AFFO”) and earnings per share to FFO and AFFO per share (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 Analysis of Global Self Storage Store Expansions In addition to actively reviewing a number of store and portfolio acquisition candidates, we have been working to further redevelop and expand our current stores.
Landscaping expenses, which include snow removal costs, increased 32.0% or $7,170 for the three months ended December 31, 2022 versus the three months ended December 31, 2021, and increased 5.9% or $9,694 in the twelve months ended December 31, 2022 compared to the same period in 2021.
Landscaping expenses, which include snow removal costs, decreased 19.2% or $5,685 for the three months ended December 31, 2023 versus the three months ended December 31, 2022, and decreased 43.0% or $74,916 in the twelve months ended December 31, 2023 compared to the same period in 2022.
Results of Operations for the Year Ended December 31, 2022 Compared with the Year Ended December 31, 2021 Revenues Total revenues increased from $10,508,830 during the year ended December 31, 2021 to $11,944,850 during the year ended December 31, 2022, an increase of 13.7% or $‭1,436,020‬.
Results of Operations for the Year Ended December 31, 2023 Compared with the Year Ended December 31, 2022 Revenues Total revenues increased from $11,944,850 during the year ended December 31, 2022 to $12,190,715 during the year ended December 31, 2023, an increase of 2.1% or $245,865.
Similarly, leasable square footage may increase or decrease due to expansion or redevelopment of our properties. 40 The following table presents a reconciliation of same-store net operating income to net income as presented on our consolidated statements of operations for the periods indicated (unaudited): For the Three Months Ended December 31, For the Twelve Months Ended December 31, 2022 2021 2022 2021 Net income $ 440,451 $ 1,379,643 $ 2,057,723 $ 3,281,251 Adjustments: Management fees and other income (21,550 ) (19,518 ) (83,768 ) (75,925 ) General and administrative 688,516 569,589 2,580,899 2,369,960 Depreciation and amortization 404,897 409,669 1,619,239 1,631,609 Business development 1,632 34,896 48,340 45,531 Dividend and interest income (27,681 ) (19,625 ) (120,575 ) (76,021 ) Unrealized loss (gain) on marketable equity securities 227,144 (775,542 ) 1,117,029 (1,566,731 ) Interest expense 208,049 217,894 780,223 1,046,461 Gain on Paycheck Protection Program (PPP) loan forgiveness — — (307,210 ) — Total same-store net operating income $ 1,921,458 $ 1,797,006 $ 7,691,900 $ 6,656,135 For the Three Months Ended December 31, For the Twelve Months Ended December 31, 2022 2021 2022 2021 Same-store revenues $ 3,037,160 $ 2,742,085 $ 11,861,082 $ 10,432,905 Same-store cost of operations $ 1,115,702 $ 945,079 $ 4,169,182 $ 3,776,770 Total same-store net operating income $ 1,921,458 $ 1,797,006 $ 7,691,900 $ 6,656,135 Analysis of Same-Store Revenue For the three and twelve months ended December 31, 2022, revenue increased 10.8% and 13.7%, respectively, as compared to the same periods in 2021.
Similarly, leasable square footage may increase or decrease due to expansion or redevelopment of our properties. 40 The following table presents a reconciliation of same-store net operating income to net income as presented on our 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 Analysis of Same-Store Revenue For the three and twelve months ended December 31, 2023, revenue decreased 2.5% and increased 2.1%, respectively, as compared to the same periods in 2022.
These increases were attributable to, among other things, increased rental rates, and the results of our revenue rate management program of raising existing tenant rates.
The increase in the twelve months ended December 31, 2023 was attributable to, among other things, increased rental rates, and the results of our proprietary revenue rate management program of raising existing tenant rates.
Analysis of Realized and Unrealized Gains (Losses) Unrealized gains/(losses) on the Company’s investment in marketable equity securities for the three and twelve months ended December 31, 2022 were (227,144) and ($1,117,029), respectively, and for the three and twelve months ended December 31, 2021 were $775,542 and $1,566,731, respectively.
As such, our Lima, OH property remained a same store property. Analysis of Realized and Unrealized Gains (Losses) Unrealized gains/(losses) on the Company’s investment in marketable equity securities for the three and twelve months ended December 31, 2023 were $574,142 and $408,876, respectively, and for the three and twelve months ended December 31, 2022 were $(227,144) and $(1,117,029), respectively.
The decrease was primarily attributable to lower occupancy at our wholly-owned properties.‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬ Operating Expenses Total expenses increased from $7,823,870 during the year ended December 31, 2021 to $8,417,660 during the year ended December 31, 2022, an increase of 7.6% or $593,790, which was primarily due to an increase in certain general and administrative expenses and store operating expenses.
Operating Expenses Total expenses increased from $8,417,660 during the year ended December 31, 2022 to $9,079,462 during the year ended December 31, 2023, an increase of 7.9% or $661,802, which was primarily due to an increase in certain general and administrative expenses and store operating expenses.
In July 2021, the Company completed such conversion, resulting in a new total of 756 units and 96,883 leasable square feet at the Lima, OH property. Upon completion, total area occupancy was approximately 94.8%. As of December 31, 2022, the Lima, OH store’s total area occupancy was approximately 91.8%.
In July 2021, the Company completed such conversion, resulting in a new total of 756 units and 96,883 leasable square feet at the Lima, OH property. Upon completion, total area occupancy was approximately 94.8%. This conversion did not constitute a significant renovation or expansion because it only added approximately 3,000 leasable square feet of self storage to the property.
However, we may opt to supplement our equity capital and increase potential returns to our stockholders through the use of prudent levels of borrowings.
However, we may opt to supplement our equity capital and increase potential returns to our stockholders through the use of prudent levels of borrowings. We may use debt when the available terms and conditions are favorable to long-term investing and well-aligned with our business plan.
We experienced an increase in administrative expenses for the year ended December 31, 2022 due primarily to increased repairs and maintenance, utilities, credit card fees, and landscaping expense.
We experienced a decrease in administrative expenses for the year ended December 31, 2023 due primarily to decreased utilities and landscaping expense.
In addition to actively reviewing a number of store and portfolio acquisition opportunities, we have been working to further develop and expand our current stores. In 2022, the Company began reviewing plans to convert certain commercially-leased space to approximately 2,500 leasable square feet of all-climate-controlled units at the Lima, OH property.
As such, our Lima, OH property remained a same store property. In 2022, the Company began reviewing plans to convert certain commercially-leased spaces to approximately 2,500 leasable square feet of all-climate-controlled units at the Lima, OH property.
General expenses increased 23.8% or $15,852 in the three months ended December 31, 2022 as compared to the same period in 2021, and increased 10.4% or $29,783 in the twelve months ended December 31, 2022 as compared to the same period in 2021, primarily due to increased expenses for travel. Lien Administration.
General expenses increased 33.4% or $27,522 in the three months ended December 31, 2023 as compared to the same period in 2022, and increased 10.8% or $34,330 in the twelve months ended December 31, 2023 as compared to the same period in 2022, primarily due to increased insurance expense.
The Amended Credit Facility Loan Agreement provides for a replacement index based on the Secured Overnight Financing Rate (“SOFR”). The interest rate on the Amended Credit Facility Promissory Note subsequent to June 30, 2023, is equal to 3% plus the greater of SOFR plus 0.11448% or 0.25%.
The interest rate on the Amended Credit Facility Promissory Note subsequent to June 30, 2023, is equal to 3% plus the greater of SOFR plus 0.11448% or 0.25%. As of December 31, 2023, the effective interest rate was 8.46%.
Same store average overall square foot occupancy for all of the Company’s same-stores combined decreased by 350 basis points to 89.6% in the twelve months ended December 31, 2022 from 93.1% in the twelve months ended December 31, 2021. We believe that our focus on maintaining high occupancy helps us to maximize rental income at our properties.
Same store average overall square foot occupancy for all of the Company’s same-stores combined decreased by 30 basis points to 89.3% in the twelve months ended December 31, 2023 from 89.6% in the twelve months ended December 31, 2022. As of March 15, 2024, occupancy at the Company’s same-store properties was 92.1%.
Store property tax expense increased 21.2% or $73,093 for the three months ended December 31, 2022 versus the three months ended December 31, 2021, and increased 12.3% or $161,085 for the twelve months ended December 31, 2022 as compared to the same period in 2021.
Store property tax expense increased 10.4% or $43,611 for the three months ended December 31, 2023 versus the three months ended December 31, 2022, and increased 14.5% or $213,519 for the twelve months ended December 31, 2023 as compared to the same period in 2022.
Analysis of Same-Store Cost of Operations Same-store cost of operations increased 18.1% or $170,622 for the three months ended December 31, 2022 versus the three months ended December 31, 2021, and increased 10.4% or $392,412 for the twelve months ended December 31, 2022 versus the twelve months ended December 31, 2021.
Analysis of Same-Store Cost of Operations Same-store cost of operations increased 5.3% or $58,956 for the three months ended December 31, 2023 versus the three months ended December 31, 2022, and increased 9.1% or $379,856 for the twelve months ended December 31, 2023 versus the twelve months ended December 31, 2022.
Utility expense increased 0.7% or $384 for the three months ended December 31, 2022 versus the three months ended December 31, 2021, and increased 13.0% or $31,077 for the twelve months ended December 31, 2022 as compared to the same period in 2021, primarily due to rising costs for energy during the three and twelve months ended December 31, 2022 versus the same periods in 2021.
Utility expense decreased 10.2% or $5,731 for the three months ended December 31, 2023 versus the three months ended December 31, 2022, and decreased 4.2% or $11,293 for the twelve months ended December 31, 2023 as compared to the same period in 2022, primarily due to lower energy usage during the three and twelve months ended December 31, 2023 versus the same periods in 2022.
Repairs and maintenance expense decreased 16.7% or $8,308 for the three months ended December 31, 2022 versus the three months ended December 31, 2021, and increased 8.3% or $11,845 for the twelve months ended December 31, 2022 as compared to the same period in 2021. 42 Our utility expenses are currently comprised of electricity, oil, and gas costs, which vary by store and are dependent upon energy prices and usage levels.
We experienced an increase in repairs and maintenance expense for the year ended December 31, 2023 due primarily to inflation and an increased number of one-off repairs in 2023 as compared to 2022. Our utility expenses are currently comprised of electricity, oil, and gas costs, which vary by store and are dependent upon energy prices and usage levels.
As such, our Lima, OH property will remain a same store property. We expect we will have sufficient cash from current sources to meet our liquidity needs for the next twelve months because our capital resources currently exceed our projected expenses for the next twelve months.
In addition to actively reviewing a number of store and portfolio acquisition opportunities, we have been working to further redevelop and expand our current stores. We expect we will have sufficient cash from current sources to meet our liquidity needs for the next twelve months because our capital resources currently exceed our projected expenses for the next twelve months.
Marketing expense increased 22.0% or $15,982 for the three months ended December 31, 2022 versus the three months ended December 31, 2021, and increased 15.4% or $39,355 for the twelve months ended December 31, 2022 as compared to the same period in 2021.
Marketing expense decreased 7.8% or $6,862 for the three months ended December 31, 2023 versus the three months ended December 31, 2022, and decreased 14.6% or $43,131 for the twelve months ended December 31, 2023 as compared to the same period in 2022.
We continue to actively review a number of store and store portfolio acquisition opportunities and have been working to further develop and expand our current stores. We did not make any acquisitions in the year ended December 31, 2022.
There were no shares of common stock sold during the three and twelve months ended December 31, 2023 under the Sales Agreement. We continue to actively review a number of store and store portfolio acquisition opportunities and have been working to further redevelop and expand our current stores.
We may use debt when the available terms and conditions are favorable to long-term investing and well-aligned with our business plan. 36 As of December 31, 2022, we had capital resources totaling approximately $23.9 million, comprised of $6.5 million of cash, cash equivalents, and restricted cash, $2.4 million of marketable securities, and $15.0 million available for withdrawal under the Amended Credit Facility Loan Agreement.
As of December 31, 2023, we had capital resources totaling approximately $24.3 million, comprised of $7.0 million of cash, cash equivalents, and restricted cash, $2.8 million of marketable securities, and $14.5 million available for withdrawal under the Amended Credit Facility Loan Agreement.
Store operating expenses increased from $3,776,770 in the year ended December 31, 2021 to $4,169,182 in the year ended December 31, 2022, an increase of 10.4% or $‭392,412, which was primarily due to increased employment and real estate tax expenses.‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬ ‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬Depreciation and amortization decreased from $1,631,609 in the year ended December 31, 2021 to $1,619,239 in the year ended December 31, 2022, a decrease of 0.8% or $12,370.‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬ ‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬General and administrative expenses increased 8.9% or $210,939‬ for the year ended December 31, 2022 as compared to the year ended December 31, 2021.
Store operating expenses increased from $4,169,182 in the year ended December 31, 2022 to $4,549,038 in the year ended December 31, 2023, an increase of 9.1% or $379,856, which was primarily due to increased employment and real estate tax expenses.
Administrative expenses increased 3.7% or $6,926 in the three months ended December 31, 2022 as compared to the same period in 2021, and increased 11.2% or $86,240 in the twelve months ended December 31, 2022 as compared to the same period in 2021.
Administrative expenses decreased 10.1% or $19,658 in the three months ended December 31, 2023 as compared to the same period in 2022, and decreased 5.1% or $43,210 in the twelve months ended December 31, 2023 as compared to the same period in 2022.
The majority of these expenses are non-recurring and fluctuate based on business development activity during the time period. 37 Operating Income Operating income increased from $2,684,960 during the year ended December 31, 2021 to $3,527,190 during the year ended December 31, 2022, an increase of 31.4% or $‭842,230, which was primarily due to increased total revenues.‬‬‬‬‬‬‬‬‬‬‬ Other income (expense) Interest expense on loans decreased from $1,046,461 during the year ended December 31, 2021 to $780,223 during the year ended December 31, 2022, a decrease of 25.4% or $266,238.
Operating Income Operating income decreased from $3,527,190 during the year ended December 31, 2022 to $3,111,253 during the year ended December 31, 2023, a decrease of 11.8% or $415,937, which was primarily due to increased total expenses. 37 Other income (expense) Interest expense on loans increased from $780,223 during the year ended December 31, 2022 to $846,406 during the year ended December 31, 2023, an increase of 8.5% or $66,183.
This decrease was attributable to decreased borrowings under our Amended Credit Facility Loan Agreement, lower amortization of loan procurement costs, and the unrealized gain on the mark-to-market of the interest rate cap. Dividend and interest income was $120,575 during the year ended December 31, 2022 as compared to $76,021 during the year ended December 31, 2021.
This increase was attributable to the unrealized loss on the mark-to-market of the interest rate cap. Dividend and interest income was $265,046 during the year ended December 31, 2023 as compared to $120,575 during the year ended December 31, 2022. The increase was attributable to the dividends earned on money market mutual fund balances.
The increase in total revenues was due primarily to increased rental rates, and the results of our revenue rate management program of raising existing tenant rates. ‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬Other store related income consists of customer insurance fees, sales of storage supplies, and other ancillary revenues.
Rental income increased from $11,485,511 during the year ended December 31, 2022 to $11,719,165 during the year ended December 31, 2023, an increase of 2.0% or $233,654‬. The increase in total revenues was due primarily to increased rental rates, and the results of our proprietary revenue rate management program of raising existing tenant rates.
Other store related income decreased from $381,534 in the year ended December 31, 2021 to $375,571 in the year ended December 31, 2022, a decrease of 1.6% or $5,963‬.
Other store related income consists of customer insurance fees, sales of storage supplies, and other ancillary revenues. Other store related income increased from $375,571 in the year ended December 31, 2022 to $392,577 in the year ended December 31, 2023, an increase of 4.5% or $17,006.
Removed
Rental income increased from $10,051,371 during the year ended December 31, 2021 to $11,485,511 during the year ended December 31, 2022, an increase of 14.3% or $‭1,434,140‬.

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